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Redbox touts its digital movie code business.

A suit filed against Redbox this week by Walt Disney Co. targets the movie rental kiosk company’s practice of reselling digital movie codes included with physical copies of DVDs and Blu-ray discs sold to consumers.

Redbox, which doesn’t have a distribution deal with Disney, gets the codes when it buys Disney movies at retail for rental or sale through its movie kiosks. Redbox then resells those codes for prices ranging from $7.99 to $14.99. That is cheaper than the cost of digital downloads through Apple’s iTunes. Cars 3, for example, costs $19.99 via iTunes and $14.99 as a digital code via Redbox.

An image from Disney’s lawsuit against Redbox.

Disney’s lawsuit, filed in U.S. District Court for the Central District of California, alleges that Redbox is doing so in “blatant disregard” of Disney’s stated restrictions on the resale of the digital movie codes. The suit cites language on the packaging that says, “Codes are not for sale or transfer.” The suit seeks an injunction and financial damages.

A Redbox spokeswoman told the Wall Street Journal that the company feels “very confident in our pro-consumer position.”

Redbox was previously based in Bellevue, Wash., as part of its then-parent company Outerwall, but its corporate headquarters has shifted to Illinois following its purchase last year by private equity firm Apollo Global Management. Redbox made an unsuccessful foray into the movie streaming business several years ago, and has recently been testing an on-demand service for digital movies.

Here’s the full text of Disney’s complaint against Redbox.

Disney targets Redbox over resale of digital movie codes by GeekWire on Scribd

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