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Streaming Picture Focuses

21 Jan, 2013 By: Stephanie Prange

At this month’s International Consumer Electronics Show, the industry got a clearer picture of the subscription streaming and rental marketplace.

In a market already populated by such heavyweights as Amazon and Netflix, Redbox Instant powered by Verizon is carving out a unique niche. The service will offer physical disc rentals at its kiosks with streaming of a library of mostly movies, rather than TV shows. It’s a combination that no other competitor emulates. Redbox Instant is “counter-programming,” to use a broadcast TV term, moving into discs as Netflix pulls back and concentrating on movies while Netflix focuses on TV content.

“We didn’t see that there was a lot of reason to build a compelling offering around TV that wasn’t already out there,” said Redbox Instant CEO Shawn Strickland. Strickland is the focus of our cover “6 Questions” article.

There’s a sort of Wild West feel to all of this streaming business. For some time, the biggest player was Netflix, which offered a compelling disc and digital streaming option. But the market has changed. Unlike Redbox Instant by Verizon, Netflix can’t provide same-day, instant gratification disc rentals at more than 40,000 kiosks dotted around the country. Disc consumers, who have increasingly been a lower priority at Netflix, must wait at least a day for their physical media to arrive. Also, Netflix’s mail service is under legal fire from competitor GameFly that has questioned preferential treatment of Netflix’s and Blockbuster’s by-mail discs.

I think Redbox Instant is smart to build a business on its popular kiosks, which can offer the same top hits as Netflix at your local mass merchant or grocery store, without having to depend on mail service. The more Netflix de-emphasizes its physical rental option (which costs more paired with its streaming service than does Redbox Instant’s disc-plus-streaming subscription plan), the more Redbox will be able to press its advantage.

Redbox Instant has one more advantage: It will support electronic sellthrough and the studios’ cloud-content service UltraViolet. That should make it a more favored subject in a world where content is king.

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About the Author: Stephanie Prange

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