Netflix Drops Most in a Month After Redbox Service Report
Netflix Inc. (NFLX) fell the most in more than a month following a report that said Verizon Communications Inc. (VZ)’s joint-streaming venture with Coinstar Inc. (CSTR) will undercut the world’s largest subscription service.
Netflix, based in Los Gatos, California, fell 7 percent to $76 at the close in New York, for its biggest decline since Oct. 24. Before today, the stock had gained 18 percent this year.
Verizon’s and Coinstar’s Redbox Instant service could charge subscribers $6 a month for a basic streaming plan, according to a Nov. 29 report by GigaOM, a technology Website. That compares with a $7.99 month subscription charged by Netflix. GigaOM said the details of the Redbox Instant service were available on an unencrypted support page for the venture’s Website. The page now requires an access code.
Redbox Instant, 65 percent owned by Verizon, will compete with Netflix and Amazon.com Inc. for the growing number of consumers who watch movies and television shows online and on devices like Apple Inc. (AAPL)’s iPhone. The U.S. market for subscription streaming rose fivefold to $1.1 billion in the first half of 2012 from a year earlier, according to data from the Hollywood studio-backed Digital Entertainment Group.
Netflix had 29.4 million streaming customers globally as of Sept. 30. Amazon, the Seattle-based online retailer, offers free two-day shipping and access to 30,000 movies and TV shows for $79 a year. It doesn’t disclose its subscribers.
Netflix spokesman Jonathan Friedland declined to comment on the GigaOM report. Patrick Mason, a spokesman for Redbox Instant at GolinHarris, a public relations agency, didn’t immediately return a phone message and e-mail seeking comment.
In addition to a monthly subscription and an allotment of DVDs from Coinstar’s almost 40,000 kiosks, Redbox Instant will offer a la carte movie rentals online and purchases for download, Eric Bruno, Verizon’s senior vice president of consumer product management, said in an interview in September. The service was announced earlier this year and plans to start by the middle of December, according to Bruno.
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