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Sell Coinstar, It Can't Beat Netflix

Tickers in this article: AMZN CMCSA CSTR GOOG MSFT NFLX SNE T VZ
NEW YORK ( TheStreet) -- In Las Vegas this week, they're wasting more money and time than usual: The Consumer Electronics Show is ongoing.

The four companies that matter most -- Apple (AAPL) , Amazon.com (AMZN) , Google (GOOG) and Microsoft (MSFT) -- aren't even there, though Steve Ballmer made an appearance last night. Beyond sex, drugs, strippers and rock-n-roll, what's the point of even putting this thing on?

Save cash and hold CES at your Southern Nevada Best Buy (BBY) . People can just as easily browse items most consumers will never buy in more familiar surroundings.

The CES spectacle highlights a problem happening across broad and often-intersecting spaces such as tech and media. There's very little innovation or, forget innovation, just game-changing news happening where it matters -- on the ground.

Consider Verizon (VZ) , one of the companies that actually matters.

Verizon is at CES showing off stuff large numbers of people will use -- Internet-connected auto technology and mobile Web services. Excellent, even if expected long before the end of the decade by most consumers. However, I'll never understand why such a strong company deals with Coinstar (CSTR) .

Coinstar couldn't be any less inspiring. Yet, Verizon just rolled out the unimaginative Redbox Instant with these guys.

Like them or not, Netflix (NFLX) pioneered third-party streaming. There's no use getting into the business unless you have a hook and massive core revenue to subsidize streaming. You're not going to beat Netflix. Best-case scenario -- you get buried in the same grave.

Reed Hastings sketched the unwritten future of a mass transition from DVDs to streaming. While I don't agree with how he executed -- premature and without selling the DVD unit -- you have to give him credit for taking a brave leap. If it doesn't work out, Hastings might have regrets, but he'll have nothing to be ashamed of.

Ultimately successful or not, most companies that enter the space have halfway decent reasons. But not Coinstar. They're playing follow the leader. Verizon, for whatever reason, plays the role of enabler.

Amazon uses streaming to rope consumers into its larger ecosystem. Google drives advertising revenue. Big companies such as Sony (SNE) can put out relatively weak platforms such as Crackle because they own a considerable amount of content. Or, like Comcast (CMCSA) with Streampix, they have large enough arsenals to subsidize ventures that super-serve their core customer.

That's what AT&T (T) will do with its new streaming complement to U-Verse television. Same goes for Verizon vis-a-vis Redbox and FIOS.

You do not lose much if you're in the cable business and you add value to a traditional subscriber's package with streaming. This strategy will not hurt Verizon. If it fails, Verizon walks away, hardly wiping sweat from between its toes. Small potatoes.

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