Forming a partnership with Redbox could be considered a way to reduce competition for Verizon's movie services through teamwork with a vendor that specializes in retail locations and physical media, rather than Internet connections and streaming media, as Verizon does.
Wall Street sees it clearly and overtly as a way to compete against Netflix.
“The service will have a Netflix look and feel, which means it will likely offer more generic library content, and not the latest shows and movies, in terms of digital rights,” according to a BusinessWeek story quoting Christopher Watts, an analyst at Atlantic Equities LLP in London. “That’s the model Verizon is aiming for.”
Verizon which, along with Comcast and most other big cable TV/ISP businesses, already offers its own services for sale, but can always use a hipper interface and more content, according to telco analysts.
Apple, Google, Amazon and Dish Network are also working on or have already launched content networks to compete with Netflix.
So what's going to happen to everyone's favorite TV-series-on-demand Internet content provider? The one whose service eats up one third of all the available Internet bandwidth in the U.S. during peak hours?
Financial analysts give Netflix an edge due to its installed base of almost 22 million homes.
Considering that one or more of its competitors are already in most of those homes, that advantage isn't as great as you'd think.
Netflix might continue to be the carrier-independent leader in online content, but in the long run it faces tremendous competition from both the content services and the unfriendly network presence of Comcast, Verizon and others.
Can Netflix survive when it has to rely on competitors to deliver its content without slowing it down and reducing its quality, while also trying to make up for a thinning menu of shows and movies?
It can't do that and keep the kind of market share that lets it eat up a third of the available bandwidth during peak hours in the U.S.
It may not be able to survive at all.
Within the next couple of years it might turn out that Netflix is this generation of the Internet's Napster.