Redbox filed suit today against Disney’s home entertainment group, claiming it uses hard-knuckled tactics to prevent the movie rental kiosk service from renting or selling its DVDs, and, more recently, to haltthe sale of digital movie downloads.
The kiosk service claims Disney is interfering with Redbox’s relationships with its suppliers and customers, and making false claims that Redbox cannot resell digital copies of movies. Redbox argues Disney is trying to prop up the prices consumers pay, and make way for its own direct-to-consumer offering.
“Disney baldly seeks to stifle competition and eliminate low-cost options in order to maximize the prices it and its retailers charge consumers,” Redbox argues in a suit filed today in federal district court in Los Angeles. “Stopping Redbox’s sale of Disney products is a means to that end, which is an unhappy one for consumers.”
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In Redbox’s telling, Disney has opposed the kiosk service from the very beginning. While other movie studios eventually got on board with the low-cost vendor, which has become a grocery store staple, Disney remained a holdout. In business negotiations, Redbox claimed the Burbank entertainment giant’s distribution arm, Buena Vista Home Entertainment, said Redbox’s pricing was too low — and threatened to depress prices for Disney titles.
Disney insisted that Redbox not rent or sell newly released titles until at least 28 days after initial release — a condition Redbox wouldn’t accept. The kiosk service did an end-run around Disney, buying movies at full price at retail. The most cost-effective approach, Redbox found, was to buy combination pacs of DVDs, Blu-ray discs and digital movies — which it began selling separately.
Redbox claims the Disney home entertainment group gradually intensified its efforts to stop Redbox from selling Disney titles — putting pressure on distributors and retailers to cut out the kiosk service. Disney even reduced one distributor’s allocation of Disney titles when it learned that the company had been a major Redbox supplier.
Now, Disney has gone to court to prevent Redbox from selling the digital downloads it purchases as part of the movie Combo Pacs.
“Defendants’ actions are harming Redbox’s lawful sales of Disney digital movies,” Redbox claims in its suit. “And the impact of that harm is not limited to the reduced revenue from those lost sales. Redbox’s entry into the digital market is being harmed as well. Because Disney is impeding Redbox’s ability to sell Redbox’s lawfully acquired Disney digital movies, consumers are being dissuaded from looking to Redbox as a source of titles that are in high demand.”
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