The cost and difficulties of acquiring digital content for streaming video services has Coinstar CEO Paul Davis thinking about alternative ways to do things when the Redbox Instant Coinstar-Verizon (NYSE: VZ) venture launches. This could even mean taking a more selective approach to content--like a Redbox kiosk compared to a Blockbuster video store.
The idea of video streaming has always given Davis pause, he admitted in a story in Fast Company, noting that the price of transforming Coinstar's successful Redbox kiosk-delivered DVD business to online streaming and competing with the likes of Netflix, Amazon.com (Nasdaq: AMZN), Hulu and even HBO was daunting.
"Just to be real candid, we couldn't afford to do [what other streaming video players have done] on our own, so we would've had to have a curated approach, with a much smaller offering," Davis said during an interview with Fast Company. "But then we wondered, 'Are there advantages to partnering with someone who is already in the space?'"
The answer was yes, and Verizon was brought on board as part of a still very mysterious Redbox Instant by Verizon service.
Davis admitted that he "saw what Netflix was doing and thought, 'They could hit some speed bumps because they're paying big, big dollars for content and hoping the subscribers will come.'"
So there was a double-edged sword. Coinstar is experiencing slower business from its Redbox kiosks and might even be exploring a potential sale, so it needs to go somewhere else. Streaming video is hot--but it comes at a price. A more selective inventory of titles could, he reasoned, lower that price.
"I mean, do you really need 100,000 titles? I mean, really?" he asked in the article. "We want to keep it very simple, with movies that matter. We have to focus on what's going to be really important for us."
Coinstar has a bit of history in selective offerings. Its Redbox kiosks were hardly on a par with competing Blockbuster stores when it came to the number of titles available in those machines.
"Had Redbox started by trying to replicate what Blockbuster was doing with all this variety, it would've very quickly become too complex. But Redbox said, 'Let's narrow the offering and let's make it super simple,'" he said.
That could mean that Redbox Instant will look more like HBO Go than Netflix, but, as has been the case all along, no one really knows other than whatever model is followed, Verizon will be a part of it.
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