Monday, February 06, 2012

Redbox doubles down on DVDs, enters streaming deal with Verizon

There was a time when Verizon's Android phones were come sporting a BlockBuster app. In fact, there's one on this Droid X sitting in front of us. That Droid X, though, is about 1 1/2 years old, and times have changed. Now, Verizon and one of the companies that drove BlockBuster into bankruptcy, Redbox, are teaming for a streaming / DVD service.

The service will launch in second half of 2012 and will be subscription-based. According to the press release from Verizon and Redbox parent company Coinstar, the service will be "affordable" and "will allow all consumers across the U.S. to enjoy the new and popular entertainment they want, whenever they choose, using the media and devices they prefer."

With streaming service, Redbox adds streaming to the ubiquitous DVD-laden red kiosks you have probably seen in front of grocery stores, 7-11s, and more, enabling the company to fully compete against both Netflix and BlockBuster (now a subsidiary of Dish Network), who offer both DVDs and streaming video.

Coinstar CEO Paul Davis said, "Our joint venture with Verizon will enable us to bring them [consumers] even more value by offering expanded content offerings and greater flexibility for how and when they enjoy entertainment. This alliance is the result of a deliberate and strategic process to identify a partner who shares our commitment to delivering innovative solutions to consumers."

There's still a lot of vagueness there. One thing is clear. Content is king. It was lack of content that killed HD-DVD and it's relative lack of content that has earned Netflix streaming criticism.

Mobile is important, as can be seen in the moves made by other vendors, and the statement that consumers will be able to use the "devices they prefer" is important. If Redbox wants to achieve this, they picked a good partner with Verizon, as the company is pumping out many more Android devices than any other U.S. carrier, and has the ubiquitous set of iDevices, too. We expect its Windows Phone offerings to be beefed up some time in the future.

Don't think that the new announcement means less focus on DVDs for Redstar, either. Redbox made another announcement on Monday. It has purchased NCR's entertainment division, meaning all its BlockBuster Express kiosks, which NCR acquired from the original Blockbuster video rental service.

Redbox said, "The acquisition [expected to close in Q3 2012] includes the purchase of the DVD kiosks, certain retailer contracts, and DVD inventory. In connection with the asset purchase, Coinstar and NCR also will enter into a strategic supplier arrangement where Coinstar will purchase product and services from NCR."

You --- and Netflix, which earlier said it expects "DVD subscribers to decline steadily every quarter, forever." --- might think DVDs are dead, but Redbox sure doesn't. How this all pans out, is sure to be interesting.

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