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Is Redbox Instant Shutting Down?

Mari Silbey
9/30/2014

Redbox Instant by Verizon may be rapidly approaching its end.

In a new GigaOM report, Janko Roettgers presents a compelling series of data points suggesting the over-the-top video service is on its way out. First, Redbox Instant isn't signing up any new customers. Thanks to a credit card fraud issue, the company has halted all new customer registrations "to make sure that criminals are not misusing our system to hurt innocent third parties." (It appears no current customer information has been compromised.)

That news wouldn't sound so dire, except that apparently the gates have been closed for three months already. And subscriber numbers weren't so hot even before the shutdown. (See Redbox Falls Flat in Streaming Space.)

Second, a Reddit user posted a rumor recently that Redbox Instant would be turned off entirely as of October 1. Roettgers asked for details from the company, but received only a curt "no comment." Light Reading also reached out to Verizon Communications Inc. (NYSE: VZ), but a Verizon spokesman said,"Redbox Instant by Verizon declines to comment."

Third, Redbox Automated Retail LLC is doing its best not to shine a spotlight on its joint venture with Verizon. On the Redbox website home page, there's no mention at all of Redbox Instant. And as Roettgers points out, the one page on the site that does mention the streaming service doesn't even provide a link.


Keep up with the latest in OTT video developments on our dedicated OTT video content channel here on Light Reading.


It's possible that Verizon is backing away from Redbox Instant in order to focus on the new mobile IP video service that it plans to launch next year. Verizon CEO Lowell McAdam said earlier this month that his company would use the OnCue assets it picked up from Intel Corp. (Nasdaq: INTC) earlier this year to kick off its new TV service in the first half of 2015. (See Verizon Plans Mobile TV Service in 2015 and Why Did Verizon Buy OnCue?)

In the meantime, however, the Redbox Instant rumors are helping to build the case against pay-TV providers trying to break into the subscription video-on-demand business. The rumors come on the heels of news that rival Comcast Corp. (Nasdaq: CMCSA, CMCSK) is changing strategy with its Streampix SVoD service. Specifically, Comcast is getting rid of its Streampix mobile apps and website, and has said "the Streampix service will simply be part of the Xfinity TV app and website, like other VoD offerings." (See Comcast Turns Off Streampix.)

Pay-TV providers are learning the hard way that it's not easy to compete with Netflix Inc. (Nasdaq: NFLX). The value of the OTT company's vast content library combined with its low monthly fee make Netflix a very hard act to follow.

— Mari Silbey, special to Light Reading

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brooks7
brooks7
10/9/2014 | 7:00:56 PM
Re: Netflix is fascinating (Brief Thoughts)
brian,

Thanks for your comments!

Yes, in the direct cable analog it is the MSO that spits out the dispute screen.  But in my model, the person that is going to want to get paid is Google.  It can detect the source of the incoming IP connection by IP address and block customers through a redirect based on that.  Yes, this is a leap...but something to think about.  :)

Essentially, the biggest single issue is that a forum on a telecom news website is insufficient for an effective and broad conversation.

seven

 
briandnewby
briandnewby
10/9/2014 | 2:23:36 PM
Re: Netflix is fascinating (Brief Thoughts)
Seven,

I think the leap (well, one of the leaps) is that Google is the same as Disney (and it may be, actuall). 

And, in your illustration, Google wouldn't be able to give the "dispute splash screen," and Comcast would be the one controlling the message.

So, all of those are fun little nuances to play with, I guess--good topics when I run.

I'm not really proposing the cable-like model, just wondering why it isn't in place.  And, I agree with the scarcity and abundance thoughts, but are those really both the model and the goal?  I do think bandwidth is more scarcity than abundance.  Heck, a bridge is more scarcity than abundance because, likewise, only so many can travel across it at one time.

I liked your post because it critically looked at some of these, but I'm left wondering if the model that exists simply is broken, and then I think about how all pricing models in all industries eventually seem broken, so maybe that's good??? 

 
brooks7
brooks7
10/4/2014 | 1:56:10 PM
Re: Netflix is fascinating (Brief Thoughts)
Hi Brian,

Well, the question would be what would I get from the premium tier of websites.

When I buy a premium channel on TV I get access to the content.  Without the purchase, access is denied.  The reason for this is the cost and marketing model of the content.  I am a Comcast subscriber and just went to their site.  I see the following message in the details of one of the bundles:

HBO® ranges from $13.95 to $23.95, depending on area.

Given that the Starter Package has 140 channels as at about $0.50 a channel you can see that there is a HUGE premium for the content. I would think that a better analogy is that Netflix would be sold by the ISPs.  You can get Internet or Internet with Netflix.  Netflix cost $8 a month and Netflix gets $7.75/month from the ISP.  The gain for Netflix is that has one HUGE bill that it deals with and doesn't care about processing your credit cards.  

I used to sell Spam Filtering to ISPs through a company named Edgewave.  We liked selling to ISPs because even if the average price per mailbox was low, we got to collect one bill and a bunch of mailboxes from one customer relationship.  Some ISPs (yes even today) upsold Spam Filtering and we had a feature which turned of content filtering for specific mailboxes.  In some ways, that was a lot like this.

Right now our Tiers are supported by paying premium sites directly.  

If your proposed model came to pass, then Google is going to come ask the ISPs for its cut of each customer (just like Disney does today).  Imagine what happens when you get a page that says, "We are in a dispute with Comcast.  We have blocked all non-premium subscribers from our services.  We here at Google ask your help by telling Comcast how much you like our services."  This is what happens when content owners and cable companies get in disputes today.

Okay, here is the thing about airplane analogies and road analogies.  If I cross the Golden Gate Bridge in a Kia or a BMW I pay the same toll.  Airlines do not do a credit check when they sell me a seat.  The choice of how much I pay is a LOT up to my behavior (when did I book) as much as what I book (First Class or Economy).  Airplanes are selling seats to users based on a very complicated pricing model.  Doing so on Internet Bandwidth would only work in a scarcity model (just like stadium seating).  The pricing models and goals we have are abundance models.

In some ways, I like the bandwidth cap models for usage.  Users get an amount bundled and get to buy in increments.  I don't like the pricing jumps or the small amounts on the caps.  But I like the general concept.  My model would be that you get the first 10GB bundled and lets call it $1/GB (for round numbers).  Each additional GB adds $1 to your bill dynamically.  For wireless maybe the number is 50G and wireline 500G bundled, but that is the idea.  

seven

 
briandnewby
briandnewby
10/4/2014 | 1:13:01 PM
Re: Netflix is fascinating (Brief Thoughts)
@brooks7

I've often said the missing element in network neutrality is the concept that there could be tiers of websites.

In cable TV, we buy channels.  In Internet, we buy access.  Why is that different?

Why couldn't Yahoo, Google, and certain sites be free, and extra be premimum just to access (I'm not advocating, believe me, just asking).  Airplanes do this, by the way.  Amazon is free on an airline, other sites aren't.
jabailo
jabailo
10/4/2014 | 10:37:10 AM
Re: Netflix is fascinating
Some of my best finds are TV series...not always the ones you think.  "The Following", "Longmire", "The Departed" (French version), "Gold Rush" all held my attention night to night or with weenend binge watching.

Take Gold Rush -- 3 seasons, 50 episodes of an hour each.  That's the equivalent of 25 movies.   That's a lot of entertainment hours for just one TV series!

The other types of movies that I find interesting there are these little known horror/thriller/sci-fi flicks.  Many of them are less stage-y and gore-y than traditional movies and have added back in the Twilight Zone era absudist plots...a more cerebral form of horror.
 
Mitch Wagner
Mitch Wagner
10/3/2014 | 5:21:41 PM
Re: Netflix is fascinating
jabailo - A friend who is a Netflix fanatic said you almost never find what you want on Netflix, but you always find something interesting. He seems to split his viewing between highbrow documentaries and lowbrow B-movies. Ask him what he's watching and he'll either say "A fascinating documentary about the religious parallels between Charlemagne and the Ottoman Empire under Suleiman" or "Fast and the Furious Part 23: Faster and Furioser."
Susan Fourtané
Susan Fourtané
10/3/2014 | 6:07:36 AM
Re: Netflix is fascinating (Brief Thoughts)
KBode, 

Well, Google plans to expand to other cities in the future. 

I think the prices of broadband in the US are quite high. They are supposed to lower, not higher. Why should Verizon be driving costs up? 

-Susan
KBode
KBode
10/2/2014 | 7:19:09 AM
Re: Netflix is fascinating (Brief Thoughts)
No, unfortunately not. :)

I am however lucky to be in a Verizon FiOS neighborhood, even though the company seems insistant on driving up costs each month. I will say I've never once had an outage or even a hiccup on the line since 2008, though....
Susan Fourtané
Susan Fourtané
10/2/2014 | 3:49:40 AM
Re: Netflix is fascinating (Brief Thoughts)
Thanks, KBode. 

Are you in one of Google's invited cities to try Fiber? 

5Mbps? That's too slow. :/ Now I see why it's free. However, the installation fee for such slow connection seems to be expensive. Maybe they are actually charging several years of service in that feel. :D I don't find any logical explanation for this. 

-Susan
danielcawrey
danielcawrey
10/1/2014 | 9:31:30 PM
Re: Netflix is fascinating
The one issue I would say Netflix has is that despite its interface that allows for easy searching, one quickly realizes that the amount of content is limited. Cable and satellite providers actually have an upper hand in that the access to content is multitudes higher. 

They should at least try to exploit this – most proviers are not doing this yet. 
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