Verizon to challenge Netflix, Hulu. Winner take all?

Well, this adds a new wrinkle to the relationship between cable companies and content providers.

In recent years, a lot of people have opted to forgo pricey cable plans in favor of streaming movies and TV shows from companies such as Netflix and Hulu. And it’s no secret that those two companies have had a tense relationship with telecom giants such as Verizon and Comcast, since they’re pushing a lot of content over the networks. But now, according to Reuters, Verizon may get into the streaming game itself: Big Red has plans to launch its own standalone video streaming service next year, offering another source of movies and TV shows to those with (or without) cable plans.

The details of the streaming package are far from final: Reuters cites only “several people briefed on the plan,” and of course the plan could change (or fall through) before its rumored 2012 debut. Reuters reports, though, that Verizon has been negotiating deals with media companies for more than two years, which means it’s likely that it’s seriously committed to the idea. The service would be “limited in its scope,” offering movie packages similar to the Starz Play collection (which will be pulled from Netflix’s streaming section next year due to failed contract negotiations), and kids’ entertainment from companies such as Disney and Viacom.

From what we know, it looks as if Verizon is planning to challenge not only Netflix and Hulu Plus, but also the on-demand movie and TV offerings of other cable companies. With this service, even those who don’t subscribe to Verizon’s TV package could get some streaming goodness. There’s a catch, though: Reuters’s sources say this package would be available only outside of areas where Verizon offers its FiOS broadband and TV package, meaning you’d be out of luck if you already have access to Verizon’s fiber. On the other hand, this new package would reach some 85 million people, compared to 5 million who currently have FiOS TV, so it’s a good way for Verizon to expand. (For the sake of comparison, Netflix has about 23 million subscribers.)

This plan would probably change Verizon’s relationship with other cable companies, such as Comcast and Time Warner: since the streaming service would compete more or less directly with cable TV offerings, it would surely create some uneasiness in that sector.  Verizon would probably price this service similarly to Netflix’s offerings, meaning they could afford to undercut cable packages.

What’s your take? Would you pay for a Verizon online streaming package (depending on content, of course), or are your entertainment needs already met by Hulu and Netflix? Let us know in the comments.

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