Warner Bros. is ending its exclusive day-and-date arrangement to provide films to Blockbuster, which didn’t have to adhere to the 28-day delay imposed on rival rental services Netflix and Redbox.
Warner Bros. Home Video president Kevin Tsujihara also indicated in an interview published Wednesday in the Financial Times, which first reported the deal’s dissolution, that the studio will move to expand the delay to even more than 28 days once the studio’s current terms with the companies expire at the end of the year.
Time Warner chief Jeff Bewkes discussed such a move a year ago during a conference call with analysts, during which he said, “so far the 28-day window has clearly been a success vs. no delay. The question of whether we ought to go longer is very much under scrutiny. It may well be a good idea.”
Warner Bros. will no longer provide physical discs to Blockbuster, sources confirm to Variety. That suggests the retail chain will have to buy discs in order to continue providing day-and-date titles. Other studios, including Fox and Universal, are expected to follow suit.
Blockbuster had been touting the exception to the 28-day delay in its marketing materials as an advantage over competitors. The company renewed its exclusion from the delay with the studio in October 2010.
The cost of buying discs rather than getting them discounted from the studio will now weigh on Blockbuster’s bottom line as well as that of Dish Network, which purchased the rental chain earlier this year.
The discount on inventory was a key factor in getting Netflix and Redbox to agree to the 28-day window.
Ironically, Blockbuster had a 28-day delay on new DVD and Blu-ray discs available through its Blockbuster Express kiosks, operated by NCR, that makes films available for rent for $1 a day. NCR began a major rollout of the blue rental boxes last year to compete with Redbox and create a much-needed revenue stream for Blockbuster, which was in the midst of a Chapter 11 bankruptcy proceeding. NCR licenses the Blockbuster brand from the rental chain.
The crackdown on availability of Blockbuster’s rental titles comes as the major studios are re-emphasizing the value of owning DVDs via UltraViolet, a cloud-based system recently deployed for select titles that is set up to encourage purchasing movies, including WB’s “Green Lantern” and “Horrible Bosses.”
The 28-day delay is the way many majors give consumers the opportunity to purchase films before they can rent it because the former transaction drives higher profit margins. Reps for Warner Bros. and Dish declined to comment.