nScreenMedia OTT multiscreen media analysis

Top four reasons for Redbox Instant failure

Redbox Instant by Verizon, a joint venture between Redbox’s parent Outerwall and Verizon, is closing its virtual doors Tuesday, October 7, 2014. After barely 20 months, the service failed to attract consumers in any quantity. This came as no surprise: the service was doomed from the start.

As a longtime subscriber to the Redbox Instant service, I have often ask myself why I continue to pay the $9.79 a month (including four Blu-ray disc rentals a month.) Now the service is to close, here are the top four reasons I should have bailed months ago.

Number one: bad business model

The idea of combining streaming service with DVD rentals was questionable from the moment the service was announced. Netflix had separated the streaming video plan from DVD rentals over a year earlier. Once the company had done this, it immediately became clear that the DVD rental business was declining while streaming was growing strongly.

Initially, Redbox benefited from this move by Netflix, with many DVD customers simply switching to Redbox kiosks. However, the general decline in DVD rentals was already underway, and by 2013 kiosk rentals were in decline as well.

All of this would have been fine if the company had been able to deliver on the streaming side. Unfortunately, that too was doomed from the very beginning.

Number two: Underfunded from the start

One of the weaknesses of the kiosk approach is that the number of titles that can be offered is relatively small. The idea of bolstering the more current titles available through the kiosk with a robust and deep streaming catalog is a good one. Each approach would make up for the weakness of the other. The streaming side of Redbox Instant never came close to fulfilling this promise.

Under the initial joint venture agreement, Coinstar (now Outerwall) and Verizon pledged to invest up to $450 million. Simply put, this was not nearly enough to purchase an interesting content catalog. My initial foray into the library yielded a handful of recognizable titles, all carried by the other major SVOD services, and a bunch of B and C movies of dubious worth. Over time, things did not get better.

Number three: poor streaming interface

While the interface for renting DVDs seemed to work pretty well from all devices, this cannot be said of the streaming interface (see below.) Lacking even a basic ability to make recommendations based on preference or system usage, a user is reduced to hunting through endless lists of poorly ordered movies. Of course, with so few interesting titles that may have been the intention!

Number four: questionable quality

The few movies I did screen with the service provided very variable quality. With the B and C movies, that likely came from the poor quality of the original film stock. However, even the top movies suffered from audio and video problems rarely seen on other SVOD services. These problems persisted throughout my time using the service, even up to yesterday when I attempted to watch The Big Wedding.

As a subscriber to the service, I can honestly say I will not miss Redbox Instant one iota. And that, of course, is the ultimate reason fo the Redbox Instant failure.

Why it matters

Competing in the market for SVOD services with mainstream content is an extremely expensive business.

The idea of combining streaming services with DVD rentals was a good idea at the beginning of the decade. Today, it’s time has passed.

Red box instant streaming service was underfunded from the start. The declining rental business and a weak streaming catalog made failure inevitable.

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(3) Comments

  1. Agree completely Colin, #5 redbox instant was DOL, dead on launch, because it lacked a fundamental value to consumers. Then it was poorly executed with low quality content. Bad game plan = bad result.

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