Yesterday Coinstar, the parent company of Redbox, the 35,400-kiosk-strong movie-rental service, announced a joint venture with Verizon to provide a subscription-based streaming video service, thus positioning the companies in direct competition with Netflix, Hulu, and Amazon. Coinstar also announced that it would acquire NCR's entertainment business, which includes its former rival Blockbuster Express, adding more than 9,000 kiosks to Redbox's roster around the country.
Now new details about the combined companies' plans have emerged. First, it's clear the companies are adamant about bringing a combined physical and digital offering to market, rather than streaming-only or DVD-only plans like Netflix. "To have a partner that sees our vision, and thinks, yes, you could do something streaming-only, but we'll be so much more successful to consumers if we have both together—that was really what Verizon's take was," says Scott Di Valerio, CFO of Coinstar and interim president of Redbox. "Streaming is great—it's really exciting," Di Valerio told us yesterday, "[but] we think there is a bright future in physical."
Still, specifics surrounding what Redbox's future might look like are sparse—company executives remained especially vague during yesterday's earnings call for competitive reasons, they said. And other than a brand-new website called RedboxVerizonProject.com, which teases that "something fun is coming," few details have been released about Redbox's upcoming subscription service with Verizon, slated to be unveiled in the second half of 2012.
Asked whether the subscription service, then, would include DVDs-by-kiosk or possibly DVDs-by-mail, Di Valerio says the company does "not have a vision of doing a by-mail service. Think about a subscription where you have 'Nights at the Kiosk' for new release content, and then be able to have your streaming—more of your library content."
Meanwhile Redbox SVP of finance, Galen Smith, indicated that kiosks will definitely be a part of the subscription, though it's not yet clear whether this will be an unlimited offering. "The core will involve both things, because Verizon could do streaming today on their own—they don't need physical," he says. "But they see our unique set of assets and the physical discs that consumers want. So I think it's safe to assume that the core product will include both."
"Consumers made it clear that they like both the physical disc as well as the digital," Paul Davis, CEO of Coinstar, tells Fast Company. "Given the fact that we have approximately 30 million consumers, and that we are [located] where people go every day—gas stations, convenient stores, supermarkets, drug stores—the instant access to our discs is a real compelling benefit, versus Netflix, where you put what you want in the movie queue, and then you have to wait a few days and hope it comes. We remove that mystery. We really allow consumers to get what they want on new releases, and then for those who want older movies—a more catalog offering—they can get that as well through what we'll be offering as a part of the joint venture."
And what about video games?
"We haven't talked about specific products," Di Valerio says, "but the way I would say it is that rental nights or 'Nights at the Kiosk' will be a kind of center point. And what do we have in our kiosks? Standard [DVDs], Blu-ray, and video games."
In terms of cost, consumers should anticipate competitive pricing with what's already been brought to market. The company stressed "affordability" throughout its announcement, follow-up conference call, and subsequent earnings call. "That's what our customers expect from us, though we haven't announced any of the pricing of the products yet," Gary Cohen, SVO of marketing and experience, tells Fast Company.
During the announcement and conference call, both Verizon and Redbox also stressed that their description would be limited to "subscription services and more." But when asked what the companies meant by "services" plural, Smith says he "wouldn't read into that."
"I would think about it as a subscription service that combines physical and digital," he says.
Asked whether the subscription will be under the Redbox or Verizon brand, it seems there will be a new brand created under the joint venture, à la Netflix-Qwiskter (although definitely not Qwikster). "I don't think it'll necessarily be a Redbox or Verizon brand but one that the [joint venture] brings out," Di Valerio says.
Lastly, in terms of content, executives have said that a wide array of titles will be available through the subscription. The company is not against competing for exclusive content deals with competitors such as HBO and Netflix, though the company declined to say whether there would be a focus on TV shows or movies. The companies plan to feature new releases in the kiosk outlets, it seems, while leaving longer-tail content for online streaming—but don't let them hear you call it "long-tail" content.
"When we say long tail, we mean that it's just not a new release," Di Valerio says. "We think about new releases in our kiosks as opposed to more library content [online]. We don't want to get too deep into the business models now, but I think we look at it a little differently in places where we can go with it as opposed to where Netflix might [go with it]. So I wouldn't say we're looking to do stuff that's five years old whereas Netflix is looking to do all new stuff."
And original content?
"It's a little too early—we're not talking specifically about what the product is," Smith says. "But we can say is that it will be very compelling and competitive to other offerings."
Very compelling indeed.
[Image: Flickr user english invader]