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The DVD / Blu-ray RentalGate Scandal

by December 06, 2009
Moon Bloodgood

Moon Bloodgood

You just laid out your hard earned cash on a new Blu-ray player that we recommended. You head to your local Blockbuster or place your rental order online with Netflix to get your hands on the previous summer blockbuster movie to enjoy it in the creature comforts of your home theater room. You got the kids to sleep, the wife is in the mood, it's movie time.  Ahhh, the Blu-ray logo appears on your display. Your mouth salivates as you anticipate the experience of the spectacular audio and video capabilities Blu-ray offers as well as the added features such as BD Live and a ton of extras previously not available on standard DVD.

You pop the movie in and it immediately starts playing previews some of which you are forced to watch and cannot bypass. This is an old trick inspired by Disney studios and now copycatted by many others. While this is often annoying, especially when trying to sooth a screaming child waiting to watch Little Mermaid before nap time, its usually not a big deal really. We are forced to watch previews in the theater anyways. So grab the popcorn, fill your beer mug and come back when the navigation screen comes up for the disc.

Umm, how did the movie start? What the heck? I am hitting the menu button but nothing is happening. I can’t select audio options? I can’t access BD Live? Where is the navigation screen?  I can’t access the disc’s special features or, in the case with Terminator: Salvation, I can’t play the R rated version to see Moon Bloodgood’s boobs? Are you kidding me? Nope. This is no joke. Read on to find out why the recording studios are depriving you of more than just some naked flesh.

According to Variety Magazine, 20th Century Fox Home Entertainment will now start selling two versions of its Blu-ray and regular DVD’s, one with all the standard special features we've come to expect, and one with just the movie and trailers to be sold to rental shops like Blockbuster.

See: http://www.variety.com/article/VR1118000857.html?categoryid=20&cs=1

And: http://www.avclub.com/articles/foxs-new-dvd-policy-no-special-features-for-renter,24860/

According to a letter sent by Fox senior VP of sales Don Jeffries: "We have developed product variations to feed different consumer consumption models and behaviors," the statement said. "For rental customers, we're delivering a theatrical experience in the home while promoting upcoming releases; for retail [or sell-through] customers, we're offering a premium product that expands the entertainment experience of that particular property to further enhance ownership."

Huh? So Fox considers a fully featured Blu-ray disc a “premium” product off-limits to rental chains and a product loaded with ads and stripped with features a “theatrical experience” for those that rent?

It seems the situation with movie studios blocking features on Blu-ray and DVD is worse than we thought when we first heard about this. We dropped by the local Blockbuster over the weekend and spoke to the store manager. This guy knew a lot about what was happening. Firstly, he verified with us that there is no set-up screen for the Terminator: Salvation rented Blu-ray disc AND there is no BD Live support. But wait, Terminator: Salvation is a Warner Brothers disc. So it appears this “theatrical experience” rental version isn't just limited to one label. The Blockbuster manager acknowledged that many features will be blocked on rentals going forward. We then inquired why this wasn’t previously done with DVD rentals in the past. He said, and we quote, "That's coming." Yes, that's right, they are going to be blocking special features from rented DVDs soon as well."

Is There Method to Their Madness?
The ProfitIn their greedy eyes, yes. Much like the music industry doesn’t want you downloading music in-lieu of buying overpriced CD’s, the movie industry wants to discourage renting to instead purchase overpriced Blu-ray and DVD’s you will probably at best watch once or twice and then shelf in your immense unwatched collection of discs. Come on admit it, you haven’t watched Ghost or Police Academy 6 since you bought it in the $5 deals section at Walmart. Actually did you even open them? Probably not, but it sounded like a good idea at the time.

So here is the deal. The Movie Studios are claiming that they are not making enough profit from movies' post-theater releases to DVD and Blue-ray. Furthermore, they claim they make no money on movie rentals. What's also typical is that most people stalk a rental store until they offer the movies they want at a special discount since they are previously viewed items used for rentals when the movie was hot. Then they go in and buy them at 1/2 or sometimes 1/4 the price, of which the movie studios see no profit.

The discount DVD rental business worries Hollywood movie studios because of fears that it is undercutting DVD sales, which dropped 13% in the fourth quarter last year and is projected to drop even more in the first quarter of next year, according to analysts.

See: http://articles.latimes.com/2009/mar/30/business/fi-cotown-redbox30

What the movie studios have seemed to collectively decide as an industry is to stop this cycle or severely hamper it. This seemingly brilliant strategy they’ve come up with has virtually gone unnoticed in the industry much more so than when these same studios attempted to withhold rental kiosks companies like Redbox new release DVD’s for at least one month to 45 days after they went on sale at retail stores. They also insisted on a 40% revenue share program and for Redbox to NOT sell used DVD rentals. Redbox fought back and sued Universal, Warner Brothers and Fox studios alleging the studio’s new revenue-sharing terms for vending machine operators violates antitrust laws and misuses copyrights.

See: Universal Studios Attempts to Squash RedBox

So why aren’t rental chains complaining about these new rental versions of Blu-ray and DVD’s? Perhaps because most people won’t notice what is missing and they get to rent their discs without fear from the movie studios cutting off their supplies. Or perhaps these movie studios are charging less for these copies to the rental stores which offsets the profit losses of not selling the used discs back to customers after their shelf life has expired. One can only speculate at this point.

One thing is certain, as long as these little stunts pawned off by the movie studios go unchecked, the loser will always be the consumer. Today they are getting away with stripping Blu-ray rental discs of menu and BD Live features. Just how far will they pervert this tomorrow? Will they start eliminating the high resolution audio tracks on the Blu-ray discs or perhaps limit resolution to 480p?

So What Can I Do?

Get active and phone or email your favorite movie studio today to ensure your rental rights are preserved and you aren’t forced to buy another crappy Police Academy sequel just to see the “enhanced” T&A action for the special R rated version, or you have to miss the bloodier and extra nude version of Terminator: Salvation after reading about its release for the past two months.

Here is the contact info to the three major studios that we currently know of that are offering the watered down “theatrical experience” versions of movies to rental chains.

Fox Studios


Warner Brothers


Universal Studios



Special Thanks to Steve DellaSala for doing the initial groundwork in uncovering this RentalGate scandal.


About the author:
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Gene manages this organization, establishes relations with manufacturers and keeps Audioholics a well oiled machine. His goal is to educate about home theater and develop more standards in the industry to eliminate consumer confusion clouded by industry snake oil.

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