The organization that oversees Southern California’s lucrative film economy has released research pinpointing cheap DVD kiosk operator Redbox as a threat to the industry. As reported in Mashable, the Los Angeles Economic Development Corporation estimates that discounted movie prices from Redbox s dollar-a-day DVD rentals will ultimately cost the film industry $1 billion in annual revenue and threaten more than 9,000 jobs. LAEDC says the revenue loss is based on customers steered away from DVD purchases and full-price rentals. It estimates that the billion dollar loss translates to $520 million loss in profits to motion picture companies, which it then breaks down based on full re-investment into film production as effecting 9,280 jobs with annual earnings of about $395 annually. The potential effect of that loss of earnings on California would be about $30 million lost in tax revenues.
Mashable points to possible bias in LAEDC’s findings, a corporation that benefits from entertainment industry money spent in California. The organization has also targeted Redbox by highlighting the very sensitive area of potential tax revenue loss for severely cash-strapped California. For its part, LAEDC admits that factors other than Redbox’s popularity, such as digital downloads, are draws on the entertainment industry’s profits. Major studios have targeted Redbox, as well as Netflix, as immediate threats and asked that the companies refrain from stocking new DVD releases for 30 days. Netflix is considering the request, but Redbox has filed a countersuit against several major studios. The company claims lack of support by film companies has forced it to purchase new releases at Walmart to stock its rental kiosks.
Read more at Mashable.