Can Verizon and Redbox conquer Netflix?

The telecom powerhouse and movie rental kiosk giant are teaming up to offer a streaming and DVD subscription service. Sound familiar?

By Feb 7, 2012 2:27PM

Image: Watching television (© Frare/Davis Photography/Brand X/Corbis)Verizon (VZ) and Coinstar's (CSTR) Redbox DVD kiosk unit are teaming up for a subscription video service that offers both physical DVD rentals and digital video streaming for a monthly fee.

"Isn't there some company that already does both of those things?" says Brad Tuttle at TIME. "Ah yes, Netflix!" After Netflix's (NFLX) disastrous 2011, Verizon and Redbox are just the latest businesses "trying to kick the company -- and steal away customers -- while it's down."

And they should be a formidable team, especially after Redbox -- already the No. 1 U.S. DVD renter -- said Monday that it's buying the kiosks and DVDs of rival Blockbuster Express, giving Redbox "more locations than McDonald's and Starbucks combined," Redbox marketing chief Gary Cohen tells Fast Company. Is this a mortal threat to Netflix?

Netflix is in trouble: Any way you slice it, this is "bad news for Netflix," say Kevin Parrish at Tom's Guide. Combine Redbox's convenience -- its kiosks are "seemingly on every street corner" -- with Verizon's digital network and access to top content through its established ties to Hollywood studios, and you have a potential "Netflix killer." Verizon and Redbox are tight-lipped about the details, but they promise a service you can watch anywhere, at any time, on any media device.

But Verizon-Redbox isn't Netflix's only rival: "This partnership sounds relevant right now, but check back at the state of this industry" when Verizon-Redbox launches its service, supposedly in the second half of 2012, says Rick Aristotle Munarriz at The Motley Fool. By that time, Amazon (AMZN) should be offering a considerably cheaper movie-streaming service, and "it's going to be hard for the Verizon-Redbox alliance to match Amazon on price or Netflix on catalog breadth." Until Verizon-Redbox opens up about their plans, "Netflix is better off worrying at what Amazon is up to."

The devil's in the details: The movies and TV shows available in Verizon-Redbox's digital library "will be the key to the service's success," or failure, says Tim Carmody at Wired. "After all, without competitive content, it's just Redbox -- which more or less remains the same as it is -- tied to a vanity digital video project from Verizon." Let's see if Verizon can really deliver the "broad and deep array of content" that it's promising.

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