Verizon, Redbox team on video venture

Confirming rumors that began to circulate in December, Verizon and Redbox said Monday they're creating a video venture that will go head to head with the reigning king of the space, Netflix. The joint venture will combine Redbox's kiosk business with an Internet video offering from Verizon. It is scheduled to launch in the second half of the year. Company kept most of the details about the as-yet unnamed service close to the vest. In a release the companies said it would offer "instantly available online and mobile content with immediate access to physical media through rental kiosks." Verizon will own 65% of the joint venture, Coinstar the remainder. Video content will be delivered over both the Web and to mobile devices. Users will apparently be able to stream some of that content and download other parts. The streaming video space is becoming increasingly crowded, with Amazon and Hulu looking to expand. So far Netflix far outspends all of its rivals on content deals and reach. Verizon's majority stake could be beneficial in courting studio involvement. Redbox recently rejected Warner Bros.' demand that the company agree to a 56-day delay before making new movies available. (The company will instead buy copies from third-party distributors, increasing its costs but giving it a notable advantage over Netflix and Blockbuster.) Verizon has a better relationship with studios. The new partners said together they "will offer all of the convenience, simplicity and value of Redbox new-release DVD and Blu-ray disc rentals combined with a new content-rich video on-demand streaming and download service from Verizon." "When you consider the core elements the parties bring to this venture -- our powerful brands; our national rental kiosk footprint; our anytime, anywhere network presence; and our mutual commitment to customer-focused innovation -- it's clear that Verizon and Redbox are a powerful entertainment team," said Bob Mudge, president of Verizon consumer and mass business markets. Among the unknowns the companies glossed over in Monday's announcement and conference call was how the service will be set up. It could be an all-you-can-eat model, like Netflix uses, or of the a la carte variety, as Amazon does with one side of its streaming business. If it's not a single payment for unlimited film consumption, it's less likely to be a contender to displace Netflix as leading streaming service. Wedbush Securities analyst Michael Pachter notes that the average Netflix streamer currently watches 31 hours per month of programming - a number unlikely to be matched on a per-view charge. Shares of Redbox parent Coinstar were up 1.3% in mid-day trading at $50.29. Netflix was up 2.5% at $129.55. Contact the Variety newsroom at news@variety.com