Redbox, Paramount reach multi-year deal

* Paramount to provide Redbox titles on day released

* Redbox to soon roll out Blu-ray pricing nationwide

(Adds Redbox president, analyst, byline, recasts lede)

By Sue Zeidler

LOS ANGELES, June 15 (BestGrowthStock) – Movie kiosk operator
Redbox on Tuesday said it reached a deal to rent Paramount DVD
and Blu-ray titles the same day they are available for sale and
is preparing to roll out Blu-ray titles from various studios
across the nation in the third quarter.

Paramount is a unit of Viacom Inc (VIAb.N: ) and Redbox is a
unit of Coinstar Inc (CSTR.O: ).

Redbox president Mitch Lowe told Reuters he expected Redbox
to soon determine pricing for Blu-ray discs and roll out the
high-definition format nationally. Lowe said Redbox will also
unveil a digital-delivery strategy in October.

“Our standard definition movies rent for $1 a night and we
are testing price points for Blu-ray of $1.50 and $1.75 a
night,” Lowe told Reuters.

“Over the next short period of time, we’ll determine which
is the right price point and will offer, nationally, Blu-rays
to rent in the third quarter.”

“I think we’ll accelerate the adoption rate of Blu-ray by
making it available,” said Lowe.

Research firm In-Stat analyst Gerry Kaufhold said while
Redbox’s Blu-ray pricing represented a big premium from its own
standard DVD prices, it was very aggressive compared with the
$4.99 to $5.99 customers spend to see high-definition films
through cable and satellite pay-per-view plans.
“Some thrifty movie consumers have already reduced their
subscriptions to movie channels due to Redbox,” he said noting
that Redbox’s aggressive Blu-ray pricing could further drive
consumers away from cable and satellite.

Dennis Maguire, Worldwide President of Paramount Home
Entertainment, said the deal with Redbox was reached following
a 10-month analysis of DVD sell-through and rental
performance.

“After analyzing the data from our test period we have
concluded that Redbox day-and-date rental activity has had
minimal impact on our DVD sales,” said Maguire.

By granting Redbox the so-called day-and-date availability,
Paramount said it was allowing the consumer a choice of how to
consume its movies while maximizing the profitability of
releases in the home entertainment window.

Other studios have entered into deals that require Redbox
to wait 28 days after a DVD or Blu-ray disc’s release to offer
them to its customers.

Studios have accused Redbox of undercutting DVD sales by
renting them for $1 a day from its 22,000 kiosks, and have
threatened to withhold titles.

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(Editing by Sofina Mirza-Reid)

Redbox, Paramount reach multi-year deal