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Warner Bros. extends delay for rental DVDs

Netflix agrees to wait 56 days after discs go on sale, but Redbox and Blockbuster will continue a 28-day waiting period, forcing them to buy discs at retail prices.

January 07, 2012|By Ben Fritz, Los Angeles Times
  • Anja Murphy returns videos to a Redbox kiosk. The service will not comply with Warner Bros.' longer delay on rental videos.
Anja Murphy returns videos to a Redbox kiosk. The service will not comply… (Lawrence K. Ho, Los Angeles…)

Warner Bros. is about to reignite a battle with Redbox and Blockbuster over how long consumers have to wait to rent DVDs.

The Time Warner Inc.-owned studio is instituting a new policy that all DVD rental services must wait 56 days from the time the disc goes on sale at retail stores like Wal-Mart and Best Buy until consumers can rent them, according to people with knowledge of the matter who were not authorized to discuss it publicly. That's double the current 28-day "window."

A spokesman for Warner Bros.' home entertainment division declined to comment. But executives at the studio have previously said they were seeking a longer delay, which they believe will help boost flagging DVD sales and video on demand, both of which are more profitable for them than disc rentals.

Netflix has agreed to abide by the 56-day delay, one of the people close to the situation confirmed.

But Redbox will wait no longer than 28 days to rent discs, interim President Gregg Kaplan said in an interview this fall. A spokeswoman confirmed Friday that the company's position has not changed.

A person familiar with the thinking of executives at Dish Network-owned Blockbuster said the only remaining nationwide DVD rental chain is also not willing to wait 56 days to offer new releases from Warner Bros.

Because those companies won't be able to buy discs directly from Warner Bros., they will have to purchase them in bulk from retail stores. That entails hiring shoppers to pick up DVDs and paying full retail price, rather than the lower wholesale price charged by the studio.

Redbox used the same tactic in 2009 and 2010 when the kiosk-rental company was in a similar fight with Warner, 20th Century Fox and Universal Pictures. It ultimately agreed to abide by the 28-day delay.

The new policy, expected to be announced next week at the Consumer Electronics Show in Las Vegas, is to take effect Feb. 1, the day after Warner Bros.' current deals with Netflix and Redbox expire.

In exchange for the 56-day delay, Warner will charge rental services a lower wholesale price. In Netflix's case, that will allow the company to save money that it can spend instead on digital content for its streaming service, which has become a more important part of its business than DVDs by mail.

Redbox and Blockbuster, however, are more dependent on new releases and would probably see declines in their revenue if they made customers wait nearly two months to rent movies that are already for sale in stores or available online via video on demand.

Previously, Blockbuster was the only major DVD renter that offered discs the same day they went on sale, an advantage studios gave the struggling company as it went through bankruptcy last year. The company was ultimately bought at auction by Dish Network.

Warner Bros.' new policy could soon be adopted by Universal Pictures. That studio's agreements with Redbox and Netflix, which include a similar 28-day delay, expire in April.

Fox's agreements with the two services expire in April 2013. Fox's home entertainment President Mike Dunn said he has been satisfied with the results of the 28-day window.

Paramount Pictures allows Redbox and Netflix to offer its DVDs the same day they go on sale. Sony Pictures has simultaneous "day and date" releases with Redbox but makes Netflix wait 28 days for its films that perform best at the box office. Walt Disney Studios does not impose a delay, but does charge more for new releases.

ben.fritz@latimes.com

Times staff writer Dawn C. Chmielewski contributed to this report.

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