With Streaming In The Red, Redbox Digital Is Dead

Everyone wants to be Netflix, or maybe Amazon Prime Video or Hulu Plus.

Subscription video-on-demand services may sound like winners to anyone with the nerve to jump in with two feet, especially at discounted prices for consumers.

At least that’s what kiosk video rental company Redbox thought in starting Redbox Instant by Verizon in February 2013. But Redbox couldn’t make a go of it, achieving much lower subscription levels than it had hoped.  And it is now ending the service.

Redbox and companies like Netflix helped usher the end of the likes of Blockbuster Video. Then, partly looking to repeat what Netflix had done, Redbox tried to expand its rental business from physical video to digital video.

Redbox’s price tag sure looked like a winner -- just $6 a month, less than the current Netflix price tag of around $8 a month. Sure Netflix has made a misstep or two, but it has recovered nicely. Maybe. in its current struggles, Redbox also believes it is following Netflix’s path.



But Redbox hasn’t had any headline-grabbing news a la Netflix’s original programming successes such as “House of Cards” and “Orange is the New Black.” Perhaps, in part, that is where Redbox went wrong with consumers.

Could consumers distinguish between Redbox’s library movie product and Netflix’s? Maybe not. And for $6 a month versus $8 a month, perhaps that differential -- just the price of a very small vanilla latte -- didn’t mean much.

Turns out -- shockingly -- that good PR and marketing matters in the entertainment world. That is what Netflix, and to a lesser extent Amazon and Hulu, are getting from new wannabe (and sometimes actual) high-quality, critically-approved TV shows and upcoming movies. Topline stuff is driving the whole video business machine.

What remains for Redbox? It may just be about price -- $1 or so to rent a physical DVD from a box sitting next to that all-night quick service store. Nothing wrong with that. But newer financially abled video consumers are looking for more, including another form of convenience.

Some believe Amazon Prime is almost catching up to Netflix. But we still wonder about the next transformative -- or disruptive -- consumer video businesses that will keep current TV/video business executives up at night.

What businesses will go out of business then?

2 comments about "With Streaming In The Red, Redbox Digital Is Dead ".
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  1. Stanley Timek from VuNeex, October 8, 2014 at 12:27 a.m.

    The next disruptive opportunity lies in the free-to-watch video space. Today's consumer-focused video is typically supported by ads (banner overlays or pre-rolls). This is a simple duplication of the broadcast TV business model.

    Opportunity lies in the creation of a new business model that rewards all parties (producers and "supporters") without forcing the audience to endure disruptive advertising.

    The question will be, if a model that respects the audience and delivers results for supporters is created, will marketers use it? Or is the status quo too comfortable?

  2. Edmund Singleton from Winstion Communications, October 8, 2014 at 4:59 a.m.

    I heard my neighbor say years ago that the porn industry lead the way killing the physical product for an on-line one to keep their collection away from the examining eyes of family and friends…

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