Redbox Falls Flat in Streaming Space
Timing is everything. While Netflix has made a (relatively) graceful transition from a DVD rental service to an online streaming powerhouse, Redbox is finding it difficult to follow a similar path several years later.
According to The Wall Street Journal (subscription required), Redbox Automated Retail LLC will remove more than 500 of its retail kiosks throughout the US this year. The move comes after the company registered revenue increase of only 3% to nearly $2 billion in 2013 and shows no signs of growth in 2014. Likewise, Redbox's operating income flattened out at $239 million last year.
Worse for Redbox, the company appears to be having trouble gaining traction with its online streaming video service. Parent company Outerwall Inc. said in February that Redbox Instant by Verizon added customers last year, while also increasing overall rental transactions and average monthly streaming times. However, the company declined to disclose any numbers, and executives said they would have to work with partner Verizon Communications Inc. (NYSE: VZ) to determine the best way to share details in the future. (See Redbox Instant Grows, But How Much?)
The WSJ now suggests that the detailed picture isn't pretty. At least compared to its much larger rival, Netflix Inc. (Nasdaq: NFLX), Redbox's subscriber numbers are low, and there's no clear strategy in place to reverse the company's streaming fortunes.
Even as Redbox stumbles, other companies are still investing heavily in their own over-the-top video offerings. Amazon.com Inc. (Nasdaq: AMZN) is using its deep pockets to commission original content for its Amazon Instant Video service. The online retailer also continues to seed the consumer market with its lineup of streaming hardware products, including the new Fire TV. (See Amazon Joins Video Streaming Wars.)
Meanwhile, Comcast Corp. (Nasdaq: CMCSA, CMCSK) is quietly but steadily building up Streampix, its own OTT subscription rental service, and AT&T Inc. (NYSE: T) recently partnered with The Chernin Group in a joint $500 million venture to "acquire, invest in, and launch online video businesses" later this year. (See AT&T Joins OTT Video Parade.)
Dish Network LLC (Nasdaq: DISH) also has plans in the works to launch an OTT service with content from Walt Disney Co. (NYSE: DIS) -- including TV shows from Disney-owned networks like ESPN, the Disney Channel, and ABC -- and other programmers as early as this summer. (See No Mickey Mouse Deal for Dish.)
— Mari Silbey, special to Light Reading