Verizon Considers Entering the Already Crowded Video Streaming Business

Netflix (NAS: NFLX) may see HBO as its main threat, but now it may be facing another challenger in Verizon Communications (NYS: VZ) , which is rumored to be mulling its own online video service.

As Verizon continues to wind down its Fiber to the Home (FTTH)-based FiOS deployments, the new service, according to Reuters, would be delivered online to consumers who are not currently within the FiOS footprint. This means Verizon could potentially target 85 million households in the U.S.

The service provider is reportedly speaking to a number of programming partners about offering a limited program lineup. While nothing is confirmed yet, the service, which would debut in 2012, would offer a similar lineup of movies as those currently offered by Liberty Media's Starz, featuring children's programming from Disney (NYS: DIS) or Viacom (NYS: VIA) .

Although Verizon has been holding ongoing discussions with programmers for the past two years, one of the sticking points is that programmers would compromise their profitable relationship with cable operators.

Of course, the program is far from a slam dunk, with some analysts questioning how Verizon would be able to lure customers to a service they can already get from other sources like Hulu and Netflix.

"If this deal comes true, it's not clear to me what Verizon would bring to the table that is materially different to what others like Amazon offer," said Carlos Kirjner, analyst at Bernstein Research.

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