Redbox Instant CEO: Netflix was wrong to sideline DVDs

A digital media service – that also offers DVDs? In 2013? “We are a bit of a throwback,” admitted Redbox Instant by Verizon CEO Shawn Strickland at a small press event in Las Vegas on Wednesday. Common wisdom in the industry is that consumers are moving towards streaming and that DVDs are a thing of the past, but Strickland and his team believe that physical media can actually be part of a viable offering for some time to come.
Redbox Instant, which started its private beta test last month, offers consumers DVD coupons as part of their subscription package, and Strickland said that the format helps to provide a unique offering with newly-released titles that other services don’t have. “That’s the freshest way to get the content,” he said about DVDs.
Of course, Netflix (s NFLX) used to provide its customers with a similar offering. The company provided customers with DVD rentals as well as online streaming for $8 a month – until Netflix decided to split the offering into two separate subscription plans in July of 2011.
Netflix has since put most of its energy towards building out the streaming business, and seen the number of its DVD subscribers continuously decline. But Strickland argued that this was the wrong move. “There was a choice forced on the consumer,” he told me.
Redbox Instant now wants to wean some of those consumers off their Netflix subscription – and the company is particularly looking to win over folks who complement their Netflix plan with Redbox rentals. Strickland said Wednesday that between 30 and 50 percent of all Redbox users already subscribe to an over-the-top streaming service.
Redbox Instant is currently in private beta, and wants to open up before the end of the first quarter. To be ready for that, the company is ramping up its device support. Beta testers already have access to iOS and Android apps as well as apps for LG and Samsung smart TVs and connected Blu-ray players. This week, it announced a partnership with Vizio to bring Redbox Instant to Google (s GOOG) TV devices.