By Jeff German, The Las Vegas Sun

"NJOY NOW can't get enough of this story.  It is definately fascinating, and being frequent visitors of Las Vegas, we are certain that Terry Watanabe's claims are true.  What happens in Vegas stays in Vegas is more then a marketing campaign, it is real life.  NJOY NOW does not want to risk it's comps or access to pills and alcohol, so we will leave it in the capable hands of the Las Vegas Sun to report." John

High-rolling Nebraska philanthropist Terrance K. Watanabe is mounting an unusual defense to charges he failed to pay $14.7 million in Strip gambling debts.

He is accusing Caesars Palace and the Rio, both owned by Harrah’s Entertainment, of providing him with a steady flow of alcohol and — in the case of Caesars Palace — prescription painkillers as his losses increased.

His Las Vegas attorney, David Chesnoff, lays out the defense in a letter to prosecutors, claiming that casino employees will testify that the resorts kept the prolific gambler in a constant state of intoxication in the latter months of 2007 in violation of state gaming regulations.

The Las Vegas Sun has obtained a copy of the seven-page letter, which maintains that Watanabe was in such an incoherent state that he was “incapable of forming the criminal intent” to avoid paying his gambling debts.

Harrah’s Entertainment spokesman Gary Thompson declined to comment on the allegations, saying the company has a long-standing policy of not commenting on legal matters.

A county grand jury indicted Watanabe, 52, on April 29 on theft and bad-check charges, stemming from gambling losses of $12 million at Caesars and $2.7 million at the Rio from October through December of 2007.

Those losses pale when compared with Watanabe’s massive overall losses at Harrah’s Entertainment casinos during 2007, Chesnoff said in the letter.

Watanabe, who is to be arraigned in District Court on Wednesday, lost an astounding $112 million that year at Harrah’s casinos, including $94.1 million at Caesars Palace and $12.2 million at the Rio, Chesnoff said.

With the exception of the $14.7 million in dispute, all of that money was paid back to the casinos through wire transfers, Chesnoff said.

Watanabe’s wealth comes from the Omaha-based Oriental Trading Co., a wholsesale novelty importer founded by his father. The younger Watanabe ran the company from 1977 until 2000, when he sold it.

Chesnoff sent the letter to Chief Deputy District Attorney Bernie Zadrowski, who runs the bad check unit, several days before Watanabe’s indictment, asking the prosecutor to present the information to the grand jury in the hope of derailing the charges.

Zadrowski said he gave the grand jury the letter, but the panel decided to indict Watanabe anyway.

Chesnoff declined to comment to the Sun about the allegations he raised in the letter.

But the Los Angeles crisis management firm Watanabe hired to help him deal with the criminal investigation issued a statement from Chesnoff.

“We look forward to presenting our case in court and to having the charges against Mr. Watanabe dismissed,” the statement said. “Mr. Watanabe has numerous strong defenses that will demonstrate that he could not and did not commit the crime with which he has been charged because he did not, among other things, have the requisite intent to commit the alleged crime.”

According to the letter, the most intriguing aspect of Watanabe’s defense centers on statements from three casino employees who spent a lot of time with Watanabe in 2007. All three will testify that Watanabe appeared in a constant state of intoxication when he gambled the latter part of 2007, often slurring his speech and having trouble walking, the letter said. Watanabe even occasionally would fall asleep at the gaming tables and would be allowed to gamble again once he woke up.

All three witnesses also will testify that Caesars Palace employees supplied Watanabe with the prescription painkiller Lortab, a narcotic that can be addictive, the letter alleged.

Nevada gaming regulations prohibit casinos from allowing “visibly intoxicated” players to continue to gamble.

“Certainly, that type of behavior on the part of a licensee would not be acceptable, but at this point we don’t have a complaint to investigate that I’m aware of,” said Jerry Markling, chief of enforcement at the Nevada Gaming Control Board. “If a complaint is made to us, we’ll certainly look into it.”

The letter said that Christopher Corso, a longtime Caesars Palace bellman who indicated he was assigned full-time to take care of Watanabe’s needs, told defense attorneys that no Caesars Palace or Rio employees “ever attempted to cut off or even slow down Mr. Watanabe’s drinking or gambling.”

Corso also alleged in the letter that Caesars Palace provided Watanabe with “controlled substances, namely prescription painkillers,” from September through December 2007. The letter said Corso will testify that he once saw a Caesars security officer deliver a “children’s candy box” containing Lortab to Watanabe’s room. The box was delivered on behalf of another casino employee, he contends.

Stuart Mitchell, a Red Rock Resort roulette dealer who befriended Watanabe when he gambled at the locals casino, indicated that he often accompanied Watanabe on gambling visits to Caesars Palace in late 2007, Chesnoff said in the letter.

Mitchell told defense lawyers that he learned at the time that Caesers employees were giving Watanabe painkillers. The drugs, combined with the alcohol, “significantly intoxicated and impaired” Watanabe, causing him to gamble more recklessly, the letter charged.

“Rather than assisting Mr. Watanabe in dealing with his intoxication, the Caesars Palace floor managers and pit bosses would turn their heads,” the letter quoted Mitchell as alleging.

Mitchell also raised concerns about Watanabe’s treatment in an e-mail to Zadrowski the day before Watanabe was indicted. Zadrowski gave the e-mail to the grand jury.

Another defense witness, George Denten, a former Caesars Palace security officer personally assigned to Watanabe in 2007, will testify that he didn’t recall ever seeing Watanabe in a sober state during the 25 to 30 hours a week he spent with him from June through December of that year, the letter said.

Denten alleges that he saw a note posted on Watanabe’s hotel room door in late October or early November 2007 that said “the pills” had been delivered to the room and Watanabe was to call if he needed more.

“Mr. Denten understood that ‘pills’ meant Lortabs,” the letter said.

According to the letter, Denten took Watanabe to “rehab for alcohol, drug and gambling” addictions, and that Watanabe completed treatment through an inpatient program.

Chesnoff gave Zadrowski the names, addresses and phone numbers of the three witnesses and the others he named in the letter, including Watanabe’s sister, who lives in San Jose Calif., in the hope the prosecutor would call them to testify before the grand jury.

But Zadrowski said the only defense witness he was able to arrange to testify was Wilson Ning, a Harrah’s vice president of Asian marketing stationed at the Rio.

In his letter, Chesnoff said Ning opposed efforts by Caesars Palace to increase Watanabe’s credit limit in June 2007 because he believed Watanabe was “out of control” and showing signs of being a problem gambler.

But according to grand jury transcripts released last week, Ning denied that he ever saw Watanabe intoxicated at the Rio, and said he did not believe casino employees at Caesars Palace would have given Watanabe prescription painkillers.

Ning, however, also told the grand jury that he had limited contact with Watanabe, and Zadrowski never asked him if he thought Watanabe might have a gambling addiction.

Rupert Murdoch plans to charge for online news and prevent stories being linked to by sites such as Google. Photograph: Shannon Stapleton/Reuters

The co-founder of Twitter today warned Rupert Murdoch that his plans to charge for online content, and block Google from using stories produced by his News International titles, were a vain attempt to "put the genie back in the bottle".

In recent weeks Murdoch has launched a vitriolic attack on Google and other web companies, accusing them of "stealing" content created by his titles, including the Times and the Sun. Management at News International is working on plans to introduce an online paywall next spring and prevent stories from being linked to by sites such as Google News.

Twitter co-founder Biz Stone today warned that Murdoch "should be looking at it as an opportunity to do something radically different and find out how to make a ton of money out of being radically open rather than some money by being ridiculously closed".

Speaking at an event organised by the National Endowment for Science, Technology and the Arts (Nesta) in London, Stone added that the speed of change on the internet meant Murdoch's plan was likely to "fail fast". He was joined in his attack by Reid Hoffman, co-founder of networking site LinkedIn, who added: "I am sure that during the transition from horses to automobiles there were some people bemoaning the loss of horse transport."

In contrast, Stone said Twitter's future lay in making more of the service available to application developers and other partners so they could build on the stream of "tweets" created by its users. The social networking site's users post more than 500 messages per second. The service is increasingly being used by news organisations as a way of discovering breaking news.

"I don't know what the future of traditional media is," said Stone. "But from my perspective and Twitter's perspective I think there is a wonderful co-operative alliance there in terms of the wisdom of crowds, and as we add things to Twitter… maybe we can help."

Twitter, which was valued at more than $1bn just over a month ago, is looking to drive revenues and eventually start making a profit.

It plans to introduce some new features over the coming months. Stone, who set up the company just two years ago, said that by the end of the year it would have begun to offer its corporate users a suite of new analytical tools to help them use Twitter to keep in touch with customers and keep an eye on their brands. An increasing number of corporations, from mobile phone companies to airlines, have added Twitter as a means by which customers can get in touch.

Twitter is also considering giving its users reputation scores, which would help traditional news organisations using the social networking service to spot breaking news stories.

Twitter recently announced search deals with both Google and Microsoft's Bing and the deals added fuel to recent speculation that the micro-blogging site might be a takeover target for either business.

But Stone emphasised a sale was not on the cards: "That was never something we were interested in talking about".

Instead, the company was interested in doing more partnership deals. "One of the things we are seeking to do as we have already done with Myspace as we have done with LinkedIn, as we have done with AOL, as we have done with Google, as we have done with Bing, is to share our data and form partnerships that are long standing... Twitter wants to work with social networks, with mobile networks, with TV networks with search engines… we want to put a little Twitter in everything."

That man has a hot ass wife, Wendi Deng.  Good to be rich.

Rupert Murdoch seems to have something against Google.

The chairman of the News Corp media empire has made no secret of his long term plans to remove the stories produced by his newspapers from Google's search engine.

Now, in a move that could have far-reaching implications for news organizations, it appears Microsoft is working on a plan in conjunction with News Corp that would see the world's largest software company pay Mr. Murdoch's empire to "de-index" its news sites from Google.

According to the Financial Times, Microsoft has held early stage discussions with News Corp -- whose media properties include the Wall Street Journal -- and other big online publishers about pulling their content from Google in favour of Microsoft's own search engine, Bing.

The plan “puts enormous value on content if search engines are prepared to pay us to index with them,” said one Website publisher interviewed by the Financial Times.

If search engines suddenly had to start paying news organizations to index their stories, the result could result in millions of dollars in new revenue for publishers, and would conceivably cut into the profit margins of the big search providers, namely Google.

Google and other search engines currently index millions of news stories a day and provide them for free to readers across the Web.

For many news organizations which have blamed the Internet for falling circulation numbers and declining revenues, such a deal could increase the value of the content they produce without forcing readers to pay for online news -- just ask the music industry how difficult it can be to get consumers to start paying for a product again once they've grown accustomed to getting it for free.

For what it's worth, Twitter co-founder Biz Stone has said that Mr. Murdoch's plan to get search engines to pay for news stories and other published content is doomed to fail.

I don't think Biz Stone, or Internet chat room whiners realize that great news costs a lot of money to produce.  Murdoch's businesses employ a lot of people, and the reporting standard is quite a bit higher then TMZ's.  I'm sure many newspaper publishers will be watching closely to see how Mr. Murdoch's anti-Google gambit plays out.

It is a Seth Rogan movie, and was released at the same time as Paul Blart Mall Cop.  If Paul Blart was funny, it could be compared to Observe and Report.

Observe and Report is hilarious, and one of the funniest movies I have ever seen.  My wife was disturbed, because this movie is anti pc.  Seth Plays Ronnie, the head of mall security, and he is bi-polar, and a little sociopathis.  I won't ramble and spoil it, but it is about 80 minutes, and it is awesome!

Book I just read:  Freakonomics.

Freakonomics was written in 2005, and I just bought the paperback at Costco, it was written by Steven Levitt and Stephen Dubner.  Levitt was the economist, and is a University of Chicago professor, Dubner is a writer, reporter.

Great book.  Levitt uses statistical data to reach common sense conclusions, that may go against conventional opinion, and may not be politically correct.  The numbers do not lie, and he is a very insightful analyst of all data.  He uses school testing data to determine some schoolteachers cheat for there students, (and their job security). 

There is an awesome, and sadly funny chapter on childrens names.  A name is more then a word, and Levitt shows how some may be handicapping their child by naming them DeShawn, and the parents may be helping them by naming them Jonathan.

This is a very good book.  Read it.

Ken Lewis quits as CEO of Bank of America.  I don't need anymore information then that.  This banking fiasco was engineered by incompetent, men like him.  They are self serving and have no regard for our Country.  GREED.

I canot describe how disgusted I am with what is happening in our Country.  An elite was rescued from failure by tax money.  This tax money was invested in AIG, banks, automakers, businesses deemed to big to fail.  WHAT THE FUCK?!?  Are you telling us that if BOA or CITI fails, we would not have banks? 

If you are from Chicago, and in your 40's, you may remember First Chicago, before it was acquired by Bank One before it was acquired by Chase, the Chase before they were given Bear Stearns, and all things Bear Stearns with ZERO risk, government secured funds, and a wonderful skyscraper in Manhattan that is worth far more then the government secured acquisiton price for the investment bank, with a weak balance sheet but a shit load of motherfucking talent and assets.  (forgive my new style of angry directionless ranting)

If the business is to big to fail, it is to big to FUCKING exist (the Soviet Union is a perfect example of this, my philosophy)!  The earth is to big to fail, and we are leaving our great grandchildren a rolling ball of coal to attempt to survive on, while we leverage our entire financial future on big businesses that can be counted on our fingers and toes.  WHY?

Remember the couple of years prior to BOA taking an enormous amount of tax money to solidify their balance sheet?  The acquisitions they made?  LaSalle Bank, Countrywide, how about Merrill?  Paying bonuses with US taxpayers unauthorized money, while corner stores and small businesses are being wiped out?  Before tax money was given to banks, which banks needed for balance sheets and bonuses?

Friends in finance tell me the government has made money on Goldman, BOA, Chase, CITI, etc.  Who gives a fuck, my other friends are out of work because their businesses are shrinking or shutting down.  I also know very few people that work in banks, and none that could open their own bank.  Can't we stop SOCIALIZING CORPORATE AMERICA?  Let's reward entrepreneurship.  If we must give our tax money to these businesses, fuck it, give them the Federal Reserve Bank too.

Some commentators at CNBC loves supply side economics, and Larry Kudlow has been absolutely giddy lately.  These finance professionals HATE the idea of all things socialist, and I do to.  What could be more socialistic then tax money being given to a bank to rescue it's poor decisions from allowing it to fail and pay a bonus to the banking officers of this unstable institution?  Tax money paying DIMON-CHASE to buy BEAR STEARNS?  Shouldn't we allow the small banks to service the customers from these big banks that suck?  New banks may pop up, with more good paying officer positions.  Let's reward the entrepreneur, and let failure fall.

Why is AIG to big to fail?  This is not a debate question where we should argue each side.  Wouldn't new insurance companies fill the market needs, while the business is dissolved? It is probably to help a few very wealthy people, like Vikram Pandit keep their bullshit jobs, and stock in place and valuable.  These handful of individuals are so powerful because of the money they control, they are able to remain despite GREED and incompetence.  We say we are trying to protect investors, and pension funds.  WTF?

I am glad to see Ken Lewis leaving, but it is not punishment.  He is hot, and wants to leave quietly to cool off.  Hand the baton to one of his guys.  Let's see how much money and stock he gets on his way out the door.

I do not joke when it comes to business.  Business is as serious as:

Nuclear Power Plants
STD's
Eagles
My Wife When She is Pissed Off
DUI
Great Ass

These are things we all take very seriously.  Like business.  So, I want to continue reminding people it is time to get entrepreneurial, again.  Invest in yourself!  You love something, and you have great ideas.  Build a business plan around your great idea, and make your dream real.

I may not be a great motivator.  I just want to try and share my energy for business, despite my shitty motivational methods. 

Log into Twitter, and try and understand the business model and ROI potential.  It boggles my fucking mind how well funded this business is, because the only opportunity for true investor ROI that I see is "be acquired by Google, Yahoo or Microsoft" in that order.  If I cannot motivate you, let Twitter inspire you.  Neat ideas, like Twitter, that may not be financially logical can still become real products and big businesses, if the passion and execution is behind the project.

As for ROI...

By Maggie Holland, 28 Sep 2009 at 15:41

Apple today announced that users have downloaded more than two billion applications from its App Store.

The news comes on the same day that mobile phone fans discovered that O2's exclusive hold over Apple's iconic iPhone is coming to an end as Orange will be offering it to UK users on its network by the end of the year.

More than 85,000 applications are now available to the ever-growing iPhone and iPod Touch user base, which Apple reckons stands at around 50 million at present.

Back in July, the company celebrated reaching the 1.5 billion app download milestone, showing just how quickly things have changed in a matter of months.

“The rate of App Store downloads continues to accelerate with users downloading a staggering two billion apps in just over a year, including more than half a billion apps this quarter alone,” said Steve Jobs, Apple’s chief executive, in a statement.

“The App Store has reinvented what you can do with a mobile handheld device, and our users are clearly loving it.

Source:  http://www.itpro.co.uk/615670/apples-app-store-celebrates-two-billion-download-milestone

Source:  http://www.theregister.co.uk/2009/09/28/app_store_hits_two_billion/

Consider, for a moment, how it works and doesn't work on sites such as Match.com, Craigslist and eHarmony. This is "relationship marketing" -- selling at its most basic. Call it communications 101, or the new skin trade, if you will. Here are several incredibly valuable lessons from online dating, for your sick, voyeuristic perusal.

• Online dating newbie's might be overwhelmed and inspired by how stocked the i-dating pool initially appears. There is seemingly no end to the number of people lining up for a shot at love. But almost everyone on these sites is playing hard up to get. The harsh reality is this: The vast majority of people out there are hurting, confused, bitter, uncertain, cynical and, yes, crazy. So, once you've weeded out those potential targets, you're left with only a small percentage of people who are at their keyboards with arms wide open. Consumers are no different. It's great they can be targeted so specifically, but that doesn't mean they're waiting for advertisers to barge into their mundane daily existence. They aren't. Approach your target with the mind-set that they're not waiting to hear from you and your humility and common sense might actually help win them over.

   

• Selling your wares to anyone online, is a risky proposition. Skepticism aside, the object of your attention is most likely getting the same basic pitch or information from others on a consistent basis. So you can hardly blame them for ignoring you, the way consumers now ignore banners. It really shouldn't ever be about you, the one selling. The creative liberties we take whenever we sell, ends up having an icky feel to it. Really now, who amongst us isn't fun, open and attractive -- behind the safety of our keyboard? Like I always tell my mother, everybody loves, wants and needs attention. Craft your message so it's about the target and the target is going to take notice. The ego loves a good massage, even more than a businessman making his way through Taiwan does. Bank on it.

   

• Everyone tells the same lie: I'm not about looks, I'm about the person. They say it with such conviction that it occasionally comes off as sounding almost believable. Of course, it's a load of crap. We are all biologically programmed to be "about looks." Apple has built a small empire based on its remarkable aesthetic. The same is true for the beautiful people who dominate the various dating sites. The information that accompanies a person's profile pales in comparison to what he or she actually looks like in their pictures. Marketing online to a target overwhelmed with visual information means a marketer's message is only as good as it looks. If you aren't dazzling the eye, you will never get the opportunity to wow them with fancy facts and stats. Appealing to the eye is the first step toward gaining your targets lasting attention.

   

• Quick, Google me an answer and Google it to me five seconds ago. The most common lie told by men -- their height -- is, outrageously, the very thing they cannot fake once face to face with their doomed dates. Women are most frequently prone to conveniently forgetting they haven't been a size four since their senior year ... in high school. These individuals who think they can simply fake it until they make it never end up doing so. Marketers now face the same dilemma. The multidimensional facet being used to sell in the virtual realm gives advertisers an opportunity to entice and enhance in ways they never have before. The problem is that, sooner or later, the interfacing that's been happening online moves offline -- and that's where the truth reveals itself. The wise marketer mustn't ever allow the technology to gussie up the truth to the point it teeters on becoming a digital un-truth.

   

• Facts are facts, but facts aren't really where it's at. It's true that people are hungry for the details, especially when seeking a mate. But age, ethnicity and how much one isn't actually making, matter not nearly as much when it comes to taking that gigantic leap of faith known as the initial e-mail exchange, followed by the phone call. In the end, it's more about the connection. Does it feel right? Do you like the way the other expresses himself or herself? Do you trust this person enough to actually take a chance? Personality can and does come through, even in the cold recesses of cyberspace. Marketers determined to simply deliver the facts to the right target will find that really reaching that target and eliciting the desired response ultimately has more to do with the how, than the what. It may be just as hard to believe that consumers are human, as it is to believe that online daters are human. But research I actually trust does in fact back this up. So, make your message human as well, or you can kiss that connection good bye.

Whoever said "love stinks" said so long before the internet got in on the action and, truth be told, it hasn't gotten much easier. True, online dating makes it easier to find people in the same way the web makes it easier for marketers to home in on consumers. But finding them is simply the beginning of a long and oft bumpy road.

We can besiege people, be they potential lovers or consumers, with all manner of facts and figures. But it is the little things, the delivery, timing, chemistry and damn luck, that make all the difference. Forget metrics and science and whatever else they teach in business school. While the tools of communication change, the truth will always come down to this: We are just people trying to connect with other people in the same way we always have, whether we're selling love or linen sheets. It's just that simple and just that complicated. Having done both and having had only middling success with either, I'll take marketing any day. In the ad world, I know I'll never get stuck having to pick up the tab after a night spent with a lousy focus group.

Prosecutors said Gonzales, who is also known online as "soupnazi," targeted customers of 7-Eleven Inc. and supermarket chain Hannaford Brothers Co. Inc. They also targeted Heartland Payment Systems, a card payment processor.

Dallas-based 7-Eleven said that the company became aware in late 2007 that a security breach had occurred. The affected transactions were limited to customers' use of certain ATMs, owned and operated by a third party, located in 7-Eleven stores over a 12-day period from October 28, 2007, through November 8, 2007. Steps were immediately taken to contain the security breach and prevent any recurrence, the chain said.

Upon being notified of the breach, the card companies in accordance with their standard fraud response procedures then alerted the issuing financial institutions regarding the security breach. Each financial institution made its own decision about what appropriate actions to take, including the issuance of new cards or putting card numbers on alert for fraud. These remedial measures were taken in late 2007 and early 2008.

7-Eleven said it "would like to thank the federal authorities for their diligence in pursuing the perpetrators of this crime. Because this matter is pending, we are not providing further details."

Gonzales, who is already in jail awaiting trial in a hacking case, was indicted in New Jersey, charged with conspiring with two other unnamed suspects to steal the private information. He is awaiting trial in New York for allegedly helping hack the computer network of the national restaurant chain Dave & Buster's. Trial in that case is due to begin next month.

He faces up to 20 years in prison if convicted of the new charges.

The Justice Department said the new case represents the largest alleged credit and debit card data breach ever charged in the United States, beginning in October 2006.

Gonzales allegedly devised a sophisticated attack to penetrate the computer networks, steal the card data and send that data to computer servers in California, Illinois, Latvia, the Netherlands and Ukraine.

The indictment also charges that Gonzales and his co-conspirators used sophisticated hacker techniques to cover their tracks and avoid detection.

Also last year, the Justice Department announced additional charges against Gonzales and others for hacking retail companies' computers for the theft of approximately 40 million credit cards. At the time, that was believed to be the biggest single case of hacking private computer networks to steal credit-card data.

OAKBROOK TERRACE, Ill. -- Redbox Automated Retail LLC is flooding Wal-Mart, McDonald's, 7-Eleven, Circle K, Walgreens and other retail, supermarket, convenience store and drug store chains with kiosks that rent the latest DVDs of Hollywood blockbusters for just $1 a day. That combination of low price and convenience has suddenly made Redbox a force with consumers and a threat to movie studios and rental giants such as Blockbuster, reported USA Today.

And following agreements with Albertsons supermarkets in June and Kroger supermarkets earlier this month, Redbox—which generated just $389 million in revenue last year and currently has 15,000 kiosks nationwide—expects to end this year with 22,000 kiosks in all 48 mainland states, up 61% from the end of 2008. Company parent Coinstar Inc., Bellevue, Wash., said that revenue from the DVD rental operation could double to as much as $780 million.

It placed its kiosks in all 248 Albertsons stores; the company said Redbox kiosks are currently available at more than 200 Kroger locations, and more than 2,600 Kroger-operated supermarkets and convenience stores will feature the kiosks within the next year.

Meanwhile, Oak Brook Terrace, Ill.-based Redbox filed suit in Delaware Federal Court against 20th Century Fox on Tuesday to protect consumers' rights to access new release DVDs. Redbox filed the action in response to new distribution terms proposed by the studio that would prohibit Redbox from providing consumers access to 20th Century Fox DVDs until at least 30 days after public release.

"Redbox's cornerstone principles include providing customers with a convenient way to rent new release DVDs at an affordable price," said Mitch Lowe, president of Redbox. "At the expense of consumers, 20th Century Fox is attempting to prohibit timely consumer access to its new release DVDs at Redbox retail locations nationwide. Despite this attempt, Redbox will continue to provide our consumers access to all major new releases including 20th Century Fox titles at our more than 15,000 redbox DVD rental locations."

The lawsuit follows an announcement by Redbox that the company has signed a multi-year distribution agreement with Lionsgate expanding the depth and breadth of Lionsgate titles available at all Redbox DVD rental locations nationwide including new release titles. Redbox signed a similar distribution agreement with Sony Pictures Home Entertainment in July, expanding the quantity of SPHE new release, direct-to-video and catalog titles available at all Redbox locations. The agreements are a win for the studios, Redbox and consumers providing consumers timely, convenient and affordable access to new release DVDs, Redbox said.

"We calculate that 150 million people every week walk within 10 feet of one of our locations," Lowe told USA Today. "The way we'll grow is by focusing on the customer experience. That's how we've come out of nowhere."

Blockbuster says it will have nearly 3,000 kiosks renting and selling discs and games by the end of this year, growing to 10,000 in late 2010. "One of our price points will be 99 cents," Blockbuster CEO James Keyes, former top executive at 7-Eleven, told the newspaper. "But we will have a broad range of other offerings."

For now, Redbox is sticking with DVDs while it tests interest in $1-a-day Blu-ray discs, said the report.

Its machines stock as many as 700 discs, usually about 200 different titles. Consumers use a credit or debit card to rent DVDs—no membership required—and can return them to any Redbox kiosk. The machines read bar codes on each disc to register what's gone out and come back.
Renters hold on to discs as long as they want; after 25 days (and a total charge of $25) they can keep the DVD. About 10% do so.

The machines constantly communicate with Redbox, primarily via cellphone transmissions. People can go to the company's website to see what's in stock at different kiosks, and reserve a movie at a particular machine.

But kiosks are taking off mostly because credit-card companies have improved their ability to securely handle massive numbers of transactions, according to the report.

"We're among the top 10 credit-card processors in the country," Lowe said. "On an average Friday and Saturday, in the evening, we process 70 to 80 transactions per second, which is around where Amazon has stated its peak Christmastime sales volume was."

Redbox said that it pays about $18 for a DVD and rents it about 15 times at an average of $2 per transaction. The company sells half of the used DVDs back to wholesalers for as much as $4 per disc, and sells about 3% directly to consumers for about $7. It destroys most of the rest.

That low-price model suits Redbox just fine, but not so much the Hollywood studios, which count on home video rentals and sales for about half of their revenue, the report said.

If consumers figure it's only worth $1 to see a movie at home—instead of the $4.50 or so charged by rental chains and video on demand—then it could "cripple the economics of today's movie business," Pali Research analyst Richard Greenfield said in a recent note cited by USA Today.

Universal was first to fight back: Last year it insisted that Redbox not rent the studio's new DVDs until 45 days after they're available elsewhere. When Redbox refused, Universal told the kiosk firm's top wholesalers to cut off its supply of the studio's DVDs. Redbox asked the U.S. District Court in Delaware to find Universal guilty of violating antitrust and copyright laws. Redbox still offers Universal flicks, often after buying its DVDs at retail.

Universal told the court that the case simply involves Redbox's desire to get Universal's DVDs "on terms that are at odds with the terms on which Universal wants to sell them."

Fox last week began asking wholesalers to wait 30 days before selling its new releases to Redbox.

Hollywood is divided, though, said the report: Disney is supplying new releases. Last month Sony agreed to do the same—on DVD, not Blu-ray—for five years; Redbox will destroy used discs when it's through renting. "It's difficult to fight against a consumer trend like this," Sony Pictures Home Entertainment president David Bishop told the paper.

"Our [DVD] product rented at a dollar is grossly undervalued," News Corp. president Chase Carey, whose company owns the Fox studio, told analysts last week, the paper said. "It's a real issue. And we're actively determining how to deal with it."

Blockbuster said it wouldn't mind if stores got DVDs before they hit the kiosks. That way, new discs bought for the stores would "move from the shelves to the vending channel, and then we'd have an advantage with significantly [lower] cost of goods," Keyes said.

But Redbox said that its kiosks with their $1-a-day discs have changed the entire video-rental game. "This has put the power of the decision in the customer's hands." Lowe told the paper.

"The mobile Internet tsunami is the best long term investment that I know of in this market."

"The Mobile Web is a trend equal to the mass adoption of the PC", said Cramer, and "it will be with us for some time to come." So Cramer today created the Mad Money Mobile Internet Index to track what he expects will be a years-long growth cycle.  Cramer picked 21 stocks and will track them over the months and years ahead, as his "Mobile Internet Index."

He picked 21 stocks and assumed to spend $1,000 on each at Tuesday’s closing prices. The index starts at 100, and its rise and fall will directly relate to how these companies – and the mobile Internet trend – fare.  “Take today’s weakness in these stocks as a gift,” Cramer said. Buy the stocks in his Mobile Internet Index, which he thinks are poised for “titanic multiyear gains.”

1.  People prefer Google - GOOG  453.936    -2.674  (-0.59%)  on their desktop computers, so Cramer figured they’d choose the GOOG for their smartphones as well. So this stock is the first addition to the index.

2.  Apple - AAPL  162.83    -1.89  (-1.15%)   

3.  Research in Motion - RIMM  72.09    -1.19  (-1.62%)  

4.  Palm - PALM  13.94    0.22  (+1.6%)    

5.  ADC Telecom - ADCT  6.91    -0.33  (-4.56%)   

6.  Starent Networks - STAR  22.36    -0.23  (-1.02%)   

7.  Cisco Systems - CSCO  21.134    -0.506  (-2.34%)    

8.  Ciena - CIEN  11.36    -0.29  (-2.49%)   

9.  Tellabs - TLAB  6.15    0.25  (+4.24%)    

10.  Tekelec - TKLC  16.15    -0.08  (-0.49%)   

11.  Commscope - CTV  26.05    -0.10  (-0.38%)   

12.  Qualcomm - QCOM  45.40    -0.34  (-0.74%)    

13.  Broadcom - BRCM  26.64    -0.58  (-2.13%)   

14.  RF Micro Devices - RFMD  4.81    -0.16  (-3.22%)    

15.  Skyworks Solutions - SWKS  11.06    -0.09  (-0.81%)   

16.  ON Semiconductor - ONNN  7.48    -0.12  (-1.58%)  

17.  Cypress Semi - CY  10.40    -0.07  (-0.67%)     

18.  Tessera Tech - TSRA  25.58    -0.31  (-1.2%)  

19.  SanDisk - SNDK  16.75    -0.40  (-2.33%)    

20.  NetLogic - NETL  38.65    -0.14  (-0.36%)  

21.  Xilinx - XLNX  21.32    -0.19  (-0.88%)