What? Redbox Had a Streaming Service?

Hobbled by poor programming and security breaches, Redbox Instant was shut down this week.



Redbox Instant — a streaming service created by a partnership between Redbox and Verizon — is shutting down after a period of stagnation following cybercrime activity. The service never really took off in a meaningful way, and in the face of poor subscription numbers, the crime aspect may have just been the final blow that killed the service.

Redbox Instant launched its private beta in December of 2012, and it wasn’t long before the deficiencies started to show. Just three months into the project, Motley Fool contributor Demitrios Kalogeropoulos pointed out where the service lagged behind Netflix:

It isn’t a substitute for the type of wide-selection, TV-dominated streaming service that Netflix sells to its subscribers. There’s room for Redbox Instant to turn a profit here, but don’t expect it to poach many of Netflix’s 30 million streamers.

Some of the downsides to the service were a lack of original content and no available TV shows. Netflix’s focus on original TV shows like House of Cards has been a major boon for the company. Redbox Instant just couldn’t compete.

Add to that the fact that cybercrime had been a frequent complaint from users of the service. “Redbox Instant’s website had been used by criminals to verify credit card numbers they illegally obtained elsewhere,” according to Janko Roettgers, a senior writer for Gigaom.

Redbox Instant responded by locking down the sign-up process, which blocked new user sign-ups for three months, and caused some users to lose accounts as their credit cards expired.

J. Scott Di Valerio, CEO of Redbox parent Outerwall, also said at a Q2 earnings meeting this year that his company and Verizon were “not pleased with where the subscribers are to date,” and “if we don’t hit certain subscriber thresholds, then we have some decisions to make in March.”

Redbox Instant failed because of a lack of user interest in another Netflix that focused on DVD rental rather than on streaming. As Netflix expanded, it began to dictate how the industry worked, and it may have realized that continued DVD service is a losing bet. Netflix is the streaming lead to follow, and looking back on Redbox Instant’s run as a competitor, it seems that it may have never had a chance.