Posted by: gmcquade | December 8, 2009

LAEDC Study Concludes Redbox’s $1 DVD New-Release Rentals Could Result in $1 Billion in Entertainment Industry Losses

Greg Freeman LAEDC Study Author

Ripple Effect of Lost Revenues in Southern California Could Cost More Than 9,280 Jobs and $1.5 Billion in Economic Output, Along With Reduced Contributions to Guild and Union Pension Plans

Los Angeles – The Los Angeles County Economic Development Corporation (LAEDC) today unveiled a new economic study entitled “The Economic Implications of Low Cost DVD Rentals” which illustrates the negative impact that low cost, new-release DVD rentals could have on the Entertainment industry and the Southern California economy.

The LAEDC study, which utilizes the Redbox model of $1 DVD rentals available at the street date, shows the ripple effect of $1 billion in lost revenues to the domestic home video industry in the Southern California region – the entertainment capital of the world – would lead to an additional $500 million in reduced economic activity.  The loss of motion picture production in and around Los Angeles would result in the loss of more than 9,280 jobs with annual earnings of almost $395 million, according to the LAEDC’s study.

“The economics of the motion picture industry are based on exclusive release windows which allow price differentiation – that is – some earlier transactions take place at higher price points,” said Gregory Freeman, vice president of Consulting and Economic Policy for the LAEDC.  “Redbox, or any other distributor that weakens the release window model, could reduce overall industry revenues.  Lower revenues will likely lead to lower production activity, hurting the Southern California economy.”

Of the 9,280 jobs, more than half of the losses will occur in the Information Sector, the LAEDC found.  In addition to motion picture and sound recording industries, this sector includes publishing industries, radio and television broadcasting, telecommunications industries and Internet service providers.  Other industries impacted will be retail trade, accommodation and food services, health care and social assistance, professional, scientific and technical services, and manufacturing, among others.

For the full story and LAEDC Study link visit: http://tinyurl.com/yeqcw94

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