For $1 a night, you, too, can cost the movie industry $1 billion in lost revenue. That's how much you pay to rent a movie from the budget-conscious Redbox DVD rental kiosks, found in many retail stores. According to a study conducted by the Los Angeles County Economic Development Corporation (LAEDC), these kiosks are draining the life out of the film industry.
Low-cost DVD rentals are apparently guilty of damaging DVD sales, cannibalizing jobs, sending customers to similarly cheap outlets, and may impact funding of future film and TV productions. But with the rise of digital downloads and streaming video, and the possible death of physical media, will Redbox's impact on Hollywood last?
Given the current economic crisis and the scarcity of employment, Redbox's effect on jobs could be seen as the biggest blow. According to the LAEDC, Redbox is knifing 9280 jobs and the combined earnings of almost $395 million. Redbox is also consuming $35.4 million in contributions to health and welfare funds for entertainment guilds and unions. That's not all: Redbox is tampering with "at least $1,493 million in economic output (as measured by business revenues)" and "over $30 million [in] tax revenues at state, county, and local levels."
Redbox, of course, rejects the notion that it's a vampire. "[The company] is an engine for industry growth, increasing consumer interest in film and providing new revenue streams to studios," Redbox president Mitch Lowe told Video Business . "In fact research shows, Redbox will reinvest 50 percent of our revenues back into the studios providing revenues to market new titles and support new production. We'd prefer to work with the LAEDC to help them to understand Redbox, create factual models based on objective, credible data and to provide insight on the benefit Redbox has on the industry and on their community."
Hollywood has hated Redbox for a long time now. Back in August, 20th Century Fox ordered its wholesalers not to sell DVD discs to Redbox until 30 days after a movie's initial release to help boost retail sales. Last year, Universal Pictures got peeved at Redbox and tried to push a 45-day waiting period. Redbox balked and Universal cut off its supply, forcing Redbox to purchase Universal DVDs at retail stores.
I see Redbox's desecration of Hollywood as temporary. Slowly but surely, I believe consumers will abandon physical media completely and turn their attention to digital entertainment downloads. The battle between DVD and Blu-Ray may result in both entities destroying one another. With the proliferation of legal (and otherwise) sources for movie downloads, and our obsession with streaming media, it's evident we're counting on the Internet to provide for us what we once held in our hands. Hollywood can save itself if it invests full-throttle in the download business, which could result in the elimination of Redbox; but we'll have to see whether or not it can embrace the future.
This story, "Redbox DVD Kiosks: Destroying Hollywood?" was originally published by PCWorld.