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Redbox planning to expand into the streaming market with Verizon's help

By Conor Simao
On February 29, 2012


It wasn't long ago that countless Blockbuster Video stores were closing their brick and mortar establishments, liquidating assets and selling $3 DVDs to their final, bargain-hungry customers.

Indeed, Blockbuster was the victim of Netflix, a flourishing and then stubbornly popular movie subscription service with a growing arsenal of redeeming features. In the years since, though, both of these companies have found a way to coexist as competitors in the same corporate niche.

But this Peps-Coke style duopoly, to no one's surprise, is proving to be fairly short-lived. We can attribute this to Redbox, a DVD reservation service that offers $1 DVD rentals in convenient vending machine-resembling red kiosks. Users reserve DVDs online and pick them up and return them at one of the company's 29,000 or so stands, most of which are located in or around supermarkets and drug stores.

While fairly non-threatening in its original form (Redbox has always had a fairly limited selection and it, of course, still requires driving) this player has shown signs of unrepentant ambition. Coinstar, its parent company, has been active on the heels of stock price increases and capital growth in recent years. One new development, the looming partnership between Redbox and Verizon, promises to challenge Netflix in the streaming video subscription arena.

The collaboration is expected to materialize in late 2012, Forbes reports. But what will separate the Verizon and Redbox brainchild from Blockbuster, who offers DVDs 28 days before their widespread release and Netflix, the digital giant with an unmatched physical and cyber presence?

A statement released by the two companies indicates that affordability, flexibility and accessibility will be the areas of focus relevant to their developing service. This may be their plan to capitalize on Netflix's most vulnerable weakness: price and customer patronage. Since their 60 percent price-hike last summer, Netflix has been stumbling to reestablish positive relations with their clients and supporters. If this new Redbox offering proves easier to use and cheaper in general, a true shakeup in the video subscription world may be imminent.

In September, Netflix reported a DVD plan customer loss upwards of 1 million. The effects since have likely stabilized, but there is inevitable interest in a less expensive and similarly comprehensive movie streaming service. If Redbox and Verizon play their cards right, they may very well be the company to step in and replace Netflix in the hearts of many entertainment fans.

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