Redbox and Verizon to launch pincer attack on Netflix by Christmas

US service provider Verizon and DVD rental specialist Coinstar are planning to launch an over-the-top (OTT) video service in the US before this Christmas, offering subscription VOD and transactional VOD services along with DVDs from the Redbox kiosk network, reports Bloomberg.

Dubbed ‘Redbox Instant by Verizon’, the service is already thought to be in tests in the homes of around 500 Verizon employees, and Verizon VP Eric Bruno is quoted as saying that it will initially focus solely on newer movies.

Verizon and Coinstar formed a joint venture back in February, owned 65% by Verizon and 35% by Redbox, with the intention of creating a multi-platform offering that leverages Verizon’s relationships with content owners, its cloud computing capabilities and IP network infrastructure, and Redbox’s studio relationships and nationwide network of nearly 40,000 kiosks.

Customers of the new service will be able to download titles to mobile devices, game consoles and set-top boxes through an application that will be available at Apple’s app store, Google’s Android store and other marketplaces, according to Mr. Bruno.

The Verizon exec also revealed some interesting titbits around the licensing model: the joint venture will pay content providers based on the number of subscribers it has, as done by most cable operators, rather than a set payment as done by Netflix.

Via Bloomberg

Editor’s view: Despite the strength of its backers (Verizon, at least), the joint venture will have a difficult job carving out a niche for itself in a fiercely competitive market populated by a range of companies with first-mover advantage.

Netflix already has 24mn US subscribers for its US$ 7.99 per month streaming service, and the nation’s cablecos and telcos already hold the lion’s share of paid VOD downloads, according to a recent report from the NPD Group.

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