Verizon, Redbox partnership will broaden market for mobile video
By Chantal Tode
February 7, 2012
Redbox is teaming up with Verizon for video streaming service
Verizon and Redbox are teaming up to create a flexible and affordable national product that will offer both physical DVDs and streaming online video to a variety of devices.
Consumers are increasingly streaming video to their mobile devices from a variety of different sources. While a lot of details about the deal are not available yet, it appears that Verizon is looking to reach mobile consumers outside of its subscribers and be a leader in the delivery of streaming video to mobile devices by partnering with Redbox, which offers a national network of kiosks for DVD rentals.
“Verizon is embracing streaming, a platform that many view as a disruptive force in our industry, as a great opportunity for innovation and leadership,” said Bob Mudge, president of the consumer business at Verizon Communications Inc., New York, during the conference call to announce the joint venture.
“By teaming with Coinstar’s Redbox, we deliver the kind of consumer-empowering service that customers expect from companies like ours,” he said. “Together we will erase all technology boundaries, advancing Verizon’s vision for a borderless lifestyle.”
Verizon and Coinstar said they plan to introduce a new national multiplatform product to deliver both disks and digital entertainment in the second half of 2012.
The partnership will leverage Verizon's industry-wide relationships with entertainment content providers, its advanced cloud computing technologies and IP network infrastructure to distribute video on-demand content.
“People are making the move to video streaming and they are watching it on their mobile devices,” said Martin Hayward, director of marketing for Mirror Image Internet, Tewksbury, MA. “Especially on mass transit, it is a convenient way to watch mobile content while they are on the go.”
By teaming with Redbox – which offers newly released DVDs for rental – the new joint venture could compete with Netflix.
While Netflix’s video streaming business is growing rapidly, the company has made some missteps as it tries to transition from a physical mail-order driven business to digital lead business, Mr. Hayward said.
Last fall, Netflix announced plans to spin off its DVD business as a standalone business with a new name so it could focus on its quickly growing digital streaming business. The company quickly abandoned the strategy after unhappy consumers reacted by canceling their Netflix subscriptions, Mr. Hayward said.
“Obviously, the company they are going to be competing with is Netflix,” Mr. Hayward said. “It is going to be very interesting.”
“Some of the movies that you can stream online are not necessarily the newest videos,” he said. “If Redbox and Verizon can issue movies faster on the streaming side than Netflix, it is going to be a differentiator for them.”
A national flexible multiplatform service could attract new users to mobile streaming video and attract customers away from Netflix.
Changing media landscape
Verizon and Redbox will face several challenges bringing video streaming services to a wide array of consumers and devices.
For example, they will need to be able to identify the type of device being used to request a video as well as its screen, orientation, streaming capabilities and more before delivering a video.
The companies will also need to ensure the streaming is high quality.
“If it does not perform well, it is not worth it,” Mr. Hayward said.
The joint venture is a limited liability company with Verizon holding a 65 percent ownership share and Redbox holding a 35 percent ownership share at the outset.
“We are confident that this joint venture will better position us to take advantage of the changing media landscape by satisfying consumers demand for easier access to popular content and attracting new customers seeking a simple integrated solution that meets their streaming and DVD rental needs,” said Paul Davis, CEO of Coinstar Inc., Bellevue, WA, during the conference call to introduce the joint venture.
Chantal Tode is associate editor on Mobile Marketer, New York
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