Kiosk operator will instead buy DVDs at retail

As expected, Redbox isn’t agreeing to Warner Bros.’ new 56-day delay to offer new film rentals.

Earlier this month, the studio inked a new distribution deal with Netflix, expanding a previous 28-day deal to a longer frame, in exchange for discounts on discs for new releases.

However, after lengthy talks between WB and Redbox this month, the companies couldn’t come to an agreement over the new demands from the studio.

Instead, Redbox has opted to turn to “alternate means” to purchase the films on DVD and Blu-ray it makes available to rent for as low as $1.20 a night through its more than 28,000 kiosks — and offer them the same day they hit store shelves to buy, according to Redbox senior VP of marketing Gary Cohen.

First WB title to bow in kiosks the same day as retail will be “A Very Harold & Kumar Christmas,” out Feb. 7.

Placed mostly in supermarkets and outside convenience stores, Redbox also said Tuesday that Walmart will continue adding kiosks its 3,700 stores through January 2015.

While other studios like Paramount say that making discs available in kiosks at the time of relese doesn’t affect disc sales, Warner Bros. has stuck to its guns in believing that longer windows will encourage more people to purchase discs and store them in UltraViolet’s cloud-based digital lockers or rent them on VOD.

Although Blu-ray sales are increasing, they haven’t made up for declining DVD revenue. Last year, the sale of all discs fell 13%, generating nearly $9 billion, primarily because of slower DVD sales, according to the Digital Entertainment Group.

On the rental side, kiosks, operated by Redbox and other vendors, showed the most growth in the rental category, up 31% to collect $1.7 billion in fees, prompting studios to look for ways to grab a larger share of that increased revenue.

After Redbox revealed that it has ended talks with Warner Bros., the studio stressed in a statement: “The consumer is best served by a windowing and pricing structure that ensures a healthy film business continuing to deliver quality movies. We hope to continue discussions with Redbox and reach a mutually agreed upon solution to this situation, but we fully intend to do what is best for our business, our consumers and the industry as a whole.”

Since the delay, Warner Bros. has found that the 28-day window has also helped boost sales for DVDs and Blu-rays by as much as 32% at retailers like Best Buy, especially during the first four weeks after they go on sale.

During this year’s Consumer Electronics Show in Las Vegas, Warner Home Video North America prexy Mark Horak said, “Since we implemented a 28-day window for subscription and kiosk, we have seen very positive results with regard to our sell-through business. One of the key initiatives for Warner Bros. is to improve the value of ownership for the consumer and the extension of the rental window — along with our support of UltraViolet — is an important piece of that strategy.”

Redbox will now begin talks with Universal over the renewal of its own terms with that studio (a 28-day delay), which expires in April.

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