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Coinstar: Studios Spying On Redbox Kiosks

November 19, 2009, 3:29 pm
Originally posted by Michael Cieply - New York Times - Novemeber 17, 2009

As it turns out, Fox has had a very close eye on an effort by Redbox, the operator of dollar-a-day DVD rental kiosks, to stock its movies, despite a refusal by Fox, Universal and Warner to sell new releases to the company and a pending legal fight over the dispute.

Redbox executives had said their kiosks would continue to carry Fox hits, even if that meant buying new releases at a retailer like Wal-Mart, then renting them out alongside movies from studios like Paramount and Disney, which have not blocked their releases from the cheap-rental machines.

But Fox had researchers check what happened with its release of “Ice Age: Dawn of the Dinosaurs,” last month, and came to the conclusion that Redbox wasn’t having much luck with the work-around strategy.

Fox checked 1,105 Redbox kiosks in 35 states, and found that “Ice Age” was missing from most of them when first released, according to people who were briefed on the numbers but spoke on condition of anonymity because of the pending litigation.

On Oct. 28, a day after the DVD was released, “Ice Age” appeared in 5.6 percent of them, according to the Fox study. By Nov. 2, “Ice Age” was in 33.1% of the kiosks monitored—far fewer than the 94.3 percent that carried “Transformers 2” from Paramount or the 88.5 percent that had “The Proposal,” from Disney.

Films from Universal and Warner were similarly in short supply. “Orphan,” from Warner, was in only 5.5 percent of the kiosks by Nov. 2, according to Fox, while “Drag Me to Hell” from Universal showed up in only 11.4 percent.

Fox executives concluded that the work-around was not working, though Mitch Lowe, the Redbox president, says otherwise.

Reached by telephone on Tuesday, Mr. Lowe said the apparent shortfalls discovered by Fox could have resulted from a misunderstanding of the way a Redbox traffic works. A new film, he said, will typically be available about 30 percent of the time — exactly in line with the availability of “Ice Age” by Nov. 2.

Mr. Lowe said his company has been able fully to stock DVDs even from the non-cooperating companies within a few days of their release dates. “It’s a little more work and a little more challenging for us, but we’ve been able to stock them all,” he said.

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