Redbox isn't much of a threat to Netflix -- yetDecember 12, 2012: 3:10 PM ET
Redbox's $8-a-month streaming service is priced just like Netflix's. But it offers far fewer movies and no TV shows.
FORTUNE -- Redbox has announced the pricing plan for its new movie-streaming service: $8 a month. This is being widely characterized as a direct assault on industry leader Netflix, which charges the same amount. But it's not, because Netflix offers all the same movies that Redbox does, plus about 55,000 more.
Redbox will surely offer more titles as time goes on (the service is still in beta), but for now, it has agreements only with Warner Bros. and the Epix pay-TV channel, which is owned by Viacom and offers titles from Paramount, MGM, and Lion's Gate. That amounts to about 5,500 titles. Unlike Netflix, the service will allow four nights per month of DVD rentals for only $1 more. Netflix (NFLX) customers who want both streaming and DVD rentals pay $16 a month. Unlike Netflix, Redbox -- which has grown as a service offering DVDs in store kiosks -- will assess late fees for customers going over the four-nights-per-month limit.
The service comes two years after Redbox, which is owned by Coinstar (CSTR), announced that it planned to get into the streaming business. Its partner is Verizon (VZ) and the full name of the service is Redbox Instant by Verizon.
While the number of titles Redbox is offering is relatively scant, it is heavily populated with blockbusters and newer movies, which the company says is its focus (at least, unless and until it makes deals with studios that offer older and more indie fare). But Netflix also has deals with both Warner and Epix, plus lots of other outfits. For instance, it recently struck a $1 billion with Disney (DIS). Though that deal won't fully take effect until 2016, it could help Netflix strike other deals, which would counter Netflix's growing reputation for not having enough new titles.
Also, Redbox, unlike Netflix, won't offer TV shows. Nor will customers be able to stream over videogame consoles as Netflix customers can. Redbox customers are limited to streaming over computers, Internet-enabled television sets, and certain Blu-Ray disc players. Meanwhile, providers of films are still closely protecting their relationships with pay-TV providers. Epix won't allow streaming of its movies until 90 days after they are made available to cable and satellite customers.
Wall Street apparently doesn't see Redbox's "competitive pricing" as a threat to Netflix's dominance just yet. Netflix shares were up about 8% in late trading Wednesday. Coinstar's shares were up only about 3.5%.