Our take...
Rental kiosks, a long-time feature of the rental sector in Southern Europe, first emerged in the US in 2006 but will account for over 11 per cent of the transactional rental business (excluding Netflix-style subscription services) this year, according to Screen Digest division Adams Media Research. At $1 a night they are much cheaper than the average US transaction fee of $3.86 and machines can stock up to 45 copies of big hits. Market leader Redbox alone, which claims its installed base of over 10,000 kiosks is expanding at a rate of one every 90 minutes, buys millions of DVDs every year. Most of these are either sold on as 'previously-viewed' as soon as 12 days after release or returned to Ingram and VPD for resale on the secondary rental market. Both the low price and the subsequent flood of second-hand copies (whether to consumers or the rental trade) are likely to be an irritant to studios who have been actively promoting the more lucrative (for them) retail model over rental for many years.

Leaving aside the legality or otherwise of such a move, if the studio were to cut off the supply of titles to Ingram and VPD it would have serious implications for the 35 per cent of the US rental market that does not buy its discs direct from the studio—in other words, everyone except Blockbuster and Hollywood Video. Such a move would not prevent these stores from acquiring inventory; under the First Sale doctrine they could buy copies from Wal-Mart or CostCo and then rent them out, although this would raise the per disc cost from around $11 at wholesale to the $14 or more charged to consumers. Meanwhile, there seems little doubt that accepting the new terms and conditions as alleged by Redbox's suit would destroy the existing US kiosk business model by witholding titles during the first 45 days after release (when Redbox claims to do 60 per cent of its business) and restricting the number of even the most popular titles to no more than eight per machine.