Warner Bros faces opposition on delay to DVD availability in US market

WARNER Bros, leading a push to spur movie purchases by delaying the availability of DVD rentals, is running into resistance in the US from two of its biggest customers.

Dish Network’s Blockbuster, the largest US film rental chain, and Coinstar, operator of the Redbox DVD kiosks, are pushing back against the Time Warner film unit’s efforts to make consumers wait 56 days before they can rent the latest releases.

The current delay for Redbox is 28 days after a DVD goes on sale to the public.

Warner Bros is calculating the potential gains outweigh the risk of alienating the retailers.

While Netflix is going along, Blockbuster stores are buying the studio’s movies from others the day they go on sale and renting them to customers right away, according to a person with knowledge of the matter who wasn’t authorised to speak publicly.

“As a company that’s really not focused on new releases, Netflix doesn’t really care about a move from 28 days to 56,” said Eric Wold, an analyst at B Riley & Co. “For the other companies, new releases really dominate their rentals, so that kind of delay would really hurt them.”

Coinstar, which has an agreement with Warner Bros that expires at the end of this month, has not agreed to lengthen its 28-day window and has suggested it too may find alternatives.

“The current agreement Coinstar has with Warner Bros. is to receive movie titles 28 days after their release,” Marci Maule, a spokeswoman for the Bellevue, Washington-based company, said in an email, reiterating earlier statements. “No revised agreements are in place.”

Coinstar, operator of more than 34,000 DVD-rental kiosks, has “workarounds” to obtain new releases if studios seek to impose a longer delay, chief executive Paul Davis said on an October 27 conference call. Peter Binazeski, a Warner Bros spokesman, said the company had no comment on talks with Blockbuster or Coinstar.

Comcast Cor’s Universal Pictures, News Corp’s Fox and WarnerBros had previously made deals with Coinstar and Los Gatos, California-based Netflix for a 28-day delay.

Netflix, the streaming and DVD rental service, agreed with Warner Bros yesterday to double the period to 56 days.

The longer window is part of an effort at Warner to get customers to buy movies rather than rent them, Mark Horak, president of Warner Home Video North America, said.

US consumer spending on home-video entertainment fell 2.1% to $18bn (€14.2bn) last year, the seventh straight annual decline, according to the industry-backed Digital Entertainment Group.

Rental revenue at stores like Blockbuster tumbled 28%, the DEG said.

Purchases of DVDs fell 20%, while spending on Blu-ray discs gained 20% to $2bn (€1.57bn). Kiosk rentals, led by Redbox, grew by 31%.

— Bloomberg.