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Verizon CFO: Joint Venture Covets Redbox’s 30+ Million Users

17 May, 2012 By: Erik Gruenwedel

With Redbox and Verizon set to launch their joint streaming business (which includes rental discs) by August, Verizon CFO Fran Shammo told an investor group the telecom’s goal is attracting the kiosk vendor’s more than 30 million users.

Speaking May 16 at the 40th annual J.P. Morgan Global Technology, Media and Telecom confab in Boston, Shammo said the joint-venture enables Verizon to showcase its proprietary digital content distribution platform (Verizon Digital Media Services) beyond its fiber-optic FiOS TV subscriber base of 4 million to a wider audience.

Announced in February, the streaming program (integrated with kiosk disc rentals) will launch in late summer.

Shammo said VDMS is a superior online video supply chain to traditional CDM platforms used by Netflix and Hulu, among others. Getting the word out was the challenge. Enter Redbox.

“We … needed a partner who is recognized outside of the FiOS footprint as a very, very good, if you will, DVD distributor, but wants to get into the streaming business,” he said. “Redbox fits that naturally for us.”

The CFO said the Redbox partnership would also target Verizon’s FiOS TV subscribers — but not wireless subs.

“It has nothing to do with wireless,” Shammo said. “It is really meant for launch across the U.S. for the Redbox population and its 30 million customers. We are going to integrate all that together and bring packages for both streaming and DVD.”

Meanwhile, Verizon Wireless is transitioning subscribers away from unlimited data plans to a tiered data-share program it will launch this summer. Shammo said the current base of 3G subscribers will slowly migrate to Verizon’s faster 4G LTE platform necessitating sign-ups for the new data-share plan.

The wireless carrier had offered new subs an unlimited data plan for $30 a month until last July. Existing subs could keep the $30 monthly fee unless they upgraded to 4G.

“As they start to migrate toward 4G, they will have to come off unlimited and go onto the data share plan,” he said. “And that’s beneficial for us, obviously, for many reasons. As you pick what tier you want to be in, we think there will be some price-up in those tiers. [This] is really where we will get the revenue accretion in the future.”

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