I’m really enjoying watching this develop.

If I understand correctly, the studios want to sell DVDs to rental stores at higher prices than consumers, despite the product being identical.  One reason Redbox is able to rent movies for so cheap is that they refused, and purchase DVDs at consumer prices.

Even if studios manage to stop their distributors from selling en masse to Redbox, this won’t be the end: crowdsource it!  Allow customers on the street  to “sell” DVDs to the Redbox machine.  This would be complicated, requiring verification, etc, but it could work.  Imagine - you buy the movie at walmart and sell it to the Redbox machine on your way out for a quick $1 profit.