Last February Warner Brothers convinced Netflix to delay new release DVDs by 56 days
-- and got Netflix to prohibit users from even adding upcoming releases to their queue until 26 days after release
. Studio executives believe this will drive users to buy more DVDs, but as everybody except for the entertainment industry has figured out, simply acts to annoy users and drive them to explore piracy
Earlier this year Red Box refused the 56 day new release delay, and decided to renew their contract with Warner Brothers, instead getting movies from retail as they go on sale. Disney recently joined the fun, trying to prohibit Netflix and Red Box from offering DVDs for a month after release. However, both Netflix and Red Box appear to both finally be getting bored of this game, and are fighting Disney
Disney is the only studio at loggerheads with Netflix over the window issue, but it's not the only one fighting with Redbox. The kiosk rental company refused to accept Warner's demand that it wait 56 days to rent new releases, as its business is heavily dependent on having fresh movies. It is now stocking its machines with Disney and Warner discs that it purchases from retail stores. Such negotiations ultimately amount to a high-stakes game of chicken. Under the "first sale" legal doctrine, studios can't forbid companies from renting DVDs that they legally purchase.
By not selling them bulk discs unless they sign annoying agreements, it's another way for studios to ramp up costs for innovative new content companies (alongside licensing). The problem is that studios have in turn been going to retailers and forcing them to limit the number of discs that companies like Netflix and RedBox can purchase. It's yet another example of an industry refusing to innovate in the face of evolution (in this case, broadband video and the death of physical media), instead resorting to anti-competitive and often self-destructive tactics in the hopes they can keep things as they are.
It will be interesting to see if RedBox remains tenacious on this front later this year as they push harder into the streaming business
in their joint venture with Verizon.