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Verizon and Redbox Partner for Streaming Video and Game Rentals

Posted by Sheila Shayon on February 7, 2012 05:01 PM

Verizon is joining forces with Coinstar, the parent company of 35,400-kiosk movie rental service, Redbox, in a bid to grab a piece of the streaming video market away from Netflix, Hulu and Amazon — not to mention Facebook and YouTube.

The still-to-be-named Verizon/Redbox joint venture — a hybrid video download and streaming service offering rental of DVDs, Blu-ray titles and video games — is scheduled to launch in the third quarter. Verizon takes 65% of the limited liability company and Coinstar, 35%. 

Verizon will handle digital streaming and video downloads on demand, and Redbox will handle physical kiosk-disc distribution. The multi-platform service will leverage Verizon’s suite of video-enabled devices already delivered via FiOs for phones, tablets, smart TVs, PC’s and consoles.

The standalone over-the-top service won't be bundled with current Verizon video (FiOS TV) and Internet subscriptions, nor will it be limited to Verizon phone, Internet or wireless customers. 

"Together, we are erasing old technology boundaries, freeing people to spontaneously enjoy the entertainment they want, whenever they choose, using the devices and media they prefer, at home or away," stated Bob Mudge, president of Verizon consumer and mass business markets.

"Streaming is great, it's really exciting, [but] we think there is a bright future in physical," said Scott Di Valerio, CFO of Coinstar and interim CEO of Redbox. Coinstar is also acquiring NCR’s entertainment business, including former rival Blockbuster Express, immediately annexing another 9,000 kiosks. 

There’s still contention with Time Warner and Coinstar rejected their recent demand to wait 56 days before making new Warner Bros. titles available, saying it will instead secure them from third-parties and get them into their kiosks within seven to 10 days of their release, according to Di Valerio. 

The previous deal with Warner was a 28 day wait, still the terms with for DVDs from Comcast’s Universal Pictures and News Corp.’s Fox, while Walt Disney Co., Viacom Inc.’s Paramount and Sony Corp. make their DVDs available on day of release.

"We have more locations than McDonald's and Starbucks combined," said Gary Cohen, SVP of marketing and customer experience at Redbox, to Fast Company. "We have this big customer base; we have this direct connection with the customers; we have physical points of presence; we are in the places that America shops. You put all that together, and there's a lot of ways you can vector off.” 

Or put another way, “We want everyone with a broadband connection. That can be from anyone, not just Verizon,” said Verizon SVP Eric Bruno to Wired

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