Verizon to take on Netflix with Redbox
February 10, 2012, Friday
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Print Edition
Print Edition
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, said on 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 US home entertainment. 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.
Getting an extensive library of streaming content to rival Netflix's will be expensive, though. The rising cost for streaming rights is the main reason that Netflix raised its US 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 US$3.9 billion worldwide over the next several years.
Redbox, whose DVD rental kiosks are located 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 US$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 US$8 per month for its video streaming plan, for instance, while the average monthly cable bill is more than US$70.
Verizon and Coinstar Inc, Redbox's parent, said on 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 US home entertainment. 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.
Getting an extensive library of streaming content to rival Netflix's will be expensive, though. The rising cost for streaming rights is the main reason that Netflix raised its US 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 US$3.9 billion worldwide over the next several years.
Redbox, whose DVD rental kiosks are located 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 US$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 US$8 per month for its video streaming plan, for instance, while the average monthly cable bill is more than US$70.
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