Verizon and Coinstar Will Destroy Netflix

Two companies have a message for the nation's largest streaming video site: you're screwed!

Verizon

, the cellular giant that

Netflix

, has seemingly found a way to

: by teaming up with Coinstar

. It's an unprecedented venture that is already having a

– all the while providing Netflix investors with a

. This announcement follows the near-confirmation that Verizon did, in fact, plan to enter the streaming video market. It has been a tough one to crack, but after Netflix made it look so darn easy, other companies can't resist the temptation to enter. Actually, it might be Netflix's own mistakes that invited competition. While many corporations steered clear of the streaming giant in the years leading up to its botched price hike, there has since been an opening for new players to enter the scene. Thus far, however, none of them have presented the world with a viable strategy for knocking Netflix from its spot at the top. That changed the moment Verizon and Coinstar entered the fray. Coinstar, which owns Redbox (the hugely popular DVD rental service that distributes movies through in-store kiosks), has just acquired invaluable help from a massive, multi-billion-dollar company. Verizon may not yet be an expert in content distribution, but it has the resources and marketing muscle to do whatever it takes to get ahead in this market. Whether or not Verizon will actually do

remains to be seen. But today's announcement is encouraging, inspiring, and downright surprising. It's also a brilliant strategy. While Netflix continues to tell us that DVDs aren't important, the

. Redbox wouldn't be so successful if people hated DVDs as much as Netflix claims. The reality is that, while DVDs could (will?) eventually fade away, they are still an important part of home entertainment. Hollywood may not be able to sell millions of them to individual consumers anymore (they could if movies were better, but that's a whole other dilemma). The film industry can, however, continue to

millions of DVDs and Blu-ray discs via Qwikster (I mean “Netflix”), Redbox, and other services. Verizon is positioning itself to take advantage of both markets while setting the stage for a streaming video takeover – if/when the day comes that people stop caring about DVDs. Until then, the company can take its time constructing a stable and reliable streaming service while acquiring the kinds of films, TV shows and content deals that will make consumers think twice before renewing their Amazon

Prime account. Granted, it will be a lot easier for Verizon to build a stable service than it will be for the company to acquire great content. Right now, the best basic TV deals are often skewed in Hulu's favor. This is partially due to the fact that Hulu is owned by Fox, NBC and ABC. Meanwhile, the best cable network deals have gone to Comcast

and Netflix. Up until recently, the best movie streaming deals were with Netflix. Now movie streaming kind of sucks across the board. And with Hollywood trying to figure out a way to digitally monetize their flicks (without having to share their profits with a content distributor), it's hard to say what the future will look like. But if anyone can make progress in this regard, it's Verizon. Amazon has too much on its plate to transform its service into a true Netflix-killer. While many users are happy with the video selection, most users subscribe to Prime for the shipping benefits. The company brags about offering 100,000 total videos, but most of them are separate from Prime and must be rented individually. Have you ever taken a moment to explore the movies that are included with the Prime package? It's hilarious. Going by

, the most popular film is a cheesy Jenny McCarthy flick called Dirty Love. This either means that Prime users love crap, or that crap is all they have to choose from. If Blockbuster has what it takes to become a streaming content leader, the company's new owner, Dish Network

, must be keeping its strategy under wraps. Thus far, we haven't seen anything good come from the buyout. Additional Blockbuster retail locations have closed, which was to be expected. But where are all the impressive, we-can't-believe-it's-not-Netflix content announcements? Right now, Blockbuster doesn't have any. Netflix should (in theory) be the company best positioned to deliver the greatest content deals. But Netflix has been unable to secure more than a silly partnership with DreamWorks Animation

, which means that five-year-olds can stream Shrek and Madagascar. Yawn. (To be fair, How to Train Your Dragon was amazing. But that's just one movie. It's not enough to make consumers switch to Netflix. I'm not sure that the whole catalog of DreamWorks' animated films would be able to do that.) Hulu will continue to grow, but its strategy is primarily focused on television. While it recently signed a deal with Miramax to acquire the studio's collection of films, people aren't going to come to Hulu for old films alone. This leaves Verizon as the leading company to step into the streaming video spotlight.