Redbox Readying a Streaming Offering

Redbox (s CSTR) is looking to the web to augment its dollar-a-day DVD rental service, according to a report by Bloomberg. The streaming service, which is expected to be announced by October, could help boost revenues and position Redbox as another competitive threat against Netflix (s NFLX).

Earlier this year, Redbox reportedly surveyed its customers as to whether or not they would sign up for an ultra-cheap, subscription streaming service along the lines of what Netflix currently offers. According to a report from High-Def Digest in April, Redbox was floating the idea of a $3.95 subscription video service that would include unlimited online streaming and four kiosk rentals a month. Redbox rentals typically cost $1 a day, so users would basically get free streaming along with their four rentals.

At $3.95 a month, a streaming offering from Redbox would be less than half the price of the cheapest subscription offering from Netflix, who plans start at $8.99 a month for unlimited streaming and one mailed DVD at a time. But a lot would depend on what kind of content is available through Redbox; in the three years since Netflix first launched its Watch Instantly streaming service, the company has grown its library to 20,000 titles. A competing offering from Redbox would most likely be playing catch-up.

Before rolling out any new online video service, Redbox would also need to build or license the technology to do so. One option would be to license technology from Sonic Solutions (s SNIC), which operates the RoxioNow video platform. RoxioNow is used by Blockbuster, Best Buy (s BBY), Sears (s SHLD) and others to power their online video storefronts. In addition to being accessible through PCs, it is also embedded in a number of TVs, Blu-ray players and other connected devices, which could give Redbox an instant on-ramp to the CE device space. And while existing services from Blockbuster and Best Buy are based on a rental model, RoxioNow also supports subscriptions.

The news of a streaming offering comes at the same time that Netflix (s NFLX) is facing a competitive threat from Hulu’s Plus premium subscription offering, which was announced late last month. But Netflix isn’t sitting still; it announced today that it would expand the availability of its own streaming service into Canada later this year.

Image of Redbox case courtesy (CC-BY-SA) of Flickr user Paul Heaberlin.

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