Disney Raises Wholesale Prices On Redbox And Netflix (DIS, CSTR, NFLX)

Walt Disney DIS has decided to raise its wholesale prices on new-release DVDs it sells to Redbox, which is owned by Coinstar CSTR and Netflix NFLX. Disney will now be charging the two companies the full wholesale rate for new DVDs, which can be up to $17.99. According to reports, this is more than most studios charge their largest wholesale customers. Analysts are unsure of how this may effect Disney. On the one hand, it could increase the company's revenue, but it also could cause both CSTR and NFLX to buy fewer DVDs. Redbox has confirmed the new agreement with Disney and said it will continue to offer Disney DVDs the same day that they go on sale for $1 per night. Most Hollywood studios have refused to supply DVDs to Netflix and Redbox until 28 days after they are released for sale in stores out of concern that low-cost rentals could hurt DVD sales. Disney is one of the few who make titles available the same day they go on sale. Many industry players have been pressuring Disney to change this arrangement with the two companies because they believe NFLX and CSTR's low-cost models are devaluing their content and negatively impacting more profitable disc sales and video-on-demand rentals. It is yet to be seen if Disney will further alter their agreements with Redbox and Netflix beyond the price increases. During Wednesday's trading session, NFLX shares have lost 0.83% to $238.75. CSTR is down 2.86% to $42.44 and DIS has added 0.63% to $43.36.