Hollywood likes to keep tight reins on movie releases. Every major film goes through the same cycle: movie theaters, DVD/Blu-ray releases, premium pay-TV, and then syndication to any outlet willing to pay for the privilege.
For ages, disc rentals followed on the same day as the hard-copy release, but that changed a few years ago. Now, rental outlets often have to wait about a month before getting their hands on the hottest new DVD and Blu-ray releases. You want the hottest new releases while they're still steaming (and before they start streaming)? Go to your local megamart and buy them!
But Redbox operator Coinstar
Digital-video maven Netflix
The so-called first-sale doctrine makes Coinstar's move perfectly legal and indeed helped get the whole movie-rental industry off the ground in the first place.
The idea behind these staggered windows of availability is to protect revenue from the most profitable sources, namely theatrical releases and full-price disc sales. Studios fear that early rentals might undercut the higher-margin sales. However, a revolt like Coinstar's could do even more damage to the revenue flow by combining three unfortunate factors:
- The windowed delay is gone, finito, forgotten, so the very threat Disney and others want protection from still comes into play -- and studios get nothing in return.
- Redbox discs are typically sent back to the supplier for a modest credit when their useful life is over. That's not an option for retail discs, giving Coinstar incentive to sell their used wares at end-of-life -- reducing the value of full-priced DVDs once again.
- If you want back-catalog favorites at a deep discount, you go to Netflix. The Redbox service is all about hot-off-the-presses hit material, and the company can ill afford to wait for cheaper access when the movies are growing stale.
So it looks like Warner and Disney are shooting themselves in the foot with a move designed to protect sales. One day, Hollywood will figure out how to make the most of its filmed content in an increasingly digital era, but these delays aren't really helping.
Video isn't just for the living room anymore. Streaming has become a major reason to buy a smartphone or tablet. Mobile computing has become a trillion-dollar market, thanks in no small part to digital entertainment. This special report shows you one surprising winner in this rampant growth industry, and you can get that name right now -- it's absolutely free of charge.
Fool contributor Anders Bylund owns shares in Netflix and has also created a bull call spread position on that stock, but he holds no other position in any of the companies mentioned. Check out Anders' holdings and bio, or follow him on Twitter and Google+. The Motley Fool owns shares of Walt Disney and Netflix. Motley Fool newsletter services have recommended buying shares of Walt Disney, Coinstar, and Netflix. The Motley Fool has a disclosure policy. We Fools don't all hold the same opinion, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.