Redbox Readies Streaming Netflix Rival, But Why?

For Redbox, an online streaming companion to its kiosk-based DVD rental service may be a crucial move.

For consumers? Not so much.

According to the Los Angeles Times, Redbox has confirmed it is going ahead with plans for a subscription-based streaming video service. Amazon, also rumored to be working on a streaming video plan, may even be a launch partner.

Of course, streaming makes sense for Redbox. With three major movie studios enforcing 28-day delays on new releases, Redbox's holiday rental earnings were lower than expected. The kiosk service's expansion into $1.50-per-night Blu-ray disc rentals also failed to meet expectations, and parent company Coinstar's shares plummeted. Streaming seems like a lucrative new revenue stream; it worked for Netflix, right?

And yet, when I try to think of reasons why Redbox's Netflix rival should exist, I come up empty. It's not that I don't like competition, but Netflix's only major deficiency today is the amount of streaming content available, and that's exactly where Redbox is going to struggle.

Here's the problem: As Business Insider points out, Netflix is profitable and has $350 million saved up. It can spend big bucks to acquire more streaming rights to movies and TV shows. Coinstar, on the other hand, has $390 million in debt and $70 million in cash on its balance sheet.

Even if Redbox gets some help from Amazon, matching Netflix's library and litany of supported devices is going to take a very long time. Without a bigger library or a longer list of compatible set-top boxes, Redbox will have trouble explaining why Netflix is inadequate.

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