Redbox’s clever solution for storing Disney films fails with demand –

Redbox’s clever solution for storing Disney films fails with demand


Photo: AP

Not only does Redbox continue to hover, but it also began a major expansion this year. And on Thursday, The Walt Disney Company filed a lawsuit against the kiosk's DVD rental company for its practice of reselling digital download codes that come with Disney DVDs. If the mouse house is successful in court, Redbox is in a lot of trouble.

Disney has not been especially friendly with the rental and transmission companies lately. In particular, it cut ties with Netflix in August because it plans to launch its own broadcast service. Instead of a distribution agreement, Redbox has been buying copies of DVDs and Blu-rays from Disney to store their kiosks. These copies often come with sheets of paper that have a digital download code for the same movie, and Redbox saw an opportunity. Last month, he began selling the codes to his customers for prices ranging between $ 7.99 and $ 14.99. Considering the fact that a digital copy of Star Wars: The Force Awakens costs $ 19.99 on iTunes, Disney was being seriously undermined. And Redbox was deftly folding his sources of income because he was also renting the DVDs.

According to Wall Street Journal :

Disney sued Redbox in federal district court in California for copyright infringement, among other claims He said in the lawsuit that Redbox is selling the digital codes "in flagrant disregard of clear prohibitions against doing so and in violation of the plaintiffs' copyright."

Aimed at small print on their DVD boxes that says, "The codes are not for sale or transfer."

Disney has requested a court order on any additional sale of download codes, and wants the money of Redbox sales or $ 150,000 for copyright infringement. There is a big gap between $ 7.99 and $ 150,000, so the judge has a lot of power here.

When Gizmodo contacted him to comment, a Redbox spokesman told us: "While we do not comment on pending litigation, we feel very confident in our pro-consumer position." In a statement, Disney told us, "Redbox is selling our digital movie codes in flagrant disregard of the clear prohibitions against doing so, their actions violate our contracts and copyrights, and we have filed this action to stop the unauthorized conduct. of Redbox. "

Buying retail copies to store your machines is nothing new to Redbox. When we spoke with Mitch Lowe, current CEO of MoviePbad and former president of Redbox, he told us he started the practice in 2010. Warner, Fox and Universal refused to work with him. They wanted a delay of 28 days before offering the films in kiosks and began to advertise their films as "not available on Redbox or Netflix". He said he lost $ 28 million in revenue that quarter, "only because of consumer confusion, when in fact, I really had those titles because I gave 1,800 credit cards to my field employees to buy all copies at Target, Wal-Mart and Best Buy every Tuesday. "

In the long term, Lowe & # 39; s decision to lose money was worth it, which allowed Redbox to maintain customer loyalty by staying stock. But this situation with Disney is a completely different beast. It seems possible that Redbox was making more money than it would have in a standard distribution agreement.

The resale of digital copies has been controversial in recent years. In 2016, a judge ruled that the doctrine of the first sale did not apply in a case of people reselling music files they had downloaded from iTunes because the transfer of digital files from one storage device to another was an unauthorized reproduction. But if a person has just sold a one-time download code, nothing is played. It will be interesting to see these two well-funded companies litigate in court over whether Disney even has the right to say that it can not sell these codes.

[Wall Street Journal via Engadget]

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