A year and a half after its official launch, Redbox Instant is calling it quits. The shutdown shows how hard it is to compete with Netflix for streaming video subscriptions.
Redbox Instant hasn’t been able to sign up new users for three months due to a credit card fraud issue that may fasten the video service’s demise.
Activist investor Barry Rosenstein has bought a 14.5 percent share in Outerwall, the parent company of Redbox, for around $204 million, reports Forbes. Rosenstein, who made the investment through his Jana Partners outlet, believes Outerwall to be undervalued, declaring in an SEC statement that options include cost cutting as well as “pursuing a sale, selling and/or discontinuing businesses.” Outerwall not only competes with Netflix through its Redbox DVD kiosks, but also through Redbox Instant, a subscription streaming service the company jointly launched with Verizon.
News Corp COO Chase Carey spoke about Fox’s digital strategy in an earnings call Wednesday afternoon. The company saw strong growth in home video, thanks to digital downloads. Carey also acknowledged that Hulu will have to adapt in coming years to compete with Netflix.
Redbox Instant by Verizon doesn’t want to beat Netflix with a bigger catalog, but rather focus on fewer titles that matter. You know, like that Redbox kiosk in your supermarket. Coinstar CEO Paul Davis revealed some details about the service during an interview.
The DVD business is still very, very good to Redbox and its parent company, Coinstar, which now control more than 42 percent of the U.S. disc-rental market. Redbox, however, said nothing about its new Verizon joint venture in Thursday’s Q2 earnings call.
The joint venture will operate under the name “Redbox Instant by Verizon” and will be headed by former Verizon FiOS executive Shawn Strickland. It’s still unknown as to what kind of programming it will offer and at what price.
Speaking at an investor conference Wednesday, Verizon CFO Fran Shammo said his company’s joint venture with Coinstar’s Redbox will seek to leverage the DVD-rental kiosk operator’s 30 million customers and not so much on Verizon FiOS’ nearly 4.4 million customers.
Has the long-moribund home entertainment sector finally started to turn the corner? Significant growth from subscription streaming and Blu-ray rentals and sales give the industry its second up quarter out of the last three, according to studio-funded research firm the Digital Entertainment Group.
While its longtime DVD-rental rival, Netflix has signaled its eventual retreat from the disc business, kiosk operator Redbox seems more than happy to take on any physical-media customers Netflix wants to cut loose.