Redbox Now Suing Warner Bros., the Biggest Home Video Business
The battle between video rental kiosk business Redbox and the movie studios is heating up. Redbox, which is owned by Coinstar is suing Time Warner's Warner Home Video , which has the biggest DVD business in the industry. The issue: Warner Bros. is effectively banning Redbox from renting its DVDs for 28 days after they go on sale.
Time Warner didn't respond to my emails and phone calls looking for a comment, but its motives are pretty clear. Its DVD sales, thanks to franchises like Batman and Harry Potter, continue to hold up much better than many of its rivals, it has the top DVD marketshare and the biggest home video infrastructure. Home video is a huge part of Warner Bros. bottom line, contributing some 20 percent of its annual revenue. The studio is looking to prevent dollar rentals from undercutting its new DVD sales. It's concerned about Redbox selling previously-viewed DVDs at bargain prices.
This is just the latest in an ongoing drama. Redbox sued Universal Studios (which like CNBC is a division of NBC Universal) over the same issue last fall. Just this Monday a Federal Court ruled on that case, saying it will proceed with Redbox's antitrust claims against Universal. And earlier this month when 20th Century Fox imposed restrictions on the rental of its DVDs Redbox sued News Corp's Fox as well.
Get ready for a long, drawn out battle. Redbox accuses Warner Bros. of copyright misuse, violating anti-trust laws, and interfering with Redbox's contracts with distributors. For Redbox to force the studios to provide their DVDs for rental the same day they go on sale it might have to show evidence of an industry wide conspiracy. Standard and Poors analyst Tuna Amobi tells me he wouldn't be surprised if this conflict over copyright and antitrust makes it all the way to the Supreme Court.