Verizon, Redbox to set up video-streaming service

Associated Press

NEW YORK

Phone company Verizon Communications Inc. will challenge Netflix and start a video-streaming service this year with Redbox and its DVD rental kiosks.

Verizon and Coinstar Inc., Redbox’s parent, said Monday that the service will be national and available to non-Verizon customers as well. It adds another dimension to Verizon’s quest to become a force in home entertainment, and it looks set to compete to some extent with the cable-TV services it already sells.

Unlike competing services from Amazon.com Inc. and Wal-Mart Stores Inc., the new service will combine Internet delivery of movies with DVDs, the way Netflix does. Dish Network Corp. also offers a similar bundle through its Blockbuster subsidiary.

Getting an extensive library of streaming content to rival Netflix’s will be expensive, though. The rising cost for streaming rights is the main reason that Netflix raised its U.S. prices by as much as 60 percent last year in a move that triggered a customer backlash. At the end of 2011, Netflix had video-licensing commitments totaling $3.9 billion worldwide over the next several years.

Redbox, whose DVD- rental kiosks are located in more than 29,000 stores, has been looking to expand into online streaming for more than a year. Its business so far has revolved around renting DVDs for as little as $1.20 per day.