Redbox Instant streaming plan takes on Netflix

By RYAN NAKASHIMA, AP Business Writer | USATODAY

LOS ANGELES (AP) — DVD kiosk operator Redbox is launching a challenge to Netflix's streaming-video supremacy.

Later this month, Redbox will offer an unlimited streaming-video plan that includes movies from Warner Bros. and pay TV channel Epix, along with four nights of physical DVD rentals, for $8 a month, or $9 a month if customers want Blu-ray discs.

The offering is a direct attack on Netflix and is priced even lower than the $10-a-month DVD and streaming plan that Netflix abandoned a year ago. The lowest price plan from Netflix that combines DVDs-by-mail and streaming is now $16 a month.

The new service, called Redbox Instant by Verizon, is "targeted squarely at movie lovers," said Shawn Strickland, the chief executive of the joint venture between Redbox parent Coinstar, which is based in Bellevue, Wash., and New York-based Verizon.

The service won't include TV shows when it launches on an invitation-only basis before the end of the year. Video game disc rentals, which cost $2 a night, are also not included in the plan.

While the price and features of the Redbox service are similar to what's offered by Netflix, its library is smaller and focused mainly on the most popular Hollywood fare, which Strickland says are the movies that "really matter in the marketplace."

Redbox kiosks carry the top 200 recent movies from the major studios and rent DVDs out for $1.20 per night and Blu-ray discs for $1.50 per night with the swipe of a credit card. The streaming plan will feature about 5,500 movies from the libraries of Warner Bros. and Epix, which is owned by Paramount Pictures, MGM and Lionsgate.

That means subscribers could stream movies such as "The Hunger Games" over computers and certain connected Blu-ray players and Internet-enabled TVs. For now, video game consoles will not be able to play Redbox streaming titles.

In comparison, Netflix has an estimated 60,000 titles available for streaming on a nearly ubiquitous array of devices and has an unrivalled DVD library with more than 100,000 titles.

While it's priced attractively, the new service could have limited appeal for the absent-minded. DVD renters who neglect to return discs will start having to pay extra after their four nights of rentals are used up each month. Unused rental credits won't roll over into the following month. Netflix DVD subscribers keep discs as long as they want, but don't get new ones until shipping the ones they have back in the mail.

The deal marks another expansion for Epix, which licensed its movies to Netflix in a blockbuster $1 billion, five-year deal in 2010. The exclusivity of that pact expired in September, allowing Amazon.com Inc. to also license Epix movies for subscribers of its Amazon Prime annual shipping service.

Epix CEO Mark Greenberg said the expansion onto Redbox will help grow its customer base since Redbox's customers tend to be younger than its current subscribers.

"We're expanding the pie by adding more people to the mix. I think that's healthy," he said.

Greenberg said he's indifferent to whether subscribers get Epix movies from Redbox Instant, Amazon, Netflix or through their TV providers.

But he noted that its 10 million TV subscribers will have access to Epix movies and original shows 90 days earlier than their Redbox counterparts, a head start that helps protect the value of Epix for cable, satellite and telecom TV partners such as Cox Cable and Verizon FiOS.