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Redbox Launches ‘Redbox Instant by Verizon’ Brand

24 Jul, 2012 By: Erik Gruenwedel, Chris Tribbey

Redbox July 24 inched closer to offering digital rentals with the beta rollout of a brand name, website and management team for its joint venture with Verizon Communications.

The new service — dubbed “Redbox Instant by Verizon” — hasn’t been given an official launch date, price points or related details, according to its website (www.redboxinstant.com). The service intends to meld Redbox kiosk disc rentals with an online streaming component. The site asks interested consumers to submit email addresses for updates on the service's planned launch later this year.

The service will be headed by CEO Shawn Strickland, who oversees day-to-day operations and strategic direction of the service, according to a release. Strickland previously served as region president of Verizon’s Telecom’s New York southeast region. He was instrumental in the telco’s rollout of its fiber-optic FiOS wireline platform.

Other Redbox Instant management team members include Amy Gibby, chief marketing officer; Joe Ambeault, chief product officer; Jack Gallagher, chief technology officer, Pete Castleton, VP of business development and performance management; and Tina Altman, VP of customer operations.

With the exception of Gibby, all executives involved with the new venture are from Verizon.

Richard Greenfield, analyst with BTIG Research in New York, expects the new service to offer a price point that is below Netflix's $15.98 monthly fee for its hybrid disc/streaming rental program.

Greenfield, who disclosed rollout of the "Redbox Instant by Verizon" website in a blog post, said appointment of Strickland underscores Verizon's commitment to the subscription video-on-demand market. The analyst wondered if Strickland has the experience required to negotiate streaming license deals with content holders as Netflix has successfully done through its chief content officer, Ted Sarandos.

"While Strickland has [multi-video program distribution] experience, we had hoped that the joint venture would appoint an outsider with a history in content acquisition," Greenfield wrote. "FIOS simply paid well-established rates for 'all' broadcast/cable network content, where at Redbox Instant, the task is to source the 'right' content at the 'right' price for a streaming audience."

Eric Wold, analyst with B. Riley & Co. in Los Angeles, doubts Redbox parent Coinstar will offer more details on Redbox Instant when it releases second-quarter financial results July 26.

"It will be interesting to see how Epix content is incorporated into the offering as content owners are increasingly looking towards non-exclusive deals after realizing there are more outlets than just Netflix," Wold wrote in an email. "I continue to believe this planned launch in [the second half] will be well-received by consumers looking for a combo plan that could be priced as much as 50% lower than the comparable Netflix plan." 

Separately, Netflix CEO Reed Hastings and CFO David Wells, in a July 24 shareholder letter, said they believe Redbox Instant faces significant challenges when it launches -- notably content license rights, which Netflix, Hulu Plus and Amazon Prime are spending billions to secure.

"[They] will face a big challenge to break into the top 3 of subscription streaming services," Hastings and Wells wrote.

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