Updated: 9:23 a.m. PST
Verizon and Coinstar Inc., owner of the Redbox video rental kiosks, announced plans for a new video service that will offer physical and digital options to customers nationwide.
"Our customers want more access to our service and by partnering with Verizon we'll be able to give that to them," Galen Smith, senior vice president of finance at Redbox, told TheWrap.
The new venture would, like Netflix, offer customers a choice between physical discs and streaming. But it appears that they would pick up and return their discs at Redbox kiosks rather than receive and return them by mail, like Netflix customers do.
It would also be run as a subscription service, Smith said.
There were few specifics in Monday's announcement, but the companies said more details would be released soon.
Also read: Redbox and Verizon Getting Hitched
The product rollout is expected in the second half of this year. It will combine "the convenience, simplicity and value" of Redbox's DVD and Blu-ray rentals with Verizon's streaming and downloading, according to a news release.
The move comes as studios such as Warner Bros. have tried to limit Redbox's access to new releases. Last month, the studio announced it would not sell discs to Redbox unless the company agreed to wait 56 days from when new releases go on sale to offer its DVDs and Blu-rays. Redbox said it will ignore the delay and simply buy the discs from a third-party distributor.
Though tensions with studios have become more pitched, executives at Redbox and Verizon said they did not think it would impact their ability to offer movies via their new service. They would not, however, say if any deals were in place with studios.
"We are extremely confident that when we go to market, we will do so with a broad array of titles," Eric Bruno, vice president of product management at Verizon Telcom, told TheWrap.
The venture had been expected since at least December, when TechCrunch reported Redbox and Verizon were planning to collaborate on a new challenger to Netflix. TechCrunch said then that the new venture would stream content to smartphones, Google TV, Xbox and Roku. There was no specific mention of smartphone streaming in Monday's release, but it did say customers would be able to access videos "using the media and devices they prefer."
The venture is a limited liability company with Verizon holding a 65 percent ownership share and Redbox holding a 35 percent ownership share. Additional terms were not disclosed.
The companies said that a title for the new service would be announced shortly and would likely draw on elements of both companies' names.
"We can guarantee that it's not going to be called Qwikster," Bruno joked, referencing the title of Netflix's failed attempt to spin-off its DVD-by-mail business.
Here's the release:
NEW YORK, Feb. 6, 2012 /PRNewswire/ -- Verizon and Coinstar, Inc. today announced the formation of a joint venture that will create a new choice for quality- and value-conscious consumers seeking a simple and affordable way to access the video entertainment they crave.
