Market darling Netflix
It's a pretty compelling deal on the surface, since the value of the four DVD rentals alone is $4. The cheapest unlimited streaming model through Netflix sets subscribers back $8.99 a month with a single DVD out at any given time.
Now, before Netflix shareholders begin curling up in fetal positions and barking out sell orders, let's ask the two questions that truly matter at this point.
- Is this really going to happen or is it just survey vaporware?
- How quickly can Redbox build a streaming catalog that as of right now is at zero?
The second question is just as important as the first one, because a buffet is only as good as the quality of the spread. If Redbox's streaming selection is limited to Gigli, Ishtar, and the Police Academy series, it may as well rename itself Deadbox.
Keeping your frenemies close
How is Redbox going to strike the digital licensing deals anyway? This is a company that has butted heads with studios in the past. Hollywood hates having its hottest releases marked down to $1-a-night rentals through Redbox machines, fearing that the cheap deals are eating into DVD sales.
It has taken Netflix three years to build its digital library to roughly 17,000 titles. How quickly can Redbox get up to speed? It is chummy with Viacom's
The one thing that is making sense in light of this development is the deal that Coinstar entered with Warner Home Video two months ago. Coinstar and Netflix have agreed to hold back from renting Time Warner's
Time Warner agreed to give both companies price breaks for their patience. It also agreed to open up more of its older library to Netflix for streaming purposes.
"This is going to be a real problem, for Coinstar in particular," I wrote at the time. "At least Netflix can point to its data-crunching recommendations engine or its growing streaming service. Coinstar simply will not have the Time Warner flicks -- until a large group of movie fans have already bought a copy."
Well, if Coinstar struck this deal under the assumption that it would eventually have the same streaming access to certain Warner Home Video as Netflix, then it wasn't the one that got punked in this deal.
Netflix hit a new all-time high yesterday, fueled by its popular debut over the weekend on Apple's
A lot of that sizzle comes from the fact that its unlimited streaming watering hole is presently uncontested in the industry. Time Warner's HBO Go and Comcast
If Coinstar manages to round up a reasonable digital library -- and that's a big if -- at less than half of Netflix's price, it can really be a game changer. With every passing quarter, more and more Netflix subscribers are embracing the streams.
Just 48% of its subscribers may have streamed at least 15 minutes of video during last year's fourth quarter, but Netflix sees two-thirds of its base streaming by the end of this year.
Redbox may have timed this perfectly. Let Netflix educate the market. Let Blockbuster
The wrench in Redbox's plan is more of a toolbox, though. Where is the digital library? Where is the arsenal of video game consoles, Blu-ray players, DVRs, and connected set-top devices to stream Redbox flicks through television sets? Where are the peace pipes to hand out to the studios it was suing a year ago?
Redbox may be introducing a heck of a plot twist to Netflix's story, but this is a character that lacks the development to pull this off.
Can Redbox seriously threaten Netflix's model? Share your thoughts in the comment box at the bottom of this queue.