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Redbox Digital Driver: Hulu?

5 Apr, 2011 By: Erik Gruenwedel

Redbox’s long-awaited foray into digital distribution could include partnering with subscription-based Hulu Plus, an analyst said.

The kiosk vendor’s parent, Coinstar, in fiscal calls and investor presentations, has said that since 2009 it has been looking for a digital third party to help it launch an online content streaming service capable of competing against Netflix and Amazon.

Eric Wold, director of research with Merriman Capital in San Francisco, said Hulu Plus is on track to net 1 million subscribers (paying the same $7.99 a month as Netflix subs) in 2011, generating about $500 million in revenue.

He said the fact that Hulu Plus offers unlimited streaming to subscribers puts it ahead of other digital candidates such as Walmart’s (transactional VOD) Vudu platform, Amazon or even Netflix (anti-trust issues).

Hulu is co-owned by The Walt Disney Co., NBC Universal and News Corp.

“Not only does Hulu offer unlimited streaming … but the exclusive TV show content selection is differentiated from what consumers can access at either Netflix or Amazon, and we believe would be complementary to the new-release movie selection within Redbox kiosks,” Wold wrote in a note.

Regardless, the analyst acknowledged Coinstar’s prolonged bow of a digital platform has caused doubt among investors that there will ever be one.

“We continue to believe a digital launch can be incremental to the company's core DVD rental business,” Wold wrote.

Representatives from Hulu and Redbox were not immediately available for comment.



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