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Watch Out Netflix, Here Comes Redbox Instant

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It's a good thing that Netflix linked up with Disney, and that it's working on original content. Competition from other content providers will be tough in 2013.

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MINYANVILLE ORIGINAL After delaying the project earlier this year, Redbox announced today that it will release the public beta of its Redbox Instant service, a partnership between the company, which is owned by Coinstar (NASDAQ:CSTR), and Verizon (NYSE:VZ). The service will be a primary competitor with Netflix (NASDAQ:NFLX) in the next year. It will even charge the same $8 per month, but will include the additional feature of allowing customer to rent four DVDs per month from any Redbox kiosk. This will make Redbox Instant the only subscription movie service that can offer movies at the same time as their DVD release.

We knew this was coming, but the big news today was Redbox signing with Epix, which has rights to films from Viacom (NASDAQ:VIAB), Viacom's subsidiary Paramount, MGM, and Lions Gate (NYSE:LGF). Both Netflix and Amazon Prime (NASDAQ:AMZN) also have rights to these studios' films, so Redbox has effectively taken a little bite out of the competition's edge. And though Redbox Instant lacks crucial movies and television shows from major studios such as Universal Pictures and 20th Century Fox (and as a film lover I have always found Redbox's lack of old films to be quite off-putting), it will certainly pose competition in the coming year. With stock prices down by more than 80% since last November's high, and with mounting competition, it's a good thing that Netflix signed the deal with Disney (NYSE:DIS) and strengthened its arsenal against the competitors.

Besides Redbox, which will probably take time to establish itself on the Internet anyway, the major competition for Netflix includes Amazon and Apple's (NASDAQ:AAPL) iTunes, both of which can support their video-streaming services with advertising revenue and hardware sales, something Netflix simply cannot do. Already, Amazon charge $79 per year for its Amazon Plus service, which includes video-streaming and free two-day shipping on the site's plethora of physical goods. Netflix costs $96 per year. As of now, Netflix's library and entrenchment in the market is keeping it strong, but it may need even more to continue being the market leader. One option Netflix is exploring is original content.

Netflix is currently developing five original series that will be streamed exclusively online, including a high production value political drama called House of Cards starring Kevin Spacey (certainly sounds like an HBO pitch) and the hopefully triumphant return of the much-missed Arrested Development (I'm a huge fan). If this original content is high quality, it could definitely help maintain Netflix's current subscriber base and attract new members with promises of delicious exclusivity (any Arrested Development fan without Netflix will probably be getting it). And with the very strong Disney card that the company is lucky enough to hold, Netflix has the tools to potentially stave of the competition in 2013, though I am certain it will be hard work.


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