Redbox Instant to Be Shut Down Permanently

Redbox has announced their streaming service, Redbox Instant, is to be shut down permanently beginning with the closure of the website on October 7. The service, backed by cellular giant Verizon, was only available for about 19 months, though it was conceptualized by the two companies midway through 2012. Redbox will continue physical operations, but the streaming service has elected to bow out to the likes of Netflix and Amazon.

The service shutdown entails a complicated refund strategy from the company that has become increasingly convoluted as a result of the digital locker feature, with which users were allowed to buy and store permanent content. The service now has to find a way to provide the users their content, or at least a credit of equal value, since they can no longer access the locker. In Redbox’s official release, they stated that they appreciate patience in the sorting of these logistics, and customers should wait about two weeks for a response that details how to receive the content they paid for. For those who are in the middle of a paid month of their subscription, a credit will be issued to their statement by Oct. 24.

The service, which began officially in 2013, was primarily held by Verizon’s 65 percent share of the company, with Redbox, or rather, their owner, Coinstar, holding the other 35 percent. Redbox has experienced incredible success with the distribution of physical films and games through their kiosks. The aim of Redbox Instant was to provide users an alternative to the likes of Amazon or Netflix by syncing their kiosk service with a streaming service to offer a fuller platform of options for consumers. On the business end, the decision may have been bolstered by reports in 2012 that Redbox had developed the largest market share of physical DVD rentals, forever putting the rental store to rest.

Redbox Instant’s announcement to be shut down permanently may be a result of unkept promises with their subscribers resulting in an unfavorable shift back to their competitors. The service was rumored to allow subscribers to download streamable content on a device for offline viewing, as long as their subscription remained active, a business model that Spotify has used with musical streaming in their effort to replace the iPod. The rumors never came to fruition, though, and when the service was plagued with credit card fraud, the final pieces had already begun to fall.

Difficulty with upset customers does not seem foreign to the service, either. Their Consumer Affairs ranking sets them at a dismal position, less than two full stars. In fact, 78 percent of ranking individuals rated the company with only one star. The reports themselves echo a wide variety of subscriber dilemmas from price increases, to difficulty with credit cards, and advertising from the company that members felt was either false or misleading. However, the company’s market share of the physical rental industry suggests otherwise. With that said, there are not many alternatives with the disappearance of video shops in the past decade.

As a result of all of these difficulties, Redbox Instant is now being shut down permanently, removing themselves from the bout of the streaming providers. Despite the company’s best efforts, it continues to prove difficult to stand up to the giants in this new budding industry. Mistakes with consumers can prove costly, something Netflix learned as well when they attempted to branch their service by dividing streaming and DVD. Regardless, Redbox Instant was not able to recover from similar mistakes, and as a result, the service did not enjoy much longevity or critical success, making the shutdown an abrupt but foreseeable conclusion.

By Brett Stewart

PC Mag
Redbox Instant
Consumer Affairs
Photo by Ian Lamont – Flickr

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