Offering perhaps the most defined threat to streaming movie leader Netflix (NSDQ: NFLX) so far, Verizon and Redbox parent company Cointstar are going into business together. The companies announced Monday they’re partnering on a new subscription video service that will combine Redbox’s DVD and Blu-ray rental strengths with video streaming through Verizon’s networks.
The new subscription service will launch in the latter half of the year, a joint announcement said, and will be 65 percent co-owned by Verizon. It will combine the power of Redbox’s 30 million disc renters with Verizon’s substantial cable TV and wireless reach. The companies would release few details about the new venture, citing “competitive reasons.”
“This will be a national over-the-top service, available to anybody who has a broadband connection, and available across a full range of devices,” Eric Bruno, VP of product management for Verizon, told paidContent.
With Netflix telling investors two weeks ago that it will stop actively trying to grow its DVD and Blu-ray rental business, and an increasing number Netflix subscribers choosing only to stream their video due to the increased prices of disc-and-streaming combo packages, Verizon and Coinstar officials said they do see an opening in the market for bundled subscription plans that are still vested in DVD and Blu-ray.
“We think that physical media is going to be attractive for a very long time,” Galen Smith, senior VP of finance for Coinstar, said. “We’re excited about it, and we think this actually helps home entertainment preserve the life of the physical format.”
So does this mean Coinstar and Verizon will under-cut Netflix on the price of a disc/streaming subscription package? Bruno would only say the price point would be “competitive.”
A flurry of new competition has emerged recently for the streaming market Netflix pioneered — Amazon (NSDQ: AMZN), for example, is also looking to develop a subscription streaming business. But Netflix investors have not been spooked by Monday’s early announcement.
As for noon on the Nasdaq, Netflix shares were trading at $126.87 per share, up about a third of a percentage point.