Verizon, Redbox team up to offer video streaming | HamptonRoads ...

The Associated Press
? February 7, 2012

By Peter Svensson

NEW YORK

Phone company Verizon Communications Inc. will challenge Netflix and start a video-streaming service this year with Redbox and its DVD rental kiosks.

Verizon and Coinstar Inc., Redbox's parent company, said Monday that the service will be national and available to non-Verizon customers as well. It adds another dimension to Verizon's quest to become a force in home entertainment, and it looks set to compete to some extent with the cable-TV services it already sells.

Unlike competing services from Amazon.com Inc. and Wal-Mart Stores Inc., the new service will combine Internet delivery of movies with DVDs, the way Netflix does. Dish Network Corp. also offers a similar bundle through its Blockbuster subsidiary.

Specific details and pricing of the new plan weren't announced.

Late last year, the companies were shopping around a $6-per-month offering that would give subscribers one DVD rental from Redbox per month as well as unlimited streaming of a certain selection of movies, according to a person briefed on the plan then. The person was not authorized to speak publicly and spoke on condition of anonymity.

It's not known whether the plan has changed since then, though the price is likely to be less than the $16-a-month minimum that Netflix subscribers have to pay for a combined DVD-by-mail and streaming plan.

Although consumers would pay less, Redbox's inventory is limited to what's in its kiosks, compared with Netflix's library of more than 100,000 discs. Redbox customers will also have to go in person to pick up a disc, which saves the company mailing costs.

Getting an extensive library of streaming content to rival Netflix's 20,000-plus titles will be expensive. The rising cost for streaming rights is the main reason that Netflix raised its U.S. prices by as much as 60 percent last year in a move that triggered a customer backlash. At the end of 2011, Netflix had video-licensing commitments totaling $3.9 billion worldwide over the next several years.

Redbox, whose rental kiosks are in more than 29,000 stores, has been looking to expand into online streaming for more than a year. Its business so far has revolved around renting DVDs for as little as $1.20 per day.

Verizon has its own cable-TV service, called FiOS, in some areas. Its Verizon Wireless subsidiary has also signed a deal to sell service from Comcast Corp. and other cable TV companies in its stores.

With the Redbox venture, Verizon is breaking ranks with the cable and satellite industry, which makes its own video-streaming services available only to people who also subscribe to its traditional TV feeds. They don't want households switching to Internet-only services, which are cheaper. Netflix Inc. charges $8 per month for its streaming-only plan, for instance, while the average monthly cable bill is more than $70.

Source: http://hamptonroads.com/2012/02/verizon-redbox-team-offer-video-streaming

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