Study says dollar rentals have cost entertainment biz $1Bn (THR, LAEDC)

By Nancy Tartaglione

A study by the Los Angeles Economic Development Corp. estimates that the dollar DVD rental business has cost the entertainment industry $1 billion and that a ripple effect will cost hundreds of millions more, writes The Hollywood Reporter.

The study says the nationwide declines in home video revenue will cause an additional $500 million in losses as more than 9,000 related job cuts wipe out almost $400 million in wages, primarily in Southern California.

The assessment comes amid the growing popularity of cheap disc rentals offered by Redbox and other DVD-kiosk chains.

Three Hollywood studios - which number among businesses supporting the nonprofit LAEDC - are engaged in a court battle with Redbox over their efforts to prevent DVD releases from finding their way into Redbox kiosks. Redbox has sued Universal, Fox and Warner Bros. over what it calls antitrust violations, THR notes.

LAEDC vp Gregory Freeman said his group's ties to Hollywood had no bearing on its study.

"The interest of the LAEDC, when it comes to this sort of issue, is simple: What's the jobs impact?" he said. "Given that one our top industries in Southern California is the entertainment industry, anything that has an impact on that is something we're going to be interested in."

The study was suggested by an unspecified labor organization serving below-the-line workers.

The LAEDC said a decline in DVD-rental income caused by the dollar-rentals trend will lead to a decline in film production. That, in turn, would prompt job cuts and other economic fallout.

However, THR reports that Redbox chief Mitch Lowe said the company's own research shows a positive impact on Hollywood. "Redbox is an engine for industry growth, increasing consumer interest in film and providing new revenue streams to studios."