So long, Redbox Instant

After only 18 months, Redbox Instant, the streaming video service jointly operated by Outerwall (parent company of Redbox) and Verizon, is shutting down. The service will officially call it quits tomorrow, Tuesday October 7, 2014. See below for the official announcement on Redbox’s website.

Redbox Instant officially launched in early 2013 with a Netflix-like hybrid model that tried to tie subscription video streaming to physical disc rentals. For only $9.99/month, subscribers got access to Redbox’s online streaming catalogue and four free DVD rentals a month from Redbox physical kiosks. In theory, this gave customers access to newer movies than streaming alone would allow, especially since customers could go straight to the kiosk to rent the movie versus waiting for it to arrive by mail.

Unfortunately, Redbox Instant never really caught on. To begin with, its catalog of subscription titles mostly focused on movies, as opposed to the TV-heavy catalogues that have been a big factor in both Netflix’s and Hulu’s success. Furthermore, Redbox Instant’s catalog was also significantly smaller than Netflix’s or even Amazon Prime’s streaming video catalog, and the service never really gained traction.

Earlier this year, Outerwall CEO J. Scott Di Valerio publicly discussed subscription numbers, stating, “We’re not pleased where the subscribers are to date.” Di Valerio also confirmed that if Redbox Instant continues to stagnate, the company will be forced to reevaluate whether they will continue to sink capital into the venture. The final straw was the fact that the service had to disable sign-ups for the past three months due to a credit card fraud issue. This not only prevented Redbox Instant from acquiring new customers, but also resulted in existing customers with expiring or revoked credit cards being booted from the service because they weren’t able to add any new payment information. 

The bottom line is that Redbox Instant just couldn’t keep up with Netflix (and Amazon and Hulu to a lesser extent). Good on Redbox for recognizing this; now they are free to focus on growing and expanding their kiosk business.

Sources: GigaOm, Redbox, Reuters, TechCrunch