The Redbox Automated Retail LLC seemed like a pretty brilliant idea, capitalizing on a concept made popular by Netflix.

Get your movies at a convenient place for a low cost…With Netflix, they came to your home. With Redbox, you got them at the same place you got another essential – your groceries.

The video-rental boxes are under some scrutiny from studios, however. Though originally there were claims that Redbox was cutting into their sales margins, some studies are beginning to change their tune. This may have something to do with the fact that studio revenue from disc sales to retailers and rental stores is going to fall by about $850 million this year. Meanwhile, kiosk sales are slated to grow by $125 million. Studios are taking notice.

The difference between video stores and Redbox seems pretty minimal, much like the difference between buying a candy bar from a vending machine vs. buying one from a gas station service person. Either way, you get the candy bar and the candy company gets a chunk of the revenue.

That’s how it works with video rental stores: Every time they rent a movie, they give a piece of the profits to the studios. With Redbox, that isn’t the case – and studio giants are trying to make it so. If they succeed in cutting a deal with Redbox, they might just manage to make up some of their lost sales. That cheap $1 rental price might not survive the transition, though.