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Report: Redbox, Verizon to Partner on VOD

8 Dec, 2011 By: Chris Tribbey

Verizon and Redbox are planning a partnership that would see video content available for both streaming and downloading by May 2012, according to the website TechCrunch.com.
An unnamed source told the site the service would include a subscription option and would deliver both standard and high-def content to a variety of devices, platforms and operating systems.
Several monthly and credit-based service tiers would be offered, including some offering physical discs, TechCrunch reported.
A Redbox spokeswoman said she could not comment on the report.
Earlier in the week, a Reuters story, also quoting unnamed sources, reported Verizon was readying a subscription VOD service targeting 85 million households without access to its fiber-optic FiOS TV platform.
Eric Wold, analyst with B. Riley & Co. in Los Angeles, said the Verizon deal likely occurred because the telco could provide Redbox with both an existing digital platform and requisite content license agreements — the latter increasingly expensive to attain in a market driven by Netflix and Hulu Plus spending, among others.
Wold believes Redbox would be wise to charge $5.95 for a combo subscription for both rental discs and streaming — a price point he believes would attract defecting Netflix subscribers. He said such a price also would position it favorably against Blockbuster's $10 Movie Pass in-store and streaming platform, which also requires a Dish satellite TV subscription.
"We believe Redbox’s 30,000 locations are superior to the 1,500 Blockbuster stores," Wold wrote in a Dec. 8 note. "While this will not eliminate any lingering [Coinstar] investor concerns around interchange fees or upcoming studio expirations, we expect near-term interchange fee relief to boost estimates and understand that Redbox has developed a long-term workaround should Warner Bros. play hardball with its [disc] negotiations."

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