$1 rentals are not too cheap: Redbox sues 20th Century Fox

In the second suit of its kind, DVD rental kiosk maker Redbox is suing 20th Century Fox in US District Court in Wilmington, Delaware, for allegedly intentionally delaying shipments of its DVD releases to Redbox.

In the first such suit at the end of 2008, Universal Studios Home Entertainment allegedly attempted to limit the availability of its titles in Coinstar-owned Redbox movie rental kiosks. The studio wanted its DVD releases to be off limits to Redbox for the first 45 days after release. The studio believed Redbox's $1 rentals have a devaluating effect on DVDs.

When Redbox sued Universal, its CEO Gregg Kaplan said, "Redbox is committed to providing our customers with the highest level of service and value, and we will continue to acquire DVD titles despite attempts to limit consumer access to titles at our kiosks."

Universal Studios Home Entertainment President Craig Kornblau told reporters at the time that he believed Redbox had only filed the action to scare other studios out of instituting similar delays.

Recently, other studios including Sony and Lions Gate have struck distribution deals with Redbox, though Sony stipulated that Redbox must destroy rental copies after their rental cycle ends instead of selling them for $7 as for other studios' releases.

The problem, according to analysts such as Pali Capital's Richard Greenfield, is that pay-per-view is vastly overpriced, and DVD rentals are equally underpriced. "Movie studios rely on the sale of DVDs, yet it would appear increasingly difficult to sell DVDs at $15-$20 a piece, if consumers believe movies are only worth $1 a day," Greenfield said earlier this month.