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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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Susan Fourtané
Susan Fourtané
10/1/2014 | 2:37:52 AM
Re: Netflix is fascinating (Brief Thoughts)
Brian, 

It's wonderful you signed up for Google Fiber. :) 

"The Internet is free, except you have to pay for the install (about $300). Or, we're signing up for a plan that is about $120 with faster Internet and cable, no install fee."

How fast would that Internet be? 

The television networks are going to suffer even more changes and will have to adapt, or tranform into something else. 

-Susan

 
KBode
KBode
10/1/2014 | 7:57:53 AM
Re: Netflix is fascinating (Brief Thoughts)
Their symmetrical 1 Gbps tier is $70, bundled with TV services it's $120, and the "free" tier (after $300 installation fee) is around 5 Mbps.
KBode
KBode
10/1/2014 | 7:59:31 AM
Incompetence and apathy
It seems like the failure here is a combination of both incompetence and apathy. I'd seen numerous users note that Verizon wasn't really advertising this service at all -- and after the credit card security issue popped up many people noted they just sort of gave up. This was on top of a "me too" service that really wasn't very good to begin with.
Michelle
Michelle
10/1/2014 | 10:04:19 AM
Re: Netflix is fascinating (Brief Thoughts)
@Brian excellent point not often made in this argument.
brooks7
brooks7
10/1/2014 | 10:13:56 AM
Re: Netflix is fascinating (Brief Thoughts)
Brian,

I think you will find that the margins on broadcast video are razor thin.  They pass almost all the dollars along to the content companies.  Which is why I find this notion that the content companies are going to pay to be distributed humorous.  Imagine this scenario, Comcast does something and Google cuts off service to all Comcast customers.  No search, no Youtube, no Gmail, etc.  Before you laugh, think about the arguments between various channels and cable/satellite.  Who caves?

seven

 
Phil_Britt
Phil_Britt
10/1/2014 | 11:18:54 AM
Re: Netflix is fascinating (Brief Thoughts)
With the razor-thin margins that you mention, there is no way for Verizon to run this profitably if there's even a hint of fraud. Target has blamed much of its poor business late last year and early this year at the fraud there. And who knows what will happen to the grocery chains that use the Supervalu system that's been hacked twice in the last few months.
MikeP688
MikeP688
10/1/2014 | 1:45:34 PM
Re: Netflix is fascinating (Brief Thoughts)
Looking foward to your periodic thoughts on it Sir--Part of the "lure" of the traditional Cable Companies is convienence.  For me, as an End User, I have been a bit "leary" as I continue to assess my ROKU player and see if it makes sense.  I was gratified, though, to see some of the more regional players pulling the plug on the expensive TV providers that the Wall Street Journal Reported on.   Maybe that's why Comcast is so keen to expand its' "reach" so that it will have an end to end way to distribute its' content.    I also wonder the "bravado" that CBS' Chief had recently in his conversations on Bloomberg may prove to be hollow if they're too aggressive.   

Truly interesting times..as we begin a new month..and a new quarter :-) 
MikeP688
MikeP688
10/1/2014 | 1:48:34 PM
Re: Netflix is fascinating (Brief Thoughts)
I am seriously considering replacing my current card since I just bought something at Albertsons yesterday.     WHat is unfortunate is how companies play the "blame game" without truly appreciating and recognizing their own culpability.    I can't help but wonder whether going for and vying for a "post-digital world" will be a solution.   But what is happening now is pure insanity.   
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. 
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
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