It is not only the pricing but the availability. I think, here (Philippines), people buy pirated DVDs because the distribution is so wide-spread. So if you sell cheap and legit copies and people have to go all the way out to buy, then chances are that they won't.

With Redbox on the other hand, if it is available just around the corner or at least in places with security guards (less likely to be vandalized, etc.), then I'm pretty sure that the ones who sell illegal copies will go out of business in weeks.

I don't know the exact numbers, but I have seen these low priced DVDs sell like hot cakes, even though the selection was quite limited (around 1.5 years ago, when I was in India, not sure now).

What the studios don't realize is this - they wont lose anything by reducing the prices because a) piracy will come down b) the sheer volume of sales, will make up for the price reduction.

Indian market is supremely price sensitive, so Indian companies aim for volume. The same can and will work in US too, if only the studios have the common sense to try it.

Since the movie studios only release slightly older movies (3 months or so after release), the piracy market has changed so that only the latest movies are pirated and are normally of low quality. Also, a lot of the pirated movie DVDs are compilations, stuff like 3 movies-in-one or multiple movies of an actor.

This is valid mostly for regional movies. Legit English DVDs of popular movies from western studios are sold for around 600-700 rupees (around 15 dollars), so the market for pirated copies of such movies is pretty large.