Verizon and Redbox have teamed up on a service intended to rival Netflix in allowing consumers to rent physical DVDs and stream movies via the Internet, the companies said Monday.
Any broadband customer, even if are outside the Verizon FiOS network, will have access to the new service, said Paul Davis, chief executive of Coinstar Inc., the company that operates the Redbox self-service DVD rental locations.
Redbox has 35,400 kiosks at convenience stores, in some McDonald's and grocery and drugstores nationwide. Verizon has more than 100 million wireless customers and nine million broadband subscribers.
"It's the best of both the physical and the digital," Mr. Davis said in an interview.
In the last few years, cable and satellite companies have increasingly tried to deliver video via the Web. Verizon said Redbox brings brand recognition in the competitive home video arena and the ability for the joint company to offer physical DVDs, which, at least for now, many consumers still prefer to streaming.
Currently, Redbox does not offer a streaming service and does not control the digital rights to its movies. The Verizon partnership is expected to change that. Verizon estimates that by 2015 nearly half of the 114.7 million United States homes with televisions will have Internet-enabled sets. Those televisions already typically come with icons for Netflix, YouTube and Hulu.
The hope, said Bob Mudge, president of Verizon consumer and mass business markets, is that soon they will include a Redbox icon. Roughly 30 million people rent DVDs and video games for as little as $1 each at Redbox kiosks, compared with 24.4 million Netflix subscribers.
"We'll target existing customers, but we'll also be agnostic as to where you get your broadband," Mr. Mudge said. Even if you don't have Verizon, "you'll get Redbox branded content."
Also on Monday, Redbox said it would pay up to $100 million for assets of the NCR Corporation's entertainment-related businesses, which include Blockbuster Express kiosk locations and DVD inventory. Fourth-quarter earnings reported by Coinstar on Monday showed that the company's revenue jumped 33 percent largely because of Redbox.
Unlike Netflix, which offers television and movies and is experimenting with original content, Redbox primarily focuses on recently movies on DVD and Blu-ray and video games. Having a partner like Verizon could give the company the financial backing and scale to negotiate with Hollywood studios, with which Web-streaming companies have had a tense relationship, and acquire more programming.
Verizon will hold a 65 percent ownership share in the joint venture, and Coinstar 35 percent. Subscription services, which analysts expected to be priced at nearly half of what Netflix charges for DVD-by-mail and streaming services, will be introduced in the second half of 2012. Verizon and Coinstar declined to comment on pricing.
Netflix already has powerful streaming competitors in Amazon Prime, Hulu Plus and Wal-Mart's Vudu service, though none of them offer DVD rentals.
http://mediadecoder.blogs.nytimes.com/2012/02/06/verizon-teaming-with-redbox-for-dvd-and-streaming-service/?ref=technology