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Verzion and Redbox Team Up to Beat Netflix

02/07/2012

As any competitor knows, when your opponent is down is the optimal time to put them away.

Clearly Netflix is down. Last September I wrote “Netflix Needs To Be Fixed” after Reed Hastings cobbled together an apology for simultaneously separating services while increasing prices. It was obvious that so little effort had been put into vetting the concept – that Hastings was dumbfounded by the negative backlash.

Since then hundreds of thousands of Netflix customers have cancelled their accounts. Oops.

Sensing an opportunity, Verizon and Redbox are teaming on a movie rental service to launch in the second half of this year. The still-unnamed business (more on that later) will challenge Netflix by offering a combination of streaming video on devices along with rentals from Redbox’s more than 35,000 kiosks for a flat monthly fee.

Currently, Redbox does not offer a streaming service and does not control the digital rights to its movies. The Verizon partnership is expected to change that. Verizon estimates that by 2015 nearly half of the 114.7 million United States homes with televisions will have Internet-enabled sets. Those televisions already typically come with icons for Netflix, YouTube and Hulu.

There is a cloud on the horizon – namely Apple TV. If true to form it will be a game changer but until then the Verizon/Redbox collaboration looks to be smart, timely and opportunistic.

Perhaps the new Verizon/Redbox company should be named NotFlix – just to rub a little dirt on Netflix’s wound.

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