Coinstar, Inc. (CSTR), Verizon Communications Inc. (VZ): Can Redbox Instant Gain Ground?

Also, Redbox Instant won’t be adding original shows to its service, which also makes it much more different from the other bigger players in space. Netflix, Amazon and Hulu are all producing a number of original shows, most of which will be aired in 2013 and 2014.

Redbox Instant by Verizon Communications Inc. (NYSE:VZ) will give users ubiquitous access from Smart TVs and gaming consoles etc., which is very much in line with other Internet offerings. Though it is being offered only in the U.S., it is almost certain to be launched in select international markets. Netflix has a presence in more than 40 countries, and Amazon has a solid presence in Europe through its LOVEFiLM subsidiary.

The CEO of Redbox Instant has stated that his company’s service will be geared towards consumers who still use physical discs. And rightly so, the company won’t be adding TV shows, at least not on a large scale especially in the near-term. But in the long-term, TV will likely be an important component of the Redbox Instant service.

And the management also, believes that over time users will likely subscribe to multiple offerings in the over-the-top streaming space. Worth mentioning, Reed Hastings of Netflix also feels the same way. All the different streaming companies are trending towards original content, which differentiates their service from one another, but Redbox is unlikely to add original content at least not anytime soon.

Verizon will own 65% of the Redbox Instant venture, whereas Coinstar, Inc. (NASDAQ:CSTR) will own the rest. And it is worth noting that Verizon Communications Inc. (NYSE:VZ) has a lot of digital content which it currently offers through On Demand. And also, Verizon Communications Inc. (NYSE:VZ)‘s On-demand offering contains a lot of shows which have aired on the same day.

If Verizon Communications Inc. (NYSE:VZ) can add more content especially TV shows to the Redbox Instant service, and cross-sell subscriptions to its existing telecom and other subscribers, the Redbox Instant service should get a decent boost in terms of the subscribers it can sign up.

Redbox Instant has a small fraction of the video streaming libraries of Netflix, Amazon and Hulu and it currently has no TV shows. The DVD credits partially make up for the significantly smaller library. If the company doesn’t add substantially more content especially TV shows, and also original and exclusive shows, it is unlikely to have a material impact in the space. Competitors all have similar price points, but offer a much larger content base including TV, and a number of original shows.

The article Can Redbox Instant Gain Ground? originally appeared on Fool.com is written by Ishfaque Faruk.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.