Redbox kiosks stock Blu-ray discs

Hellboy II, WALL-E, Tropic Thunder among high-def titles

By Danny King -- Video Business, 11/24/2008

NOV. 24 | Redbox will start stocking some of its machines at Wal-Mart stores and other retail outlets with Blu-ray Disc titles, following smaller competitor DVDPlay's decision to do the same last June.

Redbox, the largest U.S. movie-rental kiosk operator, will include Blu-ray titles in machines at "select locations in a limited number of markets nationwide," said Gary Lancina, VP of marketing at Redbox, who declined to specify how many machines will have Blu-ray discs or the size of Redbox's Blu-ray inventory. Redbox will charge $1 for a daily rental fee, the same price as standard-definition disc rentals.

The kiosks will carry Blu-ray titles from a variety of studios, with Paramount Home Entertainment's Tropic Thunder, Walt Disney Studios Home Entertainment's WALL-E and Universal Studios Home Entertainment's Hellboy II: The Golden Army promoted on the Redbox Web site.

The inclusion of Universal's Hellboy II among Blu-ray titles is notable given Redbox's legal issues with the studio. Last month, Redbox sued Universal alleging that the General Electric unit violated anti-trust laws by insisting on a revenue-sharing agreement with Redbox that, among other things, enforces rental-date and resale restrictions. Universal said it will stop distributing DVDs to Redbox Dec. 1 if the kiosk operator doesn't sign the agreement, Redbox said in its claim.

"Redbox will continue to carry all major new releases, including those from Universal Studios," said Lancina, who declined to comment on the status of the lawsuit.

DVDPlay, the No. 3 U.S. movie-rental kiosk operator, in June started stocking Blu-ray titles in about 60 of its approximately 1,300 machines. Last month, the closely held company dropped daily rental prices on both standard-definition and Blu-ray discs to $1 from $1.49 in order to match Redbox and No. 2 TNR/Moviecube, which doesn't stock Blu-ray discs.

The company, which has postponed filing a prospectus for a planned public offering that was scheduled for June, leads a U.S. kiosk industry predicted to account for an increasing percentage of the movie-rental market as chain stores cut units.

Redbox majority owner Coinstar said last month that third-quarter revenue from Redbox and smaller kiosk chain DVDXpress, factoring year-earlier sales when Redbox wasn't majority owned by Coinstar, more than doubled to $104.2 million, while operating profit surged eightfold to $18.7 million.

Redbox expects to have 12,000 kiosks in operation by the end of the year.