Not only is Redbox still around, it kicked off a big expansion this year. And on Thursday, The Walt Disney Company filed a lawsuit against the kiosk DVD rental company for its practice of reselling digital download codes that come with Disney DVDs. If the house of the mouse succeeds in court, Redbox is in a lot of trouble.
Disney hasn’t been particularly friendly with rental and streaming companies lately. Most notably, it cut ties with Netflix in August because it plans to launch its own streaming service. In lieu of a distribution agreement, Redbox has been buying retail copies of Disney DVD and Blu-rays to stock its kiosks. Such copies often come with slips of paper that have a digital download code for the same movie, and Redbox saw an opportunity. Last month, it started selling the codes to its customers for prices ranging between $7.99 and $14.99. Considering the fact that a digital copy of Star Wars: The Force Awakens goes for $19.99 on iTunes, Disney was getting seriously undercut. And Redbox was cleverly doubling its revenue sources because it was renting the DVDs as well.
Disney sued Redbox in federal district court in California for copyright infringement, among other claims. It said in the complaint that Redbox is selling the digital codes “in blatant disregard of clear prohibitions against doing so and in violation of plaintiffs’ copyrights.”
It pointed to fine print on its DVD boxes that states, “codes are not for sale…
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