Redbox Instant will be killed Oct. 7: A failed joint venture
Outerwall and Verizon are closing the tap on Redbox Instant, offering customers refunds and a short window of opportunity to stream through the rest of their queues.
Redbox Instant was the love child of Verizon and Outerwall, a kiosk company that owns the Coinstar and Redbox brands. The streaming video service was born to rival Netflix, but it appears a rough summer for the Redbox brand has resulted in the shuttering of Redbox Instant.
"Please be aware that the service will be shut down on Tuesday, Oct. 7, 2014, at 11:59 p.m. Pacific Time," stated Redbox Instant's notice to its customers. "Information on applicable refunds will be emailed to current customers and posted here on Oct. 10. In the meantime, you may continue to stream movies and use your Redbox kiosk credits until Tuesday, Oct. 7 at 11:59 p.m. Pacific Time. We apologize for any inconvenience and we thank you for the opportunity to entertain you."
In Outerwall's quarterly earnings report, released in July, J. Scott Di Valerio, Outerwall's chief executive officer, talked up his company's ability to excel with its core abilties and to scale its automated retail services to meet demand despite the struggles of its Redbox division.
"June represented the lowest monthly theatrical box office in Redbox history," stated Di Valerio. "Box office in June was down 83 percent from June 2013 as only four titles were released during the month. While the release schedule was not compelling for consumers during the quarter, consumer engagement with Redbox remained strong as demonstrated by a significant year-over-year increase in e-mail open rates, e-mail subscribers and Redbox app downloads."
Outerwall attributes a "weak release schedule" for the disappointing performance of Redbox during the quarter, but said strong Coinstar revenue helped soften the impact of the video rental kiosk's sales.
"We produced solid results in the second quarter of 2014 with consolidated revenues and profitability in-line with our expectations despite weaker-than-expected performance from our Redbox business," said Galen C. Smith, chief financial officer of Outerwall. "In addition, we generated strong cash flow in the quarter and repurchased $50 million of our common stock, reflecting our commitment to returning cash to shareholders."
While rival Netflix has tempered investor expectations with news it is anticipating it would continue to draw lackluster earning, the streaming media company's expansion in Europe and its $1 per month price hike has kept it on solid footing for the foreseeable future.