In recent weeks, DVD rental Kiosk Company have filed a law suit on 20th Century Fox over the movie studio’s attempts to delay its titles from appearing in Redbox vending machines.

The lawsuit, filed in US District Court in Wilmington, Del., marks the latest escalation in a fight over Redbox’s services, which has divided Hollywood Studios.

And just recently, we have seen Fox, a unit of News Corp, join the General Electric Co.’s Universal Pictures to try and preserve a more lucrative DVD retail sales by keeping movies out of Redbox’s $1-per-night rental kiosks for some period after they go on sale.  

Fox ordered its wholesale distributors to stop supplying Redbox until 30 days after movie discs are released for sale, with the policy to take effect from October 27th 2009. 

A similar law suit by Redbox against Universal is set to be ruled very soon by a judge in Delaware after Universal insisted on a 45-day delay.

These lawsuits are in a protest against the low prices Redbox charge for renting DVD’s. The giant entertainment companies who make millions of pounds each year on films believe that more and more people will turn to the Redbox Kiosks to watch the film for just $1 instead of purchasing the film at the standard retail price, usually in the £10-£15 region.

Redbox, which began in 2002 as a way for McDonald’s Corp. to expand beyond burger business, has 17,900 self service kiosks in the US and plans to install another 8,500 this year. Netflix Inc CEO Reed Hastings has said Redbox and other low-cost kiosk renters such as DVDPlay Inc would be the biggest competitors to his mail-order DVD rental company by year’s end.

Some studioshopping to ride Redbox’s growth have shown willingness to bargain. Lions Gate Entertainment Corp. agreed to make their films available immediately.

This deal followed Sony Corp.’s agreement to provide its movies for kiosks, as long as Redbox destroyed copies after their rental lives ended rather than sell them as “previously viewed”. Because Redbox’s used-disc purchase price of $7 is generally lower than what Blockbuster Inc. and others charge, the studios worried that fewer people will want to buy new copies at regular prices typically £10 or higher.

The disputes over supplies so far haven’t affected movies available through the self-service vending machines. When studios balk, Redbox has bought new releases from retailers rather than wholesalers, a tactic that may keep customers happy but also cuts into profit margins.

In the suit, Redbox accused Fox of violating antitrust laws by “reducing consumer choice in the marketplace and increasing the prices that consumers must pay.”

Redbox, a subsidiary of Bellevue, Wash.-based Coinstar Inc., said Fox is seeking to “strangle” its low-cost rental option to “prop up an artificially high pricing scheme.”

“We were forced to sue Fox after many discussions,” Redbox President Mitch Lowe said Wednesday. “Essentially they gave us an ultimatum of either delaying the movies from our customers starting in October or forcing us to raise our prices.”

Studio spokesman Chris Petrikin said Fox would have lifted its 30-day delay request if Redbox had agreed to improved financial terms, but the sides could not agree.

“This lawsuit aims to limit Fox’s ability to make legitimate business decisions, and Fox believes it will prevail in defeating Redbox’s merit-less claims,” Petrikin said in a statement.

This problem that Redbox has faced has put them in a potential crisis and in the badbooks of their top suppliers, which is not the best position to be in.

If you are thinking of installing a self service kiosk in your business it is essential that you learn and understand the importance of keeping a good rapport with your suppliers as well as keeping your customers happy.

However, in these circumstances Redbox had no choice but to take the matter further as the delay on receiving the DVD’s would potentially affect their profits and overall sales.

If you are to sell products or services through your self service kiosk, make sure that you sign a contract with your suppliers ensuring that there will be no changes to distribution, supplying etc.

Despite the fact that a kiosk will help improve sales in your business, it can have a negative affect if you don’t liaise with your manufacturer, suppliers and distributors properly.

At Protouch, we are dedicated to ensuring that you receive a high standard of service when choosing yourself service kiosk. There is a lot of work involved but Protouch will guide you along the way to choosing the best kiosk system to suit your needs and requirements.

For more information visit Protouch today.