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Verizon and Redbox take aim at Netflix

Two companies who derive much of their public image from the color red are attempting to cut into a third company known for their red envelope. Verizon and Redbox are teaming up to compete head to head with Netflix in the video rental market.

This all makes sense with all of the negative reaction Netflix has taken lately. Why not offer an alternative?

Redbox, which is operated by Coinstar, recently purchased the DVD kiosks from their leading competitor NCR Corp., who mostly operates their kiosks under the Blockbuster Video brand. Meanwhile, Verizon has been edging into the cable and satellite TV markets with their FiOS service. The competitors, Comcast, Time Warner, AT&T, DirecTV and Dish Network have all pushed out video-on-demand services to deliver a wide range of content instantly. With the Redbox acquisition leading to the largest network of rental kiosks, Verizon is seeking to gain as much leverage possible to compete in this growing market segment.

The plan is vague, but they’re claiming a $6 per month subscription for 1 DVD and instant movie streaming, which bests a comparable Netflix offering at $15.98 by more than 50%. Of course Verizon was squeamish on the pricing details, just claiming to seek “right pricing.”

With an initial plan of just $30 million, it’s not clear how their content acquisition will compare with Netflix who spends $1 billion per year on content.

One thing that is certain: we’ll be seeing a lot more red.

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