Summit and Redbox

There is a new way to rent Twilight, Summit has signed a two year deal with Redbox that rents DVDs for $1 a day.  Usually after 15 times being rented the disk is sold to wholesalers or fans.  But the kiosk company has promised to destroy the DVDs after the 15th time being rented so they don't affect the sales of new DVDs.  That is interesting and one way to keep business doing well and to make more money on new DVDs.

Summit Signs Two-Year Distribution Deal With Redbox

Redbox, the scrappy DVD kiosk operator, has a new studio friend in Hollywood.

Summit Entertainment, the scrappy studio behind the “Twilight” franchise, has signed a two-year distribution agreement with Redbox. The carrot that got Summit to sign up? A guarantee by Redbox to destroy Summit DVDs after a certain period.

The resale component of Redbox’s business plan is emerging as a significant point of leverage as it tries to win over movie studios. Redbox sells about half its discs back to wholesalers for about $4 after renting them about 15 times. (It sells another batch of used DVDs directly to consumers.) But most studios have a big problem with that: it helps flood the previously viewed market and potentially affects sales of new DVDs.

Redbox also agreed to destroy discs to help coax Paramount and Sony into partnerships. (Frustrated with Redbox’s practice of renting DVDs for $1 a day as soon as they become available in stores, Twentieth Century Fox, Warner Brothers and Universal Pictures want to restrict the kiosk operator’s sales window; Redbox is suing them, separately, on antitrust grounds.)

What’s not clear is to what degree selling used discs is part of Redbox’s profit equation. When we asked Mitch Lowe, Redbox’s president, about this in August, he declined to detail the numbers, saying only, “It’s part of the economics. But it has never been a business we wanted to be in.”

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Carrie