Warner Bros.' decision to withhold wholesale distribution of DVDs to Redbox and Netflix for 56 days after their release may have backfired. Netflix has already de-emphasized rentals of physical discs and is encouraging its subscribers to switch to its streaming service, which offers mostly older movies and TV shows. Now Redbox says that having to buy discs at discount retailers like Walmart and Best Buy has had little effect on its bottom line. Speaking at the Morgan Stanley Retail Conference in Boston on Wednesday, Galen Smith, head of finance at corporate parent Coinstar, observed that while Redbox machines may be stocking fewer titles, the result is that each disc produces higher profit margins. Moreover, he said, the company no longer "over-buys" 20th titles that its customers aren't particularly interested in renting. Almost certainly, 20th is assessing how its 56-day delay is affecting its DVD business, and, as reported by Home Media magazine, Redbox CFO Scott Di Valerio, who also addressed the conference, acknowledged that the company is open to reviving negotiations with 20th, pointing out that his company will spend $800 million to $1 billion on content this year. Redbox, he said, "can be an important source of value to the studios."

24/05/2012