Last updated: February 7, 2012 - 9:37am
February 6 was a telling day in home entertainment. Two ambitious players bought into the video-streaming business and one left its DVD division on the curb.
Telecommunications giant Verizon Communications broke ranks with rivals by announcing a video-streaming partnership with Coinstar, which operates Redbox DVD kiosks. Both companies want a piece of streaming online video, whose pioneer Netflix threatens to steal Verizon's pay-TV customers and users of Redbox. Separately, vending-machine company NCR sold its DVD kiosks and related assets to Coinstar after buying them just over two years ago. Who comes out on top? Verizon, which has a 65% stake in the streaming deal, looks unlikely to get much out of it anytime soon. Redbox has millions of customers already using its kiosks in nearly 30,000 locations -- plus the thousands more it will get from NCR. As users gradually shift to streaming video, Redbox can try to migrate those to its streaming service. But Redbox has a casual, rather than monthly subscription, relationship with customers. With Netflix's unlimited streaming priced at $8 a month, Redbox will feel pressure to offer an ultracheap deal to get attention. The lesson for investors is to follow the money. While Coinstar's DVD business should keep it afloat for a while, its future will be decided in the fiercely competitive online world.