Redbox sues Warner Home Video over DVD rentals
Oakbrook Terrace-based Redbox, the DVD rental kiosk company, has filed suit against Warner Home Video, its third claim against a major film studio looking to hold new releases out of Redbox vending machines while consumers have a chance to buy the movie.
The issue has divided Hollywood studios, with some hoping to piggyback on Redbox's growing popularity and others trying to preserve more lucrative retail sales by imposing a delay.
Warner Home Video, a unit of Time Warner Inc.'s Warner Bros. film studio, demanded 28 days before Redbox's $1-per-night rentals become available. General Electric Co.'s Universal wants 45 days and News Corp.'s 20th Century Fox is looking for 30.
Redbox, a subsidiary of Bellevue, Wash.-based Coinstar Inc., has dragged all three into court, arguing any delay would hurt consumers by pushing up DVD prices and limiting selection. Redbox said it filed the suit against Warner Home Video on Tuesday.
"Redbox remains committed to providing our customers the new release DVDs they want, where they want and at the low price they want," Redbox President Mitch Lowe said in a statement.
A phone message left with a Warner spokeswoman was not immediately returned Wednesday.
Oakbrook Terrace-based Redbox has kept its kiosks stocked with new titles by purchasing them at retail stores for full price, a strategy that could cut into its profits.
A U.S. District Court judge in Delaware gave Redbox a partial victory this week in its case against Universal. The court dismissed claims of improper copyright use and interference in Redbox contracts but let antitrust claims stand, leaving the door open to a trial.
Other studios have avoided a fight with Redbox, deciding to take advantage of the company's low-cost appeal, which has caught on during the recession. Redbox has 17,900 kiosks in the U.S. and plans to add 8,500 by the end of the year.
Sony Corp.'s movie division and Lions Gate Entertainment Corp. have both signed agreements this year to supply Redbox without any delay.