Light Reading

Redbox Instant Grows, But How Much?

Mari Silbey
2/7/2014
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Redbox Instant by Verizon appears to be growing. But Outerwall, the parent company for Redbox and partner with Verizon in the joint venture behind the subscription rental service, won't say by how much.

The Outerwall Inc. executive team says it isn't ready to disclose subscriber numbers or revenue gains just yet. However, Outerwall did say in its earnings call late Thursday that it will work closely with Verizon Communications Inc. (NYSE: VZ) to figure out how best to disclose more details as the service matures.

Although it didn't share much data, Outerwall did report that Redbox Instant continued to add new customers throughout 2013. Overall rental transactions rose, and average streaming times increased each month.

In addition, company executives took pains to point out that Redbox Instant has expanded to more devices faster than its competitors. In the fourth quarter, the streaming service launched on Xbox One, PS3 and PS4, Kindle Fire, and Windows 8. It's also available on the Xbox 360, iPhones and iPads, Android phones and tablets, Roku boxes, Google TV, Samsung smart TVs and Blu-ray players, and LG smart TVs.

While there are positive signs for Redbox Instant, the service still faces an uphill battle against such online video market leaders as Netflix Inc. (Nasdaq: NFLX) and Amazon.com Inc. (Nasdaq: AMZN). For $8 per month, Redbox offers subscribers streaming access to its online video library, along with four credits toward DVD rentals at Redbox kiosks. However, while Netflix and Amazon include TV show episodes and original content in their catalogs, Redbox offers just movies and video games. (See Verizon/Redbox Take a Swing at Netflix.)

— Mari Silbey, special to Light Reading

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jabailo
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jabailo,
User Rank: Light Beer
2/12/2014 | 4:19:18 PM
Re: Redbox Instant Numbers
No doubt as the industry matures we'll end up with the usual scenario of several large players running the game and lots of startups enhancing their products or nipping at their heels!    There is so much media available now and at such low cost, it seems too good to be true.  I keep waiting for the Big Chill when they decide to clamp down and charge everyone $15 per movie.   Should that happen, I guess I'll be doing a lot more hanging out on Facebook.
TaraSeals
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TaraSeals,
User Rank: Light Sabre
2/11/2014 | 1:44:34 PM
Re: Redbox Instant Numbers
That is such a horrific specter to consider--and after that last court decision it could all very well become reality. I like to think that the FCC will just re-classify broadband service so it falls under the same rubric as other telecom services (and therefore they can apply Net neutrality enforcement to it), but you're right, it remains to be seen.

I do think though that the OTT model in your scenario will just evolve--Netflix et al will cut pay-to-play delivery deals, possibly as part of overall cableco arrangements in which it becomes more of a premium network, like HBO, distributed via triple-play operators.
jabailo
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jabailo,
User Rank: Light Beer
2/10/2014 | 10:41:58 PM
Re: Redbox Instant Numbers
Maybe they are waiting to see how the net neutrality debate plays out.

Imagine a day when Internet providers all become more like cable companies.  They offer the conduit, but also control the content offerings.  

Verizon would then have a combo of 4G wireless broadband and optical fiber, and it would have "bundles" of media services like streaming video channels.

At that point, Netflix would be left out in the cold as an isolated, content only service because the Verizon network would favor Redbox and reduce access to Netflix.

Then bring in sports events and so on and suddenly you have to sign up with the big boys to get the entertainment services you expect.
TaraSeals
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TaraSeals,
User Rank: Light Sabre
2/10/2014 | 4:24:41 PM
Re: Redbox Instant Numbers
Well exactly-- it's like they're hiding it away in the attic. Not sure why...but they don't seem to want to make a lot of noise about it, that's for sure.
KBode
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KBode,
User Rank: Light Sabre
2/9/2014 | 11:15:09 AM
Re: Redbox Instant Numbers
I expected to see much more attention paid to this on the marketing front by Verizon, but I very rarely see any real noise made about it, or any buzz on the consumer side. Streaming catalog still also seems skimpy when compared to Amazon and Netflix, despite what you'd think would be greater licensing leverage as a traditional TV provider. One of those things where they thought it would be a good idea, but are too afraid of cannibalizing traditional TV to give the effort the attention it really needs to succeed?
FakeMitchWagner
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FakeMitchWagner,
User Rank: Light Sabre
2/7/2014 | 5:23:05 PM
Re: Redbox Instant Numbers
The combination of streaming video with the convenience of Redbox DVD rental makes this potentially a winning combination. 
TaraSeals
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TaraSeals,
User Rank: Light Sabre
2/7/2014 | 1:46:29 PM
Redbox Instant Numbers
I'm very, very curious to see what kind of traction Verizon is getting with this. Other online streamers are reporting giganto gains--but VzW is conspicuously silent when it comes to touting market wins. The obvious conclusion would be that it's not going very well. Is this Verizon not putting marketing resources into it? Is it too crowded of a market already? Does its need to avoid cannibalizing FiOS make Redbox Instant ultimateely untenable? I would love to hear what they had to say on any of that.
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