Verizon has teamed up with Coinstar Inc., the parent company of Redbox, to offer a streaming DVD rental service to give Netflix a run for its money.
The service will be national and open to non-Verizon customers. It marks Verizon’s latest efforts to become a contender in home entertainment and a break away from traditional cable companies, which typically make video streaming services only available to customers subscribing to traditional TV feeds. The cable and satellite companies are wary of customers switching to Internet-only services, which are cheaper and often ad free. In fact, the new service will compete with Verizon’s own cable TV service FiOS available in several areas.
“It takes my unit’s video footprint today and gives us a national partner,” Bob Mudge, Verizon’s president of consumer and mass business markets, told the Wall St. Journal. “The service will be available to anybody with a broadband pipe.”
Unlike similar streaming services such as Amazon and Wal-Mart, the new service will combine streaming with DVD rental. Instead of being mailed to subscribers, DVDs will be picked up and returned at Redbox rental kiosks. Specific details and rates for the new service has yet to be announced. A year ago, the companies had considered a plan to charge $6 per month to get streaming and one DVD per month, a person familiar with the matter told the AP. Netflix customers must currently pay $8 for streaming, and $16 for streaming and the right to borrow one DVD at a time.
Though the plan will likely be cheaper than Netflix, Redbox’s DVD collection is limited to what fits in each Redbox kiosk, and users must retrieve and return DVDs, which saves Redbox shipping fees but limits selection for customers. Netflix subscribers have access to 100,000 titles on DVD.
Maintaining streaming content to compete with Netflix’s 20,000 titles available for streaming will prove expensive. Netflix itself has faced rising costs from its streaming licenses, which prompted the company to raise its prices by as much as 60 percent last year, triggering a consumer backlash. For the next several years, Netflix has obtained video licensing commitments totaling $3.9 billion worldwide.
“We are extremely confident that when we go to market, we will do so with a broad array of titles,” Eric Bruno, vice president of product management at Verizon Telcom, told TheWrap.