Redbox video-kiosk owner Coinstar Inc. said Monday they will launch an online service in the second half of the year that features streaming videos and downloads.
The companies offered few details of the venture, in which Verizon will own a 65% stake and Redbox will hold the other 35%.
In theory, however, it would help Verizon extend its video offerings beyond the limited territory where its FiOS pay-television service is available and would give Coinstar a path to move online, as consumers increasingly choose to watch TV shows and movies over the Internet.
The venture will require the partners to cut potentially expensive deals with the studios that produce TV, film and other video content, which could prove to be a high hurdle to its success. Verizon has content deals to support its FiOS programming and video-on-demand services, but fresh contracts are typically required for new delivery channels.
Verizon signaled its interest in developing an online video service last year. The company has approached media companies over the past several months looking to license older movies and TV shows for a new service, people familiar with the matter have said. It wasn’t clear how advanced those discussions were.