Verizon and Redbox: Challenging Market Dominance
Verizon announced a ground-breaking deal today with its newly formed partnership with Coinstar’s (NASDAQ: CSTR), Redbox and Verizon (NASDAQ: VZ) customers nationwide. The venture will come to fruition in the second half of 2012 offering streaming broadband video content as well as the current Redbox Kiosks of DVD rentals. Verizon will own 65% of the Venture; Coinstar at 35%.
A quote by Bob Mudge, Verizon’s President of consumer and mass business markets touted the marketing synergies associated with both companies which will go up against powerful Netflix who continues to dominate the affordable video rental and streaming markets:
“When you consider the core elements the parties bring to this venture – our powerful brands; our national rental kiosk footprint; our anytime, anywhere network presence; and our mutual commitment to customer-focused innovation – it’s clear that Verizon and Redbox are a powerful entertainment team.”
Paul Davis, Chief Executive Officer of Coinstar reiterated in a statement that;
“Consumers rely on Redbox for the latest new release movies at a great value, and our joint venture with Verizon will enable us to bring them even more value by offering expanded content offerings and greater flexibility for how and when they enjoy entertainment.”
Clearly this is a statement to Netflix (NASDAQ: NTFLX), from the joint venture emphasizing a new player is in town, one that is willing and able to eventually take market share away with advanced cloud computing technologies, a state-of-the-art IP Network infrastructure that will challenge any existing technologies in the marketplace today.
The announcement today is a prelude to a behemoth such as Verizon taking on the quickly growing broadband streaming video market with partners which will eventually give it a dominate market presence nation-wide. Will this venture also lead Verizon to partner with the recently announced Cable Operator marketing agreement to build more dominance? Only time will tell if this deal creates additional market competition or reduce an existing competitor to eventual insignificance. In the short-term Netflix will not see much of an impact due to the amount of investment needed to up-end its influence. See (Analyst: Netflix Strong Vs. Verizon-Coinstar Venture)
Verizon Communications Inc. (NYSE, Nasdaq: VZ), headquartered in New York, is a global leader in delivering broadband and other wireless and wire line communications services to consumer, business, government and wholesale customers. For more information, visit www.verizon.com.
Redbox Automated Retail, LLC, a wholly owned subsidiary of Coinstar, Inc. (Nasdaq: CSTR), offers new-release DVD, Blu-ray Disc® and video game rentals through its network of conveniently located, self-service kiosks. Redbox has rented more than 1.5 billion discs and is available at more than 35,400 kiosks across over 29,000 locations nationwide, including select McDonald’s restaurants, leading grocery, drug and convenience stores, select Wal-Mart locations and Walgreen locations in select markets. For more information, visit www.redbox.com.
About Coinstar, Inc.
Coinstar, Inc. (Nasdaq: CSTR) is a leading provider of automated retail solutions offering convenient services that make life easier for consumers and drive incremental traffic and revenue for retailers. The company’s core automated retail businesses include the well-known Redbox® self-service DVD rental and Coinstar® self-service coin-counting brands. For more information, visit www.coinstarinc.com.