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Verizon-Redbox JV Starts Testing Their Netflix Rival, Names Management Team

7/24/2012 10:52 AM Eastern

Verizon Communications and Coinstar have begun testing the streaming-video portion of "Redbox Instant by Verizon," their joint DVD-plus-online video service designed to compete with Netflix, and have announced former FiOS executive Shawn Strickland as the venture's CEO.

The companies announced their partnership in February, saying they expected to commercially launch service in the second half of 2012. Verizon owns 65% of the JV with Redbox holding a 35% ownership stake.Redbox Instant by Verizon

A representative for Redbox said the alpha testing of the product is under way and is "internal and invitation-only. The company is testing the streaming capabilities of the product." No other additional details, including pricing and availability, are currently being disclosed about Redbox Instant by Verizon, which will combine streaming video with access to DVDs at Redbox's 36,800 kiosks nationwide.

The JV's website is redboxinstant.com.

Strickland, as CEO of Redbox Instant by Verizon, oversees the strategic direction and day-to-day operations of the company and "is charged with successfully positioning Redbox Instant by Verizon Redbox in the online entertainment marketplace," according to a bio provided by the companies.

Shawn StricklandMost recently, Strickland -- named one of Multichannel News' "40 Under 40" in 2006 -- was region president of Verizon Telecom's New York south/east region. Prior to that, he served as vice president consumer strategy and planning for Verizon Telecom and also held a number of leadership positions within FiOS initiative from the inception of the program.

Other execs working for Redbox Instant by Verizon include:

* Chief marketing officer Amy Gibby, previously vice president of marketing for Redbox;

* Product line strategist and business manager Joe Ambeault, previously director of product management at Verizon;

* Chief technology officer Jack Gallagher, formerly executive director in Verizon's technology office where he concentrated on digital media retail services and technologies for four years;

* Pete Castleton, vice president of business development, who previously headed application developments for broadband services at Verizon; and

* Director of operations Tina Altmann Zawadzki, who previously oversaw the development of end-to-end service delivery processes for FiOS TV.

Strickland's appointment -- and the breadth of Verizon management involved in the joint venture -- "surprises us, and speaks to how serious Verizon is taking their entrance into the subscription video on demand (SVOD), over-the-top (OTT) video business," BTIG Research senior analyst Rich Greenfield wrote in a blog post. However, he added, "We still cannot fully understand why Verizon wants to be in the SVOD business so badly."

The Verizon-Redbox service will offer subscription services that will "leverage Verizon's industry-wide relationships with entertainment content providers, its advanced cloud computing technologies and state-of-the-art IP network infrastructure to distribute video on-demand content to its customers," according to the companies.

In a regulatory filing in February, Redbox said it would make an initial capital contribution of $14 million in cash to the joint venture, implying that Verizon is contributing approximately $40 million into it (given that the agreement calls for each party to contribute on a pro-rata basis).