[quote](Reuters) - Verizon Communications Inc and Coinstar's Redbox unit have formed a video joint venture to provide services aimed at competing directly against video rental giant Netflix Inc.
Shares of Netflix fell almost 3 percent after news of the venture, which will combine the Redbox DVD rental kiosk business with an Internet video offering from Verizon.
The alliance will mark Verizon's first foray into video streaming outside of its network operating region as the telephone company currently only offers Internet video services to customers using its FiOS television service.
However, the venture's success in competing with Netflix and other online rivals like Amazon.com and Hulu Plus, will depend hugely on the price of the service and the depth of content it has available, according to analysts.
Verizon and Coinstar will likely have to invest heavily to convince Hollywood studios to participate if they are to offer a comparable service to Netflix, Daniel Ernst, an analyst at Hudson Square Research said.
"The question is, how much are they investing to get a large library of programming? Netflix is spending up to $1 billion a year on content," said Ernst. "For me, it's doubtful that these two companies will invest to that level."
As Netflix has shifted its emphasis to instant-view streaming from its mailed DVD rental service, it has had to write ever-heftier checks to content.
Verizon did not disclose how many of its FiOS TV programming partners, if any, had agreed to make video content available for the streaming service.
The partnership follows a December 6 report from Reuters that Verizon was planning a standalone streaming video service.
Analysts said it makes sense for Verizon, which has spent about $23 billion building its FiOS TV network, to create an online offering in the hope of increasing its TV subscriber numbers. But Pacific Crest analyst Steve Clement complained that it did not give enough details to get investors excited.
"We don't know what kind of content they'll have available, what they'll pay for that content and what they'll charge for it," said Clement. "There's way more questions than answers at this point."
He noted that a big part of Netflix' success was due to its easy user interface and recommendation of TV shows and movies based on its subscribers viewing history.
Netflix had 24.4 million U.S. subscribers at the end of December, while Verizon ended the year with 4.2 million FiOS TV customers. Coinstar rents out DVDs at $1 a day and Blu-Ray discs for $1.50 a day from kiosks in locations such as supermarkets.
The venture -- to be 65 percent owned by Verizon and 35 percent by Redbox -- will offer its first products in the second half of 2012, the companies said.
Shares in Netflix fell $3.54, or 2.8 percent, to $122.89 in morning trade on Nasdaq, where Coinstar shares pulled back from an earlier increase of up to 7 percent but were still up 66 cents, or 1.38 percent, at $50.33. Verizon edged up 6 cents to $37.90 on the New York Stock Exchange.[/quote][url]http://www.wtkr.com/business/sns-rt-us-verizon-redboxtre81510m-20120206,0,4383986.storyPersonally[/url] I dislike how much people are trying to bring down Netflix because the only people who lose are us, the customers.
Competition is a good thing though. Netflix has to constantly try to outperform competitors and that makes the service good for everyone.
[QUOTE=Protocol7;34574836]Competition is a good thing though. Netflix has to constantly try to outperform competitors and that makes the service good for everyone.[/QUOTE]
I agree competition is good, but it almost seems like Hollywood is ganging up on Netflix.
WAIT, what OP? How is competition bad for the consumer?
[QUOTE=Bassplaya7;34574870]WAIT, what OP? How is competition bad for the consumer?[/QUOTE]
The way that every company is ganging up on Netflix is causing us to have practically no selection on Netflix.
[QUOTE=Bryanrocks0;34574887]The way that every company is ganging up on Netflix is causing us to have practically no selection on Netflix.[/QUOTE]
Which is pointing out the inherent flaw in digital rights
For example: I can watch say 80% of the content on Hulu on my iPod and the other 20% can only be viewed on the web. What's up with that? If you have the rights to stream it why does it matter what device it goes to?
Competition is good, exclusivity is bad.
[QUOTE=Bryanrocks0;34574866]I agree competition is good, but it almost seems like Hollywood is ganging up on Netflix.[/QUOTE]
It's how they took out the electric car, too
Good. Tired of Netflix showing mostly 80's films
However, I do love how they have every episode of Hey Arnold....[B]IN HD[/B]
[QUOTE=sHiBaN;34579281]However, I do love how they have every episode of Hey Arnold....[B]IN HD[/B][/QUOTE]
Are you serious?
I know what I'm watching all week. :v:
Netflix is a bit shit in the UK because there is hardly any good films on there at the moment, so people now are totally uninterested in it now because of the lack of good films, so they've pretty much fucked up in UK by not making it a good service at the start. But I've signed up because I believe it will get better.
In Canada the selection is pretty weak as well, all of the rental stores around me are closing too and I've never seen a redbox before regardless if it was in my city or not.
The thing about any of these other companies is: they're going to plaster advertisements everywhere.
The greatest thing about Netflix is the fact that there are no ads, no matter what device you use to watch it. The price increase didn't bother me because it wasn't a huge deal, I never even used the mail in DVD service.
The same can't be said for Hulu plus, NBC, or most of the other places, paid subscriptions or not, they interrupt your entertainment with ads.
And considering Verizon is involved, it's pretty much guaranteed.
[QUOTE=mjbrooks194;34584103]The thing about any of these other companies is: they're going to plaster advertisements everywhere.
The greatest thing about Netflix is the fact that there are no ads, no matter what device you use to watch it. The price increase didn't bother me because it wasn't a huge deal, I never even used the mail in DVD service.
The same can't be said for Hulu plus, NBC, or most of the other places, paid subscriptions or not, they interrupt your entertainment with ads.
And considering Verizon is involved, it's pretty much guaranteed.[/QUOTE]Knowing verizon, you'll have a additional fee for using their bandwidth.
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