Redbox Cuts Deal With Warner; Agrees To 28-Day Window
Coinstar (CSTR) unit Redbox this afternoon said it signed a new multi-year distribution deal with the Warner Bros. Home Entertainment unit of Time Warner (TWX) that will allow Redbox to rent new Warner DVD and Blu-Ray titles after a 28-day window.
Context & Ripple Effects
Warner Bros.' standoff with Redbox ends here: after a December 2009 report warned that dollar-a-night kiosk rentals could devastate the entertainment industry's economics, the studio had been the most prominent holdout against supplying Coinstar's machines. This multi-year agreement converts that fight into contract terms — Warner supplies new DVD and Blu-Ray titles, but only after a 28-day holdback.
For Coinstar, the deal matters because new-release availability is what drives kiosk traffic; for Warner, it preserves the theatrical and early sell-through window while keeping a cut of the fast-growing low-price rental channel rather than forfeiting it entirely.
First-order effects
- Redbox regains legal access to Warner's new-release DVD and Blu-Ray catalog after the 28-day window, ending the risk that its roughly 20,000-strong kiosk fleet goes dark on one major studio's titles.
- Warner trades immediate kiosk availability for contractual control over release timing — and a direct revenue stream — instead of the outright refusal it had been practicing.
Second-order effects
- Other major studios now have a template for dealing with Redbox: holdback-plus-agreement rather than supply cutoff, raising pressure on any remaining holdouts to negotiate similar windowed terms.
- Traditional video rental chains lose more ground, since their historical advantage — guaranteed day-and-date new-release access — narrows whenever a discount kiosk secures multi-studio supply on staggered terms.
Third-order effects
- Release windows look set to become the standard instrument through which studios govern cheap physical rental channels, replacing binary decisions to supply or starve a distributor.
- If the pattern holds, home-entertainment economics bifurcate by channel: premium prices buy day-one access, discount kiosks buy older inventory — a structure the studios, not retailers, get to define.
The trend: Studios are shifting from refusing discount kiosk rentals altogether to monetizing them through negotiated release-delay windows, making distribution timing itself the bargaining chip.