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Verizon's Internet-Streaming Service Could Include Live TV

2/06/2012 5:25 PM

Verizon isn’t ruling out adding live TV programming to its still-to-be-named Netflix challenger, which it’s developing with Coinstar’s Redbox — raising the specter of a “virtual MSO” that could challenge cable and satellite TV nationwide, not to mention AT&T U-verse (see Verizon, Coinstar Tag Team On Netflix Rival).

When I asked Eric Bruno, Verizon’s SVP of consumer product management, whether the service would include live programming, he said, “To be determined.” Any live TV channels, though, probably wouldn’t replicate even a low-end cable lineup, given the Netflix-range price points Verizon-Redbox are trying to hit.

Verizon and Redbox also are mum on pricing and the scope of content that is to be available with the over-the-top solution.

For the telco, the streaming-plus-DVD-kiosks service (there won’t be any DVD-by-mail component) is an opportunity to reach beyond its FiOS footprint. Verizon also will sell it to FiOS customers.

“From a FiOS perspective, we participate in about 30% of the marketplace,” Bruno said. “We want to compete in 100% of it… From a Verizon perspective, this lets us compete on a national basis.”

But won’t such a service potentially cannibalize FiOS TV? Bruno said he’s confident that FiOS “will be able to hold its own.”

While not addressing what exactly will be on offer from Verizon-Redbox in terms of content, Bruno said “we are very, very confident it will be competitive in the marketplace.”

Meanwhile, there’s a question of why Verizon even needed a DVD element at all. BTIG analyst Rich Greenfield wonders the same thing, asking in a blog post, “Why Does Verizon Need Redbox with DVDs Going the Way of the VHS Cassette?”

Verizon said it wants to provide a comprehensive offering, and Redbox gives it new-release titles, available at some 35,000 vending machines across the U.S. You also have to think that the brand equity and the retail presence of Redbox provides a pretty powerful jump-start in marketing the service, relative to starting from scratch on a streaming-only brand.

“As we looked at participating in the national video market, we wanted a partner that could help us deliver a level of differentiation,” Bruno said. “We wanted to partner with Redbox because our belief is we need to give customers a really compelling choice… We felt the combination of physical disc with streaming was the best way to do that.”

Greenfield, in his blog, said, “Long-term, we doubt Verizon really wants their streaming joint-venture to include DVD kiosk rentals, but it was a way to get started with a pre-existing user base (30 million plus active Redbox kiosks users).”

As for Redbox, teaming up with Verizon gives it an easy way to build a bridge to a video-streaming future, after its strategy for competing with Netflix on this front has languished (see Redbox’s Streaming Service To Rival Netflix Still In The Works).

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Programming Note: Don’t miss MCN/B&C’s Advanced Advertising: Setting the 2012 Agenda, Feb. 29, 2012, in New York City. Scheduled speakers include Marcien Jenckes, Comcast SVP and GM of video services, plus execs from Canoe Ventures, Avail-TVN, SeaChange, CNN, NCC, FreeWheel and GroupM. Click here for more info: multichannel.com/AdvancedAd5

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