M+E Daily
Verizon, Coinstar’s Redbox Team on Streaming
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The team-up between Verizon and Coinstar’s Redbox for a streaming service later this year is without a doubt a big deal. But the companies, in announcing their joint venture on Monday, left unanswered a big question: what content will their forthcoming service offer consumers?
The general expectation is that the two companies will market some type of competitor to Netflix, which is busy adding exclusive original productions to its streaming catalog of largely legacy movies and TV series. Initially, Verizon and Redbox may follow Netflix’s playbook on offering older titles online, according to Coinstar chief executive Paul Davis.
“Consumers who instantly want a new release can go to a kiosk and get it,” Davis tells the Los Angeles Times. “For titles that are a bit older, there will be streaming capability.”
Sounds like a plan — if content owners go along with it. As it stands, Redbox is working around Warner’s insistence of a 56-day window on new DVD and Blu-ray releases. And owners of streaming rights are expecting big paychecks from content distributors, Daniel Ernst of Hudson Square Research tells Reuters. “[H]ow much are they investing to get a large library of programming? Netflix is spending up to $1 billion a year on content,” analyst Ernst says. “For me, it’s doubtful that these two companies will invest to that level.”
Verizon will own a 65 percent stake in the new venture, with Coinstar owning the remaining 35 percent. Coinstar will provide an initial capital contribution of $14 million in cash to the venture, according to the companies’ regulatory filing.
The companies plan to market “subscription services and more” under the new venture come the second half of 2012. “Regardless of whether a customer prefers a DVD, a Blu-ray disc, or streaming video to a mobile device or their home, we’ll make it very easy to access and immediately enjoy,” Bob Mudge, president of Verizon consumer and mass business markets, said in making the announcement Monday morning.
Together, the companies have scale in both the physical and digital space. Verizon maintains nearly 109 million wireless connections in the U.S., and counts nearly 9 million broadband customers; Redbox, meanwhile, operates 35,000 kiosks nationwide, and touts more than 30 million active rental customers.
