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Redbox Considering Subscriptions, Streaming

7 Apr, 2010 By: Erik Gruenwedel

Netflix’s hallowed business strategy of offering monthly DVD subscriptions and streaming could soon get a major competitor: Redbox.

Citing discussions with Coinstar management, Merriman Curhan Ford analyst Eric Wold April 7 said Redbox is surveying its more active customers about a pre-paid monthly subscription option that would combine DVD rentals and digital streaming.

Specifically, select subscribers would be offered a plan for $3.99 per month and receive four DVD rentals and unlimited streaming (presumably through Redbox’s Web site).

Netflix offers a $4.99 monthly plan for two DVD rentals per month and two hours of streaming. A more popular $8.99 plan offers one DVD out at a time, in addition to unlimited streaming.

“At this point, it is unclear if the streaming option would include new releases and/or catalog titles — although we believe it would likely lean more toward catalog titles that are cheaper to provide to consumers,” Wold wrote in a note.

The analyst said he believes the streaming option would be supported by Sonic Solutions, which markets the popular Roxio CinemaNow downloading technology, also used by Blockbuster On Demand.

Sonic has said it expects CinemaNow will be embedded on 30 million devices, including Blu-ray Disc players, by June 2011.

“We believe Redbox is making a smart move to align itself with CinemaNow in the early stages to create a dual option for consumers and benefit from the growth of both rental channels,” Wold wrote.

The analyst said he would not be surprised if Redbox parent Coinstar moved to acquire Sonic Solutions in the near future in order to gain control of the burgeoning digital channel.

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