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Summary:

Speaking at an investor conference Wednesday, Verizon CFO Fran Shammo said his company’s joint venture with Coinstar’s Redbox will seek to leverage the DVD-rental kiosk operator’s 30 million customers and not so much on Verizon FiOS’ nearly 4.4 million customers.

Verizon-Redbox

Details of the new venture are still hard to come by. But the new streaming service being jointly launched in August by Verizon and Redbox seems clearly intended to compete with over-the-top services like Netflix, and not so much meant to further the TV Everywhere goals of Verizon FiOS.

“This is going after some FiOS customers, but this is really meant for the launch across the United States to the Redbox population and their 30 million customers,” said Verizon chief financial officer Fran Shammo Thursday morning, speaking in Boston at the 40th annual J.P. Morgan Global Technology, Media and Telecom Conference.

Also read: A new ‘stream team': Verizon and Redbox take on Netflix

Shammo said Verizon’s impetus for the joint venture was not so much to transition video content licensed for the fiber-optic-fueled FiOS’ roughly 4.4 million subscribers, a la TV Everywhere, “but to expand our capability outside FiOS’ footprint.”

As for the Redbox footprint, it’s actually much bigger than 30 million. With Coinstar conducting a separate financially oriented event Thursday, “analyst’s day,” its Redbox unit tallied nearly 39 million customers at the end of the first quarter.

It’s about to take over the 10,000 Blockbuster Express kiosk locations it acquired in February. And the company has plans to expand into Cananda, the third biggest disc-rental market in the world.

As for the streaming venture, Shammo said it will showcase Verizon’s new proprietary digital distribution platform, Verizon Digital Media Services (VDSM), which he believes has advantages over the content delivery networks utilized by Netflix and Hulu.

“Utilizing that backbone, we’re able to deliver content at a much cheaper rate than people out there today,” Shammo said.

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  1. Jeff Martens Thursday, May 17, 2012

    This is when I get pissed off over the sale of Verizon’s assets in the northwest to Frontier. I’v a Frontier FIOS tv customer but don’t get any of the good stuff like this.

  2. Well Verizon is taking back unlimited services phone and internet services I am seeing enough Red, I wont be staying around for the RED BOX. Metro is looking better all the time

  3. Dave Mackey Sunday, May 20, 2012

    I’m excited for there to finally be a real competitor to Netflix…Right now who is there? No one. Neither Amazon Unbox nor Hulu are really comparable.

    1. Dave, I think you should get ready to be disappointed. As you may have seen from Coinstar’s prior 8-K filing, the Verizon/Redbox venture’s total project commitment maxes out at under $450 million — about 3 months worth of Netflix’s annual domestic content spend. This is not taking what Verizon’s has licensed for its FiOS linear MVPD subscription service(which it pays somewhere close to $35/sub/mo for content acquisition according to media analysts) for a TV Everywhere experience (as we see from Comcast’s Xfinity, the service stops once you are outside of wifi range as Comcast’s content licenses only allows it to distribute to the home), but rather a de novo Amazon Prime clone (who is estimated to be ramping spending to $250mm/yr for content licensing). Verizon’s belief that it has a “lower cost distribution platform” than other CDN’s really points out how inane its thinking is. Let’s see, we have a cost advantage on the line item that’s less than 10% of COGs, and that’s why it makes up good curators of content. I will give them the benefit of the doubt for now but I wouldn’t be holding my breath if I were you.

  4. jeff actually not true. you’ll be able to get all this goodness- whatever it is even if you are not a Verizon FiOS custoemr because ti is largely targeted “out of footprint”.

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