Five Must-Haves from the Verizon and Coinstar/Redbox Deal

What do Verizon and Coinstar need to make this venture a groundbreaking success? For starters, a little groundbreaking content would be nice. While it might be too much to ask, Verizon VZ could go the route of Starz, HBO, Showtime, and other cable networks and develop a few exclusive shows or films. This would provide Verizon with a nice foundation to lure prospective customers. That, however, is probably a venture Verizon will save for later. But if it can't build its own original programs, what can Verizon do to thrive in the world of streaming video? 5. Start With a Big Announcement When Amazon AMZN announced that it would bring old Fox shows (such as Ally McBeal and 24) to Amazon Prime, I practically fell over laughing. When Netflix NFLX announced that its famous (or infamous) deal with DreamWorks Animation DWA, it set off a chain of yawns so powerful it could have put the whole world to sleep. Really, Netflix? This is all you've got? Why, exactly, would anyone pay double for a service that provides them with less content than they received before the price hike? Verizon cannot afford to make a similarly embarrassing mistake. It could offer the service for free for several months, or release an ad-supported freebie edition (a la Hulu), just to spark interest. But if it really wants to be successful, Verizon needs to utilize the Hollywood-schmoozing power of its new partner, Coinstar CSTR, and start the service with films and TV shows that no one can resist. 4. Fair Pricing Structure If Verizon doesn't think it can offer a lifetime streaming/DVD package for $10 a month, then let me give the company some advice: don't do it! The short-term gain of acquiring new users will not help Verizon or Coinstar's share price when consumers learn that they have been double crossed. A better strategy would be this: offer the most basic (streaming-only) service for less than Netflix, a premium (streaming and limited DVD) package for a few dollars more, and an ultimate (streaming and unlimited DVD) package for somewhere around $20 to $25 a month. Coinstar could continue to offer Redbox movies individually, allowing consumers to use the service as is, if they choose. But the package deals could be a huge draw for new customers. 3. Roll Out New Content on a Regular Basis Better yet, why not provide a calendar for users to know exactly when new content is coming? While Verizon may not be able to tell us in advance that a new content deal is about to be struck (if the deal falls through, consumers would be justifiably upset), it would be nice if the company could give us some kind of guarantee. You know, the way HBO guarantees that one new movie will premiere every Saturday at 8:00 p.m. 2. Don't Be Afraid of Ads, But Realize That Consumers Hate Them It will never, under any circumstance, be okay to interrupt someone's movie with an advertisement. Only TBS and other basic cable networks can get away with that. That said, there is a ton of money to be made in advertising – you just have to know where to look. This is where TV becomes an important property. Aside from having the potential to draw in millions of viewers, TV watchers expect to see commercials. Thus, the commercials breaks are already built into our favorite shows. They're not always pleasant. Sometimes they are completely ignored (or avoided altogether; many TV lovers go with Netflix to bypass the ad breaks). But they are a much more acceptable option than needless price hikes. 1. Secure Content for Multiple Years (With an Easy Renewal Contract on the Side) Verizon can't afford to pull a Netflix. If it scores a deal with Starz, for example, it must fight to keep that network for as many years as possible. Netflix failed in this regard. While Starz seemed reluctant to re-sign with Netflix (the company thinks its network is too valuable to push online), the streaming giant could have found a way to make it work. You know, by paying more money. Verizon needs to learn from these mistakes and do whatever it takes to avoid repeating them. Follow me @LouisBedigian