On Monday New York-based Verizon Communications announced a joint venture with Redbox parent company Coinstar that will bring a subscription-based multi-platform Netflix competitor to the market in the second half of 2012. Redbox will provide the DVD and Blu-ray rental aspect whereas Verizon will supply the video streaming and download portion.
Due to competitive reasons, the duo refrained from revealing details surrounding the joint venture, but promised to uncover more information later this year. However Verizon said it will have a 65-percent ownership share in the service while Bellevue, Wash.,-based CoinStar will claim a 35-percent share. Both promise that consumers will be able to enjoy new and popular entertainment they want "whenever they choose, using the media and devices they prefer."
"When you consider the core elements the parties bring to this venture - our powerful brands; our national rental kiosk footprint; our anytime, anywhere network presence; and our mutual commitment to customer-focused innovation - it's clear that Verizon and Redbox are a powerful entertainment team," said Bob Mudge, president of Verizon consumer and mass business markets.
The reasons why this could be bad news for Netflix should be obvious: Redbox kiosks are seemingly on every street corner (there are four just blocks away). Plus there is Verizon's already well-established connections with Hollywood studios and networks thanks to FiOS and its own video streaming offering for Verizon Wireless. This could bring extra content to those kiosks that Coinstar/Redbox previously didn't have access to.
Assuming that Verizon Wireless will be part of the overall big picture, it may be possible that a subscription service can be billed directly to a Verizon Wireless customer's bill much like Slacker Radio, Rhapsody, Rdio and others services. There's also a good chance account holders will simply be able to head down to the nearest kiosk and pick up a physical disk without having to pay a rental fee. This would not only beat Netflix in terms of physical delivery times, but will also be highly competitive with Blockbuster which in some places share the same street corner.
"Consumers rely on Redbox for the latest new release movies at a great value, and our joint venture with Verizon will enable us to bring them even more value by offering expanded content offerings and greater flexibility for how and when they enjoy entertainment," said Paul Davis, chief executive officer of Coinstar, Inc. "This alliance is the result of a deliberate and strategic process to identify a partner who shares our commitment to delivering innovative solutions to consumers. We look forward to rolling out the shared benefits this venture will bring to consumers, retailers, and shareholders."
The joint venture will reportedly leverage Verizon's industry-wide relationships with entertainment content providers, its advanced cloud computing technologies and state-of-the-art IP network infrastructure to distribute video on-demand content to its customers.
Verizon's conference call on Monday morning did not produce any additional details, merely regurgitating the press release.