There is tension arising in the DVD kiosk industry after Coinstar Inc announced a multi-year deal allowing redbox to offer day-of-release DVD and Blu-ray titles from Paramount Home Entertainment Inc.

Industry insiders have speculated that the new agreement will encourage other studios to strike similar deals with DVD kiosk companies such as redbox and NCR Corporation, which has already deployed about 6,000 Blockbuster Express-branded DVD-rental kiosks in the past year.

“Our BLOCKBUSTER Express kiosks currently offer day-of-release titles because we purchase them from third party retailers, but we continue to have discussions with studios about licensing agreements that would allow NCR to get day of release titles directly from the source,” said Jeff Dudash, a spokesperson for NCR’s DVD kiosk division.

The deal between redbox and Paramount was reached following a 10-month trial license agreement and analysis, which concluded that day-and-date rentals at kiosks had minimal impact on DVD sales, according to a statement issued by redbox.

“After analysing the data from our test period we have concluded that redbox day-and-date rental activity has had minimal impact on our DVD sales,” says Dennie Maguire, Worldwide President of Paramount Home Entertainment, said in a press release. “By granting redbox day-and-date availability we are allowing the consumer a choice of how to consume our movies while maximising the profitability of our releases in the home entertainment window.”

President of redbox, Mitch Lowe, said that the arrangement is a “win, win and win for consumers, Paramount and redbox.”  About $575 million is expected to be spent to the studio during the course of the agreement, which runs through to the end of 2014, according to the Los Angeles Times.

Stocks for both Coinstar, parent company of redbox, and rival Blockbuster Inc zig-zagged everywhere last week and for Blockbuster the ride isn’t over. The company had a meeting in Dallas last week which scheduled them to vote on board nominees, including a controversial bid for director Gregory Meyer who founded a DVD rental kiosk business in 2001 that was later sold to Coinstar Inc.

Blockbuster began issuing press releases urging stockholders to vote in favour of incumbent director Gary Fernandes instead of Meyer. A live audio webcast of the meeting will be available viat the Blockbuster’s investor relations site at http://investor.blockbuster.com.

Paramount’s strength as a major player among studios seems to continually expanding. This summer’s DVD and Blue-ray releases include Martin Scorsese’s ‘Shutter Island’ with Leo DiCaprio.

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