Analyst: Redbox Needs ‘Sonic Speed’ to Catch Netflix Streams

2 Sep, 2010 By: Erik Gruenwedel

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Redbox’s expected foray into movie streaming would require the Coinstar Inc. unit to significantly upgrade it digital efforts at “sonic speed” to catch market pioneer/leader Netflix — an action considered unlikely in the short term, according to an analyst report.

Boston-based research firm Trefis, in a note, said Redbox could partner with Sonic Solutions, the Novato, Calif.-based company whose RoxioNow download technology powers video-on-demand (VOD) services offered by Best Buy, Blockbuster, Sears and others.

“Redbox could theoretically become a serious competitor to Netflix by adding a streaming option to its popular $1-a-day DVD rental service, but [it] lags far behind Netflix in term of its movie library and device penetration,” Trefis analysts wrote.

Due to margin limitations for individual titles via subscription services, studios have been reluctant to grant Netflix timely streaming access to new releases. The online DVD rental pioneer recently inked a $1 billion license deal with studios for streaming access to content after the DVD/Blu-ray Disc window.

In addition, with Netflix streaming available via nearly 50 million video game consoles (PlayStation 3, Xbox 360 and Wii combined), Sonic Solutions, by comparison, said its backend technology would be available in about 3 million devices by June.

The research firm believes Netflix will reach 40 million subscribers by 2016.

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