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Verizon improves Redbox Instant posture against Netflix with Warner Bros deal

The impending launch of the Redbox Instant online streaming service by Verizon Communications has gotten a boost with a deal with Warner Bros Home Entertainment to provide content for the service with a 28-day release window.

Redbox Instant, a joint venture between the telco and the Redbox kiosk-based physical disc rental company, will make Warner Bros. titles available via subscription VOD and electronic sell-through (EST), and will support and distribute Warner Bros's UltraViolet–enabled movies.

"This agreement fits perfectly with Redbox Instant by Verizon's vision for bringing people the movies that matter, wherever and whenever they choose, using the devices and media they prefer, at home or away," said Shawn Strickland, CEO at Redbox Instant, in a statement.

Verizon plans to launch the subscription service by the end of the year, combining DVD and Blu–ray Disc movie rentals through more than 42,400 Redbox kiosks nationwide and online streaming of TVs and movies anywhere, anytime, across a range of devices. Verizon will be taking on a variety of competitors, most notably Netflix, which leads the domestic market. But it will also compete with cable's TV Everywhere strategies, and, potentially, its own FiOS TV service. It appears that the telco is taking a multilevel approach to capturing the video opportunity: Verizon's wireless arm is marketing a quad-play bundle that includes cable TV service from Comcast, Cox and Time Warner Cable.

The Warner Bros. deal is significant for Redbox Instant's ability to compete with Netflix specifically thanks to the fact that titles will be available 28 days after their retail release dates. Warner Bros. earlier in the year doubled the amount of time between the day that DVD and Blu-Ray discs go on sale to the general public and movies' appearance on Netflix, to eight weeks.

Netflix is not in a good position to deal with additional competitive issues. In the third quarter, the company added 2 million Watch Instantly members to total 29 million globally. In the U.S., subscribers to Netflix streaming subscriptions grew to 25.1 million, up more than 20% from a year earlier. However, it revised its Q4 guidance, saying that it now expects to add 4.73 million to 5.43 million customers in the U.S. for the year, down from its previous guidance of 7 million—leading many analysts to question whether the deceleration of growth will translate into long-term stagnation for the company.

"Netflix has expanded so deep into the marketplace that it's down to the lower-income homes where $7.99 a month isn't a luxury," wrote Rick Aristotle Munarriz in the Motley Fool blog. "It makes sense. Netflix was never going to get most of the roughly 120 million households in this country on its plan. It's not just about the necessary broadband connectivity hurdle. Too many people have already tried the service and moved on. There really aren't too many folks in this country that have never heard of Netflix by now."

Meanwhile, Redbox announced plans to join the Digital Entertainment Content Ecosystem (DECE) and has agreed to promote UltraViolet through a comprehensive marketing programme.

UltraViolet, a digital rights authentication and cloud-based licensing system, allows users to stream and download purchased content to multiple platforms and devices. UltraViolet offers a digital locker capability for a buy-once, play-anywhere approach that allows users to store digital proof-of-purchases under one account to enable playback of content across platforms. Streamers like Flixster are starting to build support for the format into their services, but a lack of enabled content and consumer awareness has hampered adoption.

"For the past 10 years, Redbox has been committed to giving consumers affordable access to new–release entertainment," said Galen Smith, senior vice president at Redbox. "This new agreement continues this commitment and represents an exciting new chapter in our relationship with Warner Bros., and an opportunity to explore our consumers' interest in UltraViolet."

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