There are six basic stages to the research process. Stage 1 is clarifying the research question. This would be the process in identifying the problem that is prompting the research. Stage 2 is proposing research, which would be the act of identifying the resources necessary to do the research. The third stage is designing the research project, or deciding which method to use to gather the information. Stage 4 involves data collection and preparation, which is gathering the data and making it ready to be evaluated. Stage 5 would be the data analysis and interpretation stage. Stage 5 is defining what the data is saying about the problem. The final stage, stage 6 is reporting the results. This is breaking down the interpretation into a presentation that shows the meaning of the data collected. (Cooper & Schindler, 2014) This is the process used by Paramount Pictures recently when it was in contract negotiations with the DVD rental company, Redbox.
As the major Hollywood studios took sides for and against Redbox, Paramount Pictures was staying neutral. The studio had signed a first-of-its-kind trial deal guaranteeing that its titles will be available from the fast-growing $1-a-night DVD rental company through the end of the year. During that time, Paramount would study the effect of Redbox rentals on its total home-entertainment revenue, examining whether there is any decrease in the sales of its DVDs at stores that house Redbox kiosks. Under the terms of the agreement, Paramount would have the option at the end of the year to trigger a five-year deal with Redbox similar to ones recently struck with competitors Sony Pictures and Lionsgate. The estimated value of the agreement was $575 million. Redbox President Mitch Lowe agreed because Paramount movies performed better at the box office that year.
A Paramount agreement would give the studio a share of rental revenue, meaning it could earn more than $575 million if its movies prove popular. Sony and Lionsgate are selling their discs wholesale to Redbox. Though it doesn’t have a formal deal with the company, Walt Disney Studios allows its wholesalers to sell discs to Redbox as well. (Fritz, 2009) “There has been a lot of debate in the industry about the impact Redbox is having and will have, and we felt the best way to make a decision is by getting the information,” said Paramount Vice Chairman Rob Moore. “Then we can make an informed decision based on what we will have learned over the next four months.” Guaranteed access to Paramount’s movies was important for Redbox. The studio released two of that summer’s biggest movies, “Transformers: Revenge of the Fallen” and “Star Trek.”(Fritz, 2009)
A movie that plays well in the theaters tends to do well when it is available to rent. Rental revenue could also provide a much-needed boost to the bottom line of Paramount. Lowe said he was confident that providing detailed data to Paramount would help resolve the heated disputes in Hollywood about his company’s effect on the entertainment business. Lowe has previously said his company’s research found that DVD sales dropped less than 1% in stores that installed a Redbox kiosk. “Many studios do their own analysis that we know is not as reliable and is aimed at coming to the answer they want to hear,” he said. “We find that when we can form a relationship with a studio and share real data, it results in a positive step forward.” Moore said he hadn’t reached any “definitive conclusions” as to what steps he would take if the data showed that Redbox rentals do in fact reduce overall revenue. So, the dilemma that Paramount has is whether or not partnering with Redbox will reduce its sales income more than it will increase its rental revenue.
Paramount and Redbox did the research to determine whether or not rentals available the same day to buy decreased the sales revenue any more or less than those studios who decided to wait 28 days to make them available. Despite some content executives recently having touted the benefits of a 28-day window for DVD titles, Coinstar Inc.’s CEO Paul Davis said the company’s own research showed Redbox Automated Retail LLC kiosks have a minimal impact on DVD sales. “We did a major study, a little over a year ago, with a major studio and a major retailer and we found that the impact on new product sales as a result of our $1-a-night being out there, day and date, was less than 1%,” Redbox worked closely with Paramount, and they did a lot of testing as well, and the fact that they decided to go with day and date (of release) I think speaks volumes.”(James, 2010)
After reviewing the data collected by themselves and Redbox in 2009, Paramount Pictures made their decision. In June, 2010, Paramount exercised its option to extend its revenue-sharing license agreement with Redbox, which gives Redbox access to Paramount’s newly released DVDs and Blu-ray titles on the same day they are released in the sell-through market. Paramount’s extended agreement with Redbox runs until the end of 2014, though the studio will had the option to terminate the agreement early at the end of 2011. (James, 2010) As a result of the research, Davis thought that studios that have the 28-day window might opt to tweak their Redbox agreements to get certain DVD titles out for rental sooner.
“Especially as more and more data gets out there and … as the studios that have opted for the 28-day window, as they have a year or so to look at the data, see how it’s impacted their new product sales … it could move that we get some titles earlier,” he said.(James, 2010) The process that Paramount and Redbox used, and the data they collected, could prove to be useful data to the other studios as to whether or not they should wait the 28 days.
Cooper, D. R., & Schindler, P. S. (2014). Business Research Methods (12th ed.). New York, NY: The McGraw-Hill Companies, Inc.. Fritz, B. (2009, Aug 26). COMPANY TOWN; paramount to give redbox a spin. Los Angeles Times Retrieved from http://search.proquest.com/docview/422289074?accountid=458 James, S. B. (2010). Impact of day-and-date redbox rentals on DVD sales less than 1%. SNL Kagan Media & Communications Report, Retrieved from http://search.proquest.com/docview/869743836?accountid=458
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