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The Wall Street Journal has an interesting piece about a legal battle between McDonald’s-owned Redbox, the video rental kiosk company, and Universal Pictures.

According to the story, Universal has been threatening to shut off its shipment of DVDs to Redbox , saying that the kiosks charge too little for the movies and therefore hurt other video sales and rental businesses. Redbox has countersued, saying that the studio is violating antitrust laws.

“The spat,” writes the Journal, “between Redbox and General Electric Co.'s NBC Universal is part of a broader struggle in the industry to cope with declining DVD sales.”

The story continues, “Studios have been keeping a close eye on Universal's efforts to rein in the rapidly growing Redbox. According to the lawsuit Redbox filed against Universal, the studio in August deployed executives to Redbox's headquarters near Chicago to set new terms for stocking Universal movies.

“Under the proposed agreement, Redbox would have to start sharing revenue with Universal, and wouldn't be able to stock more than eight copies of a movie per kiosk, compared with the four dozen or so Redbox might stock for the most popular releases.

“Universal also wanted Redbox to stock its DVDs no earlier than 45 days after they hit traditional retailers. The vast majority of sales and rentals occur in the weeks immediately after a movie is released on DVD.

“In its motion to dismiss the lawsuit, Universal said Redbox's charges of copyright misuse and antitrust violations were baseless. Both companies declined to comment on the lawsuit. According to the legal documents, the studio said if Redbox didn't comply it would cut off the supply of Universal movies.”

KC's View:
These guys are fighting over the symptoms, not the problem – which is that in a recessionary environment, fewer people are shelling out money for DVDs. (Though apparently the newly issued “The Dark Knight” is selling like gangbusters … proving that people will pay for something really good.)

The other funny thing is that they are fighting over technology that will be obsolete sooner rather than later, as downloads take over and young people look at DVDs as being as anachronistic as they believe CDs are.