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Verizon’s Netflix Competitor Redbox Instant to Stop Streaming

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Redbox Instant, the streaming video service jointly operated by Redbox and Verizon, is shutting down on Oct. 7. Redbox Instant subscribers were informed via email Saturday of the shutdown, and a notice posted to the website reads as follows:

“Thank you for being a part of Redbox Instant by Verizon. Please be aware that the service will be shut down on Tuesday, October 7, 2014, at 11:59 p.m. Pacific Time. Information on applicable refunds will be emailed to current customers and posted here on October 10. In the meantime, you may continue to stream movies and use your Redbox kiosk credits until Tuesday, October 7 at 11:59 p.m. Pacific Time. We apologize for any inconvenience and we thank you for the opportunity to entertain you.

Sincerely,
The Redbox Instant by Verizon Team”

A Redbox Instant spokesperson added this via email:

“The joint management of Redbox Instant by Verizon has elected to cease operation of the service effective Tuesday, October 7, 2014. The joint venture partners made this decision after careful consideration. The service had not been as successful as either partner hoped it would be.  We apologize for any inconvenience this may cause our customers.”

The shutdown comes after the service had disabled new sign-ups for three months due to a credit card fraud issue, which 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. Redbox Instant was quick to point out that the customers’ credit card information wasn’t impacted by the issue; instead, Redbox Instant’s sign-up process was used to verify credit card numbers stolen from other retailers.

Rumors about a shutdown first surfaced about a week ago; at the time, a Redbox Instant spokesperson curiously replied with “no comment” when I asked whether a shutdown was imminent. 

Redbox Instant officially launched in early 2013 with a hybrid model that tried to tie subscription video streaming to physical disc rentals. Subscribers were given coupons to redeem at Redbox kiosks every month and also had access to a catalog of subscription titles that mostly focused on movies, as opposed to the TV-heavy catalog that has been a big factor in Netflix’s success.

Redbox Instant’s catalog was also significantly smaller than Netflix’s or even the Amazon Prime Instant streaming video catalog, and the service never really gained traction with consumers, leading the CEO of Redbox parent Outerwall to remark that both his company and Verizon were “not pleased” with the subscriber numbers. In that context, the credit card fraud issue may have just been the final straw.

It’s still unclear what is going to happen to the team behind the service as well as Redbox Instant’s assets. I’ve heard from a source close to the company that the team is still in place; my guess is that at least some of Redbox Instant’s engineers may end up working for Verizon’s online video service, which the company plans to launch sometime next year. Asked about possible layoffs, Redbox Instant’s spokesperson had this to say:

“While Human Resources matters are private, I can tell you that the Redbox Instant by Verizon team is made up of talented individuals who made great contributions to the service.”

And here’s the official word on Redbox Instant’s assets:

“We are always looking for innovative ways to serve our customers, but don’t have anything further to discuss at this time.”

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