Verizon and Redbox plan new streaming service

Verizon is teaming up with Redbox, which rents out movies through kiosks found in parking lots of grocery stores and gas stations.

We already have a company that offers streaming movies and TV shows as well as offering DVDs and Blu-Rays. It's Netflix. So why, then, is Verizon and Redbox teaming up to offer the same thing? Why in addition to offering a zillion other electronics communications services does Verizon want to team up with that company that puts those little kiosks in the parking lots of grocery stores and gas stations? And what's with everyone relying on the color red?

"Verizon, in addition to being the nation's leading wireless provider, also has eight million broadband subscribers and more than four million subscribers to its fiber optic cable service," says Max Dawson, assistant professor of radio/television/film at Northwestern University's School of Communication. Verizon has a strong interest in developing alternatives that will allow it to hedge against the possibility that more and more of its cable subscriber base will cut the cord and begin relying primarily on services like Netflix and Hulu Plus for their TV and film viewing.

So essentially, Verizon is going strategic here. Figuring that if it has to lose customers, it might as well lose them to itself. And Redbox. We'll go ahead and call it "Verizbox." That's not their name, just ours. 

But let's take the advice of Deep Throat from the movie "All The President's Men" and follow the money here.

"Verizon's primary strategy has to be finding new ways to increase its customer base's use of bandwidth," says Dawson. "Over the past decade, we've seen Verizon and other mobile providers develop applications to do just that, be it text messaging, multimedia messaging, video clips, apps, gaming, ringtones -- all of these things have been initiatives to get us to use more bandwidth and to subscribe for bigger bandwidth packages."

And there's the money we were following. It's you writing a bigger check to Verizon for more of the things that you lean on the company for. But if what you're getting is worth the money, that might not be all that bad, right? So what would "Verizbox" give us that Netflix, Hulu and Amazon aren't already providing? How would the selection be?

Complicating matters is the fact that there's a lot of bad blood between the big movie studios and Redbox. Redbox would like to get movies that are new to disc into their kiosks but the studios wanted people to buy the discs in stores. "The major point of contention was that Redbox wanted stuff as soon as available and the studios wanted to hold things back for four weeks or longer to increase potential for consumers to purchase them in stores," says Dawson. "So there's not that great history to suggest that there will be the possibility of amazing content on Redbox."

Of course, all that money that Verizon has been gathering over the years might go a long way toward patching over all those hard feelings.

Also in today's program, some Girl Scout troops are trying out mobile credit card payments for Girl Scout cookie sales. We debate the pros and cons of this development. Essentially, both sides take the same point of view: this will make cookie sales easier and you will be more likely to eat them.

About the author

John Moe is the host of Marketplace Tech Report, where he provides an insightful overview of the latest tech news.

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