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Verizon, Redbox team up to challenge Netflix with video streaming service

Isaac Brekken/Associated Press/File

The Verizon partnership will break ranks with the cable and satellite industry, which makes video streaming services available only to people who also subscribe to its traditional TV feeds.

NEW YORK - Phone company Verizon Communications Inc. will challenge Netflix and start a video streaming service this year with Redbox and its DVD rental kiosks.

Verizon and Coinstar Inc., Redbox’s parent company, said yesterday that the service would be national and available to everyone. It adds another dimension to Verizon’s quest to become a force in home entertainment, and it looks set to compete to some extent with the cable-TV services it already sells.

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Unlike competing services from Amazon.com Inc. and Walmart Stores Inc., the new service will combine Internet delivery of movies with DVDs, the way Netflix does. Dish Network Corp. also offers a similar bundle through its Blockbuster subsidiary.

Specific details and pricing of the new plan were not announced.

Late last year, the companies were shopping around a $6-per-month offering that would give subscribers one DVD rental from Redbox per month as well as unlimited streaming of a certain selection of movies, according to a person briefed on the plan then. The person was not authorized to speak publicly and spoke on condition of anonymity.

It is not known whether the plan has changed since then, though the price is likely to be less than the $16-a-month minimum that Netflix subscribers pay for a combined DVD-by-mail and streaming plan.

Although consumers would pay less, Redbox’s inventory is limited to what is in its kiosks, compared with Netflix’s library of more than 100,000 discs, including more obscure fare. Redbox customers will also have to go in person to pick up a disc, which saves the company mailing costs.

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Getting an extensive library of streaming content to rival Netflix’s 20,000-plus titles will be expensive. The rising cost for streaming rights is the main reason that Netflix raised its US prices by as much as 60 percent last year in a move that triggered a customer backlash.

Redbox, whose DVD rental kiosks are located in more than 29,000 stores, has been looking to expand into online streaming for more than a year. Its business has revolved around renting DVDs for as little as $1.20 per day.

With the Redbox venture, Verizon is breaking ranks with the cable and satellite industry, which makes its own video streaming services available only to people who also subscribe to its traditional TV feeds. They don’t want households switching to Internet-only services, which are cheaper. Netflix Inc. charges $8 per month for its streaming-only plan, for instance, while the average monthly cable bill is more than $70.

Verizon and Coinstar said the service is intended to give subscribers access to DVD and Blu-ray discs as well as streaming movies starting in the second half of the year. Subscribers might visit the site to find that the movie they want is not available for streaming, but is available at a Redbox kiosk, said Paul Davis, chief executive of Coinstar.

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