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Verizon/Redbox Combo Set for Q4 Breakout

Jeff Baumgartner
LR Cable News Analysis
Jeff Baumgartner

LAS VEGAS -- Telco TV 2012 -- The streaming and DVD rental subscription service being developed by Verizon Communications Inc. (NYSE: VZ) and Redbox Automated Retail LLC is in the beta phase, and the companies are on track to launch it commercially before the end of the year, Verizon President of Consumer and Mass Business Robert Mudge said during his keynote here Wednesday.

"We will be in the market in the fourth quarter. Quite frankly, this has been a heavy lift," Mudge said.

The coming service -– called Redbox Instant by Verizon –- represents a "prudent step with over-the-top," Mudge said. It will be a standalone subscription offered outside the FiOS sphere, so it will be available to any U.S. consumer with a broadband connection, making it a direct competitor to Netflix Inc. (Nasdaq: NFLX). (See Verizon & Redbox Boot Up Web Video Service and Verizon & Redbox Target Netflix .)

The winner, he said will be "the provider that can give the consumer any of those [video] choices at a reasonable price." Verizon and Redbox, by the way, have not revealed what they'll be charging.

The Redbox deal ties into an overarching strategy around what Verizon calls the borderless lifestyle (the main subject of Mudge's talk) that will enable access all apps and services to all devices, at home or on the go, via a mix of wired and wireless connectivity.

Mudge shared the results of new consumer research (something Verizon calls the FiOS Innovation Index) that found that 39 percent of U.S. adult consumers already fall into this "borderless" demographic. And it appears to be a highly sought-after group for advertisers, with 48 percent of the group making more than $75,000 a year and 51 percent being college graduates. Those figures were based on a Verizon-commissioned survey of 2,292 adults conducted Sept. 7-12.

That all means that "establishing a strategy for converged innovation for products and services is imperative" for service providers, Mudge said. It's become so important, he pointed out, that Verizon Wireless and its cable partners have created an innovation joint venture that will develop blended apps and services that can be delivered on wired and wireless networks. (See Verizon Wireless: Cable’s New BFF.)

But the demands on the network to support the notion of a borderless lifestyle "will continue to be staggering," Mudge said.

That will, of course, put more stress on wireless networks, but the wired home networks will also be called on to carry a bigger load. Verizon launched two high-end Quantum FiOS tiers (300Mbit/s and 150Mbit/s) in June, and the company has already been getting some consumer interest in them, indicating that they're more than just flashy marketing ploys. Mudge said he was pleasantly surprised to learn that 7 percent of the subscribers calling in were asking about the 150Mbit/s Quantum tier. (See FiOS Speeds & Prices Take a Quantum Leap .)

— Jeff Baumgartner, Site Editor, Light Reading Cable

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Jeff Baumgartner
Jeff Baumgartner,
User Rank: Light Beer
12/5/2012 | 5:18:39 PM
re: Verizon/Redbox Combo Set for Q4 Breakout

that would offer a more meaningful metric... you have to wonder how many ask and then get sticker shock on the price.  But VZ's high end tiers are still less expensive than the similar tiers Comcast is trying out in some FiOS markets. JB

User Rank: Light Beer
12/5/2012 | 5:18:39 PM
re: Verizon/Redbox Combo Set for Q4 Breakout

It is interesting that "7 percent of the subscribers calling in were asking about the 150Mbit/s Quantum tier" but I'd be much more interested to learn what percentage are willing to pay for the speed.  Is the target market heavy gamers and online movie viewers?  How large is that?

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