Verizon, Redbox combine to start streaming video service

— -- Add one more entrant to the stiffening competition in movie streaming.

Redbox has become popular among consumers looking to rent movies cheaply on the go at grocery stores, airports or other convenient locations. But streaming is increasingly becoming the go-to choice for movie consumers at home on set-top devices such as the Roku, Apple TV and connected Blu-ray DVD players.

The deal also shows the companies' efforts to explore new revenue at a time their older businesses face waning demand. While it owns 55% of Verizon Wireless, Verizon is primarily in the business of land-line phones and cable but is aiming to generate more sales from content. The company offers on-demand movies and TV shows to its Verizon FiOS customers. But the cable network isn't available nationally, and its relatively expensive on-demand movies have struggled to compete with cheaper options, such as Netflix and Amazon.

"Our joint venture with Verizon will enable us to (offer) expanded content offerings and greater flexibility," says Paul Davis, Coinstar's CEO.

Verizon brings to the partnership its relationship with film studios and distribution technology, such as cloud computing and network infrastructure. Redbox provides its movie-rental brand recognition and the ability to bundle streaming with immediate access to 35,400 kiosks.

"It means more choices for consumers. That's a good thing," says Dan Rayburn, an analyst at Frost & Sullivan.

But competition is fierce. Netflix is investing more on its streaming business. Rival Amazon has tripled its video streaming content in a year. The digital commerce giant offers DVD sales, a subscription to movies and TV through its $79-a-year Prime service and film or TV episode rentals.

Dish Network, which owns Blockbuster, plans to introduce streaming to non-Dish customers later this year. Walmart also runs a streaming service for movies, called Vudu.

Verizon is making up for lost ground as a telecom giant that has controlled distribution channels but allowed start-ups to muscle in on streaming. "This was their business to lose. (Cable companies) were so slow," Rayburn says.

The new venture's prospects will depend largely on the number of movies and availability of exclusive content, he says. "Inventory is going to make or break this service."