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Redbox digital service will go toe-to-toe with Netflix

February 16, 2011 |  4:29 pm

Redbox is gearing up to challenge Netflix head-on, the kiosk DVD rental company confirmed Wednesday.

At a meeting with analysts, Redbox President Mitch Lowe said his company's forthcoming digital option will be subscription-based Internet streaming instead of a transactional service through which consumers pay separately for each movie. A single monthly fee would allow users to access movies on multiple devices and access discs through kiosks.

That means Redbox will be competing directly with Netflix, which has amassed more than 20 million subscribers to its DVD-by-mail and Internet streaming subscription plans.

Redbox has previously said it will launch a digital service with a partner but has not identified the partner. Several people familiar with the matter have confirmed that Amazon.com is in talks with studios to acquire content for a Netflix-like subscription movie streaming service set to launch soon, making it a likely candidate to be Redbox's partner.

Investors have been eager to see Redbox launch a digital service, because consumers are increasingly choosing to watch movies via the Web and not DVD. In Coinstar's last fiscal quarter, Redbox revenue came in below expectations because of the impact of three studios not offering new releases to the company until 28 days after they went on sale.

Redbox was also recently dinged when Walt Disney Studios decided to raise its wholesale prices for DVDs sold to the company.

Related:

Disney raises wholesale price on Redbox and Netflix

Amazon poised to launch online movie service to rival Netflix

Shares of Redbox parent Coinstar hammered on earnings warning

— Ben Fritz

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