At a time when streaming is on the rise and conventional brick-and-mortar video chains like Blockbuster are extinct virtually everywhere but Alaska, Redbox has been able to give the DVD and Blu-ray rental business a cockroach-like resilience. Not having to pay clerks, managers, and other profit-siphoning fleshwads helps, but the real advantage of Redbox is its simplicity: If you’re at the drugstore or getting groceries, you can scan through a limited selection of the latest releases, plug in the dollars left over from the scratch lottery tickets you bought in a vending machine, and enjoy an impulse rental without having to make a separate trip to a video store. In some cases, the disc will even be playable, despite all the scratches and beer rings on it.
But with everyone getting into the streaming business, Redbox (via its parent company, Outerwall) and Verizon teamed up for the can-miss proposition of Redbox Instant on March 14, 2013. And now, after a series of mishaps, weak second-quarter earnings, and poor subscription numbers, Redbox Instant is shutting down tomorrow. There are others reasons for the shutdown, but let me offer one. Here is a screenshot of the Redbox Instant site:
The genius of Redbox kiosks is that it makes renting movies as simple—and often as nutritious—as buying a bag of chips from a vending machine. Redbox Instant, on the other hand, involved a system where users spent $8 a month for four DVD credits through a box and a streaming library, which is more complicated and defiant of the impulse-buy appeal of the one-step kiosks.
Beyond that fundamental problem—and simply trying to gain a foothold in an already crowded and competitive streaming marketplace—the demise of Redbox Instant was an inevitability for other reasons. Three months ago, the site disabled signups for new users after criminals had used the service to verify stolen credit cards. And it was not just would-be customers that were affected: Subscribers with expiring credit cards were also unable to change their payment information.
The shutting of Redbox Instant comes after even more bad news for Outerwall, which is facing a slew of expiring contracts with movie studios and likely demands that discs be more expensive to rent at a minimum or that titles would be delayed or not be made available to Redbox at all. Verizon will probably survive this, however.