Redbox Teaming with Verizon for Streaming Service, Buys Out Blockbuster Express
Today was an exciting day for Netflix. They launched their first original series, Lillyhammer, and got to watch Redbox unload on them with both barrels. Redbox has risen rapidly in the last few years to become Netflix's biggest competitor in the DVD and Blu-ray rental market, and today Redbox made two major announcements that signal their intention to be even more of a competitive threat in the future.
The first announcement was a partnership with Verizon to launch a streaming video service. The service will launch in the second half of 2012 and will offer both on-demand streaming and downloads. Verizon will hold a 65 percent ownership share, which makes sense as they will actually be doing much of the heavy-lifting on the backend and are expected leverage their relationships with content providers to help secure much of the content for the service while Redbox brings the brand name and nationwide customer relationships. Though Verizon will undoubtedly position the new service as a feather in their FiOS cap, the service will not be limited to the Verizon network.
Rental kiosk service Redbox is apparently trying to move in on the streaming video market. The company has just announced a joint venture with Verizon that will combine the Redbox DVD and Blu-ray rental business with "video on demand streaming and download service."
Hot the heels of their announcement about partnering with Verizon, Redbox also announced that they had purchased NCR's entertainment division, operators of the Blockbuster Express kiosks. The deal reportedly includes all of the Blockbuster Express kiosks, retail contracts, and disc inventories. There is no word how long it will take, but it is only a matter of time before the blue kiosks turn red. Redbox has already shown that it can compete successfully with Netflix's DVD-by-mail service and the NCR announcement only strengthens their position. Combined with the Verizon deal, will Redbox have the arsenal it needs to go toe-to-toe with Netflix on all fronts?
That includes DVD kiosks, retailer contracts and an inventory of discs for stocking the machines. That's big news not only because it expands Redbox's already sizable self-serve rental empire, but because it's doing so at the expense of the floundering Blockbuster, since NCR owns the blue and yellow rental kiosks.