Verizon and Redbox Team up Against Netflix
Netflix has taken a lot of hits lately, first changing their pricing structure which resulted in a loss of hundreds of thousands of customers. Then, in a further damaging move they separated the streaming capabilities from disc rentals resulting in even more customers canceling their services. During this time, Redbox proved to be a worthy adversary, even if they did not offer as great a selection as Netflix at the time.
Now, there is news of Verizon partnering up with Redbox in a collaborative effort to compete directly with Netflix. The venture may not prove to be successful, as Netflix is only one competitor – Amazon.com and Hulu.com also provide streaming services to customers. Verizon and Redbox will have to convince Hollywood that the efforts to adapt the services will be well received.
The main obstacle that stands in their way is the amount of money that Netflix pays each year in order to have access to the content. It is unlikely that Verizon or Redbox would be willing to invest over $1 billion each year in order to have access to the most exclusive content like Netflix currently does.
It is apparent that the negotiations are only in the beginning stage as customers have more questions than answers. Amongst the most popular questions include: how much content will be available and how much will Verizon and Redbox charge for the streaming services? One thing that is already clear, Verizon will own 65% of the profits while Redbox will get 35% of the venture.
The initial products are set to launch in the second half of 2012. This will be the first time that Verizon partners up with another company in order to offer streaming services. They currently offer this service to customers who are fortunate enough to have Fios in their area.[via: nextweb, image : digitaltrends]