FROM MIN. For months, Blockbuster (BBI) has been boasting and brandishing the rental exclusivity window it has with big-name studios in the faces of Netflix (NFLX) and Redbox (CSTR). Striking deals with Warner Bros (TWX), Sony Pictures Entertainment (SNE), Universal Pictures (GE), and 20th Century Fox (NWS), Blockbuster became the only rental house to carry new releases for the first 28 days of their release. Competitors like Netflix and Redbox have to wait nearly a month before making those titles available to their customers.
It mocked Netflix and Redbox's delay and said, "It's kind of a big deal." Ads on its website sneered, "Rent it while it's still a new release." CEO Jim Keyes referenced Avatar's availability at his company four times during an interview with Fast Company, saying, "If you want Avatar, you are not going to get it on Netflix in a timely basis," and "Avatar comes out, and you want to stream it, you come to me."
But while Keyes and Co. place so much emphasis on the company's four-week head start, Paramount Home Entertainment (VIA) President Dennis Maguire doesn't see the merit. In fact, Paramount Pictures agreed to issue Redbox its new releases on the same day they go on sale. This comes after the studio implemented rental windows over the last 10 months to gauge if it boosted any revenue.
Paramount's conclusion: Rental windows are insignificant.
Speaking with the Los Angeles Times, Maguire admitted, "There hasn't been a cannibalization of DVD sales from Redbox, and Redbox was allowing us to expand our business and ultimately make more money."
Paramount will pull out of its rental-window experiment as part of its Redbox deal and supply kiosks with its new releases for same-day rental availability through the end of 2014. Over the course of its deal with Paramount, the rental house estimated that it would pay the studio $575 million, according to the Los Angeles Times.
But what about the film enthusiasts who want to see, say, James Cameron's blue rapscallions as immediately as possible? Surely, by depriving them the opportunity to rent a movie, it will leave them no other choice but to pay full retail price for the title, no?
Maguire countered, "Those people who want to rent are going to figure out ways to rent, and us restricting them from renting isn't going to turn it into a purchase."
That's some shocking lucidity from a Hollywood studio executive. Especially if Maguire used the word "pirate" in place of "rent."
So as Blockbuster holds on to its rental exclusivity window like a life preserver, Paramount is actually thinking realistically and taking a very small step toward a more logical home entertainment business plan.