Redbox, Paramount extend agreement on DVD rentals

Redbox, the company behind grocery store DVD kiosks, and Paramount Home Entertainment said today that they will extend a revenue sharing license agreement, allowing Redbox customers to rent Paramount's DVD and Blu-Ray titles the same day they're released in the sell-through market.

The two originally cut a trial deal back in August 2009 with Redbox agreeing to provide rental data so Paramount could study the benefits of a longer-term contract. What Paramount found was that the "day-and-date" rental activity had minimal impact on DVD sales.

Obviously, there's a concern that consumers will opt to rent a movie instead of purchase one but the data suggests that the impact on sales was minimal.

Redbox, which is owned by Coinstar, is proving to be a competitive thorn in the side of companies like Netflix and Blockbuster, reporting revenue growth of more than 99 percent in the 2009 fiscal year, bringing in $773.5 million of Coinstar's $1.1 billion in revenue for the year.

On the movie studio side. Paramount, which is owned by Viacom, is the latest to cut a deal with Redbox. In February, the company settled a lawsuit and cut a multiyear distribution deal with Warner Bros. Home Entertainment Group.