• by Gavin O'Malley , Staff Writer @mp_gavin, February 6, 2012

Spelling trouble for Netflix, Amazon, and Hulu, Redbox is teaming up with Verizon to launch a streaming video service.

“The announcement comes at an opportune time for Redbox, which has long been expected to introduce a streaming service to complement its DVD business,” Fast Company reports.

Due out by the second half of 2012, the service should also better position Redbox parent Coinstar for the digital age. Writes Reuter: “The venture will mark Verizon's first foray into video streaming outside of its network operating region as the telephone company currently only offers Internet video services to customers using its FiOS television service.” 

Also, “roping Redbox into the [joint venture] … makes sense, because it will give the unnamed service a digital-plus-physical option,” notes AllThingsD.

Indeed, “even as video streaming increases, consumers are still renting discs,” Bloombergpoints out. “By combining with Redbox, which offers DVD rentals for about $1, Verizon is adding physical discs to its video offering, allowing it to also compete with Dish Network Corp.’s Blockbuster.”

“I’m not sure Verizon can be a real competitor with Blockbuster and Netflix without the physical DVD component,” Jaison Blair, a Telsey Advisory Group analyst, tells Bloomberg. The problem? According to AllThingsD: “While the big media companies are very happy to license some of their content to Verizon … they are much less comfortable with Coinstar’s Redbox, and have tangled with that service in court.”

What’s more, Hudson Square Research analyst Daniel Ernst tells Reuters that Verizon and Coinstar will need to invest heavily in content relationships in order to offer a comparable service to Netflix.

"The question is, how much are they investing to get a large library of programming?” Ernst asks. “Netflix is spending up to $1 billion a year on content … For me it's doubtful that these two companies will invest to that level."