Verizon could become virtual MSO through Redbox joint venture

Verizon (NYSE: VZ) and Redbox want to distribute live TV networks to high-speed Internet users nationwide, in addition to renting viewers DVDs and movie downloads, Redbox parent Coinstar disclosed in an SEC filing Monday.

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The joint venture will have the "primary purpose of developing, launching, marketing and operating nationwide 'over-the-top' video distribution services providing consumers with access to video programming content, including linear content, delivered via broadband networks to video-enabled viewing devices and offering rental of physical DVDs and Blu-ray Discs from DVD rental kiosks," Coinstar said in an 8K filing.

Verizon and Coinstar executives said little about the joint venture on a conference call Monday, noting that they will unveil details on their strategy during the second half of 2012. But the Coinstar filing would appear to confirm that Verizon hopes to use Internet video distribution to expand outside the footprint where it offers FiOS TV services.

But Verizon faces several challenges in becoming a virtual MSO, including obtaining rights from major programmers to distribute their programming via the Web. While the telco already allows its FiOS TV subscribers to purchase content for viewing on multiple platforms via its Flex View service, it offers a limited number of movie titles through Flex View.

Verizon will own 65 percent of the joint venture with Redbox. The company may also be able to use Redbox kiosks to market its FiOS products.

For more:
- see Coinstar 8K filing
- and the news release

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