Verizon and Redbox Launching Video Service

Andrew Dowell and Martin Peers for The Wall Street Journal:

Telecommunications company Verizon Communications Inc. and Redbox video-kiosk owner Coinstar Inc. said Monday they will launch an online service in the second half of the year that features streaming videos and downloads.

Although details regarding content providers are notably absent, the collaborative project certainly boasts some uniquely attractive traits. Given the physical network of Redbox machines, Verizon's exisiting media allegiances and digital network via its cellular and FiOS services, and the apparent dedication to building a standalone service, Verizon and Coinstar's plans paint a fairly cosmetically formidable picture.

Having said that, aside from a robust distribution network, Verizon and Coinstar have failed to indicate any semblance of interest in original content. Although specific content deals have not been detailed, the joint press release fails to even hint at original content - an area that is likely to become of pivotal importance in the streaming arena.

Netflix now touts over 24 million users and is actively pursuing original content deals, most notably with its impending resurrection of the popular television show, 'Arrested Development.' With Yahoo! and Hulu both following suit, it is clear that merely offering a library of other people's content will not suffice for market success.

Netflix and Hulu have both posted impressive earnings, and have repeatedly highlighted their dedication to modernization. Focusing upon streaming rather than physical distribution, although met with initial apprehension, has proved an important business model for Netflix, and Hulu's entire reliance on digital distribution is clearly paying off. Thus, it seems odd that Verizon has struck a deal with Coinstar and its Redbox machines when the communications giant evidently could've built a streaming service of its own with few hurdles to clear. 

With no content-specific details - particularly with a view to original projects - it is entirely premature to view this as a viable Netflix competitor. Vague promises of apps, an apparent desire for physical discs, and unclear content deals all provide for a thoroughly flimsy premise, and I'm accordingly unconvinced. Brand name clout aside, without concrete details and industry-upsetting deals to back it up, it will take quite a lot more for me to even mention this deal as some sort of threat to Netflix or Hulu.

The joint press release can be viewed here.