The new service could be rolled out in 2012, according to one of the sources, and be available to about 85 million U.S. households, to start.
There seemed to be some confusion on the service, as various sources told Reuters the service would a) be limited in scope, b) be focused on movies, and c) be focused on children's programming. While it can’t be all three, it probably will feature on-demand movies and premium show streams, presumably delivered with that signature Verizon style.
Whatever the service eventually turns out to be, Verizon will be hard pressed to push into a market already filled with multiple competitors. Key to success will be how --- or how not --- Verizon will differentiate itself among all the rest.
Shares in Netflix fell by as much as 5 percent on Tuesday before recovering. The stock ended the day down 3 percent at $68.14 on the NASDAQ.