Redbox Instant Is Netflix, Inc. (NFLX), With a Twist: Coinstar, Inc. (CSTR), Verizon Communications Inc. (VZ) and More

It’s been over a year since Coinstar, Inc. (NASDAQ:CSTR) and Verizon Communications Inc. (NYSE:VZ) first announced plans to join forces to take on industry-leading Netflix, Inc. (NASDAQ:NFLX) . At least, that’s what most industry insiders seemed to think, and why not? Coinstar, owner and operator of all the Redbox kiosks, and $138 billion telecom giant Verizon make a formidable team. In typical fashion, Netflix CEO Reed Hastings pooh-poohed the notion that this dynamic duo would pose a threat. Well, we’re about to find out.

Redbox Instant is up and running
Redbox has officially launched its new video streaming and DVD rental service in the U.S., after completing a successful beta testing phase that began in December. For $8 a month, users can stream movies using their Android or iOS mobile devices, an Xbox or Blu-ray player, and some Samsung TVs. Redbox Instant customers will also receive “4 fabulous DVD credits at the kiosk” as part of their $8 monthly fee.

Customers of Redbox Instant also have the option to forgo the DVDs and stream an unlimited number of movie titles for $6 a month, $2 less than a similar Netflix, Inc. (NASDAQ:NFLX) subscription. That would appear to directly compete with Netflix, so why did Strickland go out of his way to emphasize that Redbox Instant isn’t playing in Netflix’s field?

At least for now, the differences between the two services somewhat support Strickland’s assertion that Redbox Instant doesn’t want to be Netflix. Unlike Netflix, Inc. (NASDAQ:NFLX) and direct competitor Amazon.com, Inc. (NASDAQ:AMZN) Prime, Redbox Instant is all about movies. There’s no original content with the new Redbox service, something both Netflix and Amazon are diving headlong into.

In addition, the number of streaming titles is limited to about 4,600, or 10% of the entire Redbox library. Current rules surrounding which movies can be streamed and when will put a crimp in the Redbox Instant content library for the foreseeable future. The movies offered for streaming come from an agreement Redbox has with Epix, similar to the arrangement Amazon recently signed to supplement its Prime service content.

So it’s not another Netflix, right?
As former Verizon Communications Inc. (NYSE:VZ) executive and current Redbox Instant CEO Shawn Strickland tells it, the new service was never supposed to compete directly with Netflix. But there are similarities between the two services that Netflix investors shouldn’t discount.