Netflix rival Redbox starts movie streaming this month
US-REDBOXINSTANT-LAUNCH:Netflix rival Redbox starts movie streaming this month
By Lisa Richwine and Himank Sharma
(Reuters) - Kiosk operator Redbox will launch an $8-a-month instant video streaming service this month, in a challenge to dominant movie rental company Netflix Inc <NFLX.O> in the battle for home entertainment dollars.
The price, which matches Netflix's charge for unlimited streaming from its bigger library of movies and TV shows, includes four one-night DVD rentals per month from Redbox kiosks. Streaming and DVD-by-mail packages start at $16 on Netflix.
Redbox parent Coinstar Inc <CSTR.O> and joint venture partner Verizon Communications Inc <VZ.N> will begin selling subscriptions to "Redbox Instant by Verizon" later this month, the companies said in a statement on Wednesday.
Coinstar shares gained 4.3 percent at $53.00 in afternoon trading on Nasdaq. Netflix jumped 6.7 percent after a Morgan Stanley analyst raised his price target, citing the company's strong portfolio of content after last week's agreement for first-run Walt Disney Co <DIS.N> movies.
Verizon shares climbed 0.9 percent to $44.83 on the New York Stock Exchange.
Coinstar and Verizon formed a joint venture in February to sell video services in a market that is dominated by Netflix but also has several new entrants, including Amazon.com Inc's <AMZN.O> Prime, Hulu Plus and HBO Go.
Redbox Instant subscribers will have access to movies from Viacom Inc's <VIAB.O> Paramount Pictures, Lions Gate Entertainment <LGF.N> and MGM through a deal with the Epix premium cable channel, as well as films from Time Warner Inc's <TWX.N> Warner Bros. That includes recent hits such as teen death match drama, "The Hunger Games," and Tom Cruise action sequel, "Mission Impossible: Ghost Protocol."
Customers will be able to stream the films to certain Internet-connected TVs, phones and tablets.
While Redbox Instant will offer a smaller library than Netflix, the new service contains enough content from major Hollywood studios to make it an attractive alternative, said B. Riley & Co. analyst Eric Wold.
"They don't need everything Netflix has," said Wold, who has a "buy" rating on Coinstar and a "sell" rating on Netflix. "I think it's going to be a big draw for consumers."
But Morgan Stanley analyst Scott Devitt said Netflix's broad range of content, enhanced by new Disney movies that will reach the service in 2016, provided a key advantage for a company with 25 million U.S. streaming subscribers.
"It's about having the best, and right now, Netflix clearly has the best content portfolio, domestically," said Devitt, who raised his price target on Netflix shares to $105 from $80.
(Reporting by Lisa Richwine in Los Angeles and Himank Sharma in Bangalore; Editing by Supriya Kurane and Bernadette Baum)