Is Redbox Instant Shutting Down?

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.

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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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