Watch out Netflix, Redbox is going for that crown. Details leaked today on the partnership with Verizon. Hit the jump to check them out.




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Verizon and Coinstar Monday announced a long-rumored joint venture, combining a new video download and streaming service from Verizon with Coinstar’s popular Redbox kiosk rentals of DVDs, Blu-rays and video games. The service will launch in the second half of 2012.

The Redbox/Verizon partnership was first reported in December 2011, and today’s press release, while short of details itself, confirms much of what sources said then. Highlights:

The yet-to-be-named service will be stand-alone and over-the-top. That means it’s not included with current Verizon internet or video subscriptions, or limited to Verizon phone, internet or wireless customers. ”We want everyone with a broadband connection,” Verizon SVP Eric Bruno told Wired. “That can be from anyone, not just Verizon.”
That means the service will be national at or immediately following launch. In December, Reuters had reported that the service would be introduced outside of markets where Verizon already offered digital video through FiOS; that does not appear to be the case.
Verizon’s infrastructure will supply both digital streaming as well as digital video downloads on demand. Redbox will do what it does best: handling distribution of physical discs through kiosks.
It will be a unified service — no Netflix/Qwikster separate billing and account management here. It will also be modular, letting users pick which services they want. Citing competitive concerns, Verizon and Redbox are leaving this quite short on details. I have no clear idea how this will actually work.
The streaming and download service will be multi-platform, offering video for PCs, phones, tablets, smart TVs, consoles — the whole gamut of video-capable devices to which Verizon already delivers some video services through FiOS.
On the business side, Verizon owns 65% of the new limited liability company; Coinstar owns 35%.
And that’s about all we know right now. Content partners, specific launch dates, device and regional availability are all still being kept under tight wraps, due to nondisclosure agreements the two companies have signed with their partners. If the deals are even already done, nobody’s legally free to talk.

The lopsided ownership stake suggests that the joint venture is primarily Verizon’s baby. Redbox offers a physical presence nationwide, a brand consumers associate with video, and an existing customer base.

I asked Redbox SVP Galen Smith whether Redbox customers haven’t been keen to embrace VOD delivered over the internet, almost by definition.

“That’s a common misperception,” Smith said. “Redbox customers do a lot of both” — that is, both rental of optical discs and digital video on demand. “Our customers have been asking us for additional titles and digital delivery for a long time, and we felt Verizon was the partner best positioned for us to offer that.”

The new streaming and download video services and digital delivery to multiple devices — all of that will have to be handled by Verizon. Both companies plan to play a role in content partnerships — something of a surprise, since Redbox bucked Warner Bros’ demands for a 56-day rental window for new releases on DVD and Bluray.

Generally, online video companies have agreed to rental windows for physical discs as a condition of negotiations for streaming and download rights. Will studios want to negotiate with Redbox?

Here, too, Smith says there’s been a misperception. “It’s really only one particular studio who’s been pressing for a longer rental window” for new releases: Warner Bros. “Other studios have been happy to have their content released with us on day and date of release… We have a great relationship with them, and as they learn that Verizon is our partner, they’re even happier to work with us.”

“Verizon works with all of these studios and television companies, and we buy a lot of their content,” adds Bruno. “Between DVD rentals, streaming and FiOS, we think we offer a unique value proposition to both content partners and customers.”

The content partnerships for digital streaming will be the key to the services’ success. While deferring on specifics, again citing non-disclosure agreements, Bruno and Smith say that their offering will include a broad and deep array of content, competitive with everything comparable in digital VOD on the market today. When asked whether Verizon would be willing to pursue exclusive or multi-tiered streaming agreements, Verizon’s Bruno simply said “nothing is off the table.”

After all, without competitive content, it’s just Redbox — which more or less remains the same as it is — tied to a vanity digital video project from Verizon. Both companies are looking for something, anything to both differentiate itself from and catch up to Netflix, Amazon, HBO, other telecoms and the rest of the companies carving off slices of the digital video market.

Wired