Is Hollywood Shooting for a Monopoly?

It would certainly seem so.  Hollywood certainly does not like Redbox or other kiosk rental companies.  Universal tried to stop Redbox with a revenue sharing plan which puts all the expense on the $1.00 per night rental kiosks.  The penalty for refusing to cooperate was a loss of movie supply whole sale resources.  Many people suspect the movie producing company’s main aim is to drive the kiosks out of business.

Universal dropped the unfair revenue sharing agreement on Redbox from left field.  They showed up at Redbox headquarters with the agreement in hand and demanded that Redbox sign it by December first or loose access to new release DVD rentals.  The agreement would force Redbox to get their movies from the studio at a cost of $8.00 to $12.00 per movie and hand over 40% of the profits from each unit rented to the studio.  On top of handing over a big chunk of the profits, Redbox would pay all the taxes while Universal would get all of the tax credits.  Furthermore, Redbox has to pay the profit from the rentals to the studio whether they collect the fees from the rented DVD or not.  They also have to pay for lost or stolen DVD movies.

Another unfavorable term for Redbox is that they will be forces to wait 45 days after the new movies are released before they can get them for their rental kiosks.  A limit of eights copies per movie will be placed on each kiosk.  Once the movie is removed from the kiosk, it cannot be sold to the public at a reduced price.  It must be destroyed.  Redbox would be forced to keep detailed records and can be audited at Universal’s whim.  What really goes over the top is that Redbox has to pay for the audit whenever a discrepancy of more than five percent is found.

The kiosk business depends upon getting the new releases for rental as soon as they are available for public consumption.  This part of the revenue sharing agreement alone could put the kiosk rental businesses out of the market for movie rentals.  Most revenue sharing is done as an attempt to expand the market but it is obvious that Universal intends to shrink wrap the market into one corner; theirs.  If they succeed in putting Redbox and other overnight rental kiosks out of business, what is to stop them from putting the ax to all DVD rental stores?  Where does the saga end?  My guess is with a studio monopoly on DVD’s.  Last I knew monopolies were illegal in this country.

Source: Audioholics online AV Magazine