350 Million New Reasons to Avoid Netflix, Inc. (NFLX)? – Verizon Communications Inc. (VZ), Coinstar, Inc. (CSTR)

Redbox Instant starts slowly
And finally, Coinstar’s Redbox Instant service doesn’t soak up spending the way Netflix, Inc. (NASDAQ:NFLX)’s and Amazon’s streaming plans do. In contrast to those two services, Coinstar, Inc. (NASDAQ:CSTR)’s joint venture buys content on a per-subscriber basis, which makes for dramatically different economics.

That structure will help the company keep streaming costs low while it works to gain a good base of customers. But it also takes large original content gambles off the table for now. So the type of big, flashy content buys that Netflix, Inc. (NASDAQ:NFLX) and Amazon have been announcing aren’t going to be a regular part of Coinstar’s service. Coinstar, Inc. (NASDAQ:CSTR) could become a major bidder for streaming video content but not anytime soon.

Looking ahead
That leaves Netflix as the real pure play for the online streaming market. Amazon is clearly committed to competing on a large scale here. Still, its media revenue is tiny compared to the $61 billion in sales it booked last year.

Coinstar is slowly wading into the market now, but has to fund other projects that are much closer to the retailer’s core strengths. Netflix, on the other hand, has hitched its wagon directly on streaming. That brings a lot of risk, but it also sets up a level of corporate focus that will be handy as it competes in this growing market.

The article 350 Million New Reasons to Avoid Netflix? originally appeared on Fool.com and is written by Demitrios Kalogeropoulos.

Fool contributor Demitrios Kalogeropoulos owns shares of Netflix. The Motley Fool recommends and owns shares of Amazon.com and Netflix.

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