Redbox, the $1 per day DVD kiosk company, has faced its share of challenges recently. But here’s some good news: Viacom’s Paramount Home Entertainment announced today it had entered into an agreement with Redbox: A four-month revenue-sharing trial.
Paramount confirmed that the deal is a revenue-sharing agreement — an important factor, given that studios on the sidelines currently have voiced their desire for revenue-sharing agreements, not the wholesale payments that Sony and Lions Gate currently receive.
Under the agreement, Paramount will make its titles available to Redbox the day they are released (another key sticking point for Fox’s, Universal’s, and Warner Bros.’ opposition to Redbox) and will monitor the impact that the Redbox service has on DVD sales.
At the end of the year the trial agreement expires, at which point Viacom will have the option to renew it until 2014, with an out clause after two years. Redbox has also agreed to destroy any Paramount DVDs once they are removed from the Redbox service.
This is an interesting and positive move for both sides. The deal provides Redbox with a little more leverage when negotiating with the studios that are holding out. The more studios that participate, the more pressure on the remaining studios to come to the table. For Paramount, it enables them to test the Redbox service with the ability to pull out before too long if it does end up hurting DVD sales.
Redbox, a division of Coinstar, currently finds itself in the midst of three lawsuits with Twentieth Century Fox, Universal Pictures, and Warner Brothers after all three tried to limit access to their new releases over concerns that renting them at $1 per day would hurt sales. Meanwhile, Sony Pictures and Lions Gate have entered into formal agreements with the company.
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