Redbox, Verizon Grasp At Streaming Dollars, But Their Service Makes No Sense

In the world of online streaming video, Netflix, Amazon, Hulu, and HBO are all battling to control what content you watch and where you watch it. Now a new service is entering the brawl. And despite being backed by industry giants Redbox and Verizon, it has no clear advantage over its rivals.

Launched in public beta last month, Redbox Instant by Verizon hopes it can best its competitors with a low monthly subscription rate ($8 per month) and the unique feature of allowing members to borrow a limited amount of movies at Redbox's some 36,000 DVD kiosks in the U.S. However, there's a number of issues with this plan that makes it impossible for me to recommend this service to friends and family. To tick off the biggest problems: Redbox has far less content than its arch rival Netflix; it inexplicably offers no TV shows, essentially making it the opposite of Hulu; it has no original content like HBO Go; nor does it come with streaming access on an endless array of devices, as Amazon's Prime service does. Worse yet, talk with those behind the service, and they're almost unable to explain in any compelling fashion why consumers would want to spend cash on Redbox Instant as opposed to another streaming option. "It all starts with the people--if you want to join us, you have to be a big fan of movies," says chief product officer Joe Ambeault. "The second thing is we don't take ourselves too seriously--this is about fun, and about connecting friends and family. That's what's going to differentiate us."

Of course, it's impossible to understand how such a boilerplate answer will translate to customer acquisitions. Consumers care about high-quality content, unique features, and streaming access on devices like Xbox and Roku. But ask Ambeault what sets the service apart and he'll say, "One of our significant advantages is the brand equity that both of the parent companies bring to this joint venture." Imagine telling your parents that they should subscribe to the service because Redbox and Verizon have great brand equity. (Acknowledges Ambeault, "Yes, that's not something you'd say to your mom.")

Redbox Instant by Verizon brings a surprisingly weak value proposition to such a competitive market. Netflix, for example, has been incredibly aggressive about striking content deals, most recently with Warner Bros. and Disney, which agreed (for a large sum) to give Netflix unprecedented access to its titles starting in 2016. HBO too just inked an exclusive deal with Universal for content through 2022, while Amazon nabbed a content agreement with A&E after Netflix failed to reach a deal with the company.

Comparing these services will always be apples to oranges, in terms of price, content, and features. But after playing with its beta in recent weeks, Redbox Instant by Verizon feels like an awfully lazy attempt to compete with these already established players. Some of its freshest streaming titles (Thor, Transformers, Rango, The Lincoln Lawyer) are all available on competing services; in fact, I had trouble finding a single title that was available on Redbox Instant, and not on Netflix or Amazon Prime. The service is available on mobile products like the iPad and most Android devices, but not on Xbox, Google TV, or LG and Samsung televisions. It offers no TV shows, despite the fact that after years in the business, Netflix has noticed that two-thirds of its viewing is now for episodic content, while just a third of viewing is for movies. And for a company looking to differentiate, Redbox's online service looks remarkably similar to Netflix's design.

Executives dispute the comparison to Netflix's user interface. "It's not something we set out to do. If there is a similarity, it's because maybe we have similar goals. We've got the core Redbox colors, but if you step away from color and logo, we think the experience is a bit different," says Imran Maskatia, senior director of digital product management. Ambeault also promises the company will add more devices to Redbox Instant's roster in the coming months, and says the service has unique and compelling content to attract subscribers from other companies. "The two segments that we're pursuing are huge horror and thriller fans, so we are heavy on horror and thriller [content]," he says. Example? "2-Headed Shark Attack," Ambeault says.

"That's a good one," Maskatia says.

Ambeault is also sure to take a jab at Netflix's content strategy. "Rather than backing to our truck up to some studio in Burbank and taking whatever they put in the back, we spent a lot of time on picking the titles in partnership with those content providers," he says. (And as for TV content, Ambeault adds, "If your mom is not a movie lover, then she is not part of our initial target audience.")

The company's only advantage is its thousands of physical kiosks--ironic for a digital subscription service. Members have the option to venture to nearby kiosks, which are present at many Walgreens and Duane Reade stores, where they can take out up to four titles per month on DVD. It's the best feature of the service, or at least its most unique. However, the limited amount of DVDs that can be rented per month, in addition to the limited catalog of discs in each kiosk (they contain roughly 200 titles), make this a limited value proposition. And don't forget you'll have to deal with picking up the DVDs and returning them in person--an unpleasant notion for anyone dealing with the harsh winter season.

Still, the service is only in beta, and deserves time to grow. But as of now, I doubt if even shareholders of Verizon or Redbox's parent company Coinstar would want to use this service over Netflix or Amazon Prime.

Well, maybe not Ambeault. "It's an amazing value," he says.

[Image: Flickr user Mike D]

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14 Comments

  • Movie buff

    I've just subscribed for Redbox on my Roku-s (multiple) and I am underwhelmed at the quality of streaming. Not the titles as they can be, for the most part, found on Netflix, but the actual encoding of the movie I'm streaming. Some, not all, of the movies I've streamed have a claymation look to them as if they employed stop action to encode the movie. All this on a 100Mbps connection that Redbox's "test" movie plays perfectly.

    Netflix, HuluPlus and Vudu play perfectly (Netflix and HuluPlus have some artifacts some of the time) and no one can touch Vudu's HDX, but you have to pay per movie on Vudu, so apples to oranges there.

    Netflix and HuluPlus's streaming quality is apparent with less artifacts while Redbox streaming is horrible in comparison. I thought that maybe I was watching on too large of a TV, so I went to a smaller one in my bedroom and got the same "blocky" artifacts and while I do get some artifacts from Netflix and Hulu, they're more numerous and visually unsatisfactory on Redbox. Couple that with the few movies that stream in a claymation encode and it will cause you to question the value of the service.

    I do enjoy the 4 "free" DVD rentals as I do feel that is heck of a good deal for me and my household. The selection and the availability is good. The kiosks are everywhere and I know of 4 within walking distance... albeit I'll drive instead, but the option is there if I'm out for a walk with the wife. When you add in the fact that I can reserve titles directly from any of my Roku's, well... that is the midas touch for me. I will keep the service as an addition to my other streaming services.

    The bottom line is I am a movie lover, the wife and kids like TV shows more, but the movies are my hook and when I can get 4 "free" a month and get streaming (poorly, but hopefully this will get fixed with either new encodes or a better protocol) the Rebox, for me at least, is a win-win.

  • Randy Timmons

    Not a winner! RedBox's advantage is cost per movie ..When they stream their movie content the same as box rental prices ...then they'll have something that will drive millions to their system. They will have to expand beyond devices also.

  • Atboone2

    I was interested in Redbox, but I read other reviews and I am not pleased.  I have a TV that allows me to use Netflix, HulU, and others.  Redbox does not give me those options

  • GordanShumway

    So Redbox is into streaming now? They lead the way on the
    kiosk thing, but this seems like a late entry. I work at DISH and this just doesn’t make sense for me; Redbox
    Instant charges eight bucks a month and only covers streaming and four rental
    credits. With Blockbuster @Home by DISH
    my family gets access to thousands of titles via streaming, twenty movie
    channels, and unlimited game and movie delivery through the mail for only ten
    bucks a month. It’s not only more convenient, as I don’t have to go to a kiosk
    to pick up my DVDs or games, but on top of the streaming I also have the movie
    channels. It’s easily the best deal out there.

  • JenJen

    Streaming content is about as average as Netflix's streaming catalog The only benefit is the 4 rentals for regular DVDs. A dollar extra for Blue Ray. I honestly was hoping to have at list some of the releases the kiosk has available available for streaming, not all but some mind you. I mean after all, that is reboxes niche. But right now its another netflix with the added bonus of 4 dvd rentals.

    Right now I will stick with Netflix and Amazon Prime. If redbox's catalog improves in the next month, I may give it a chance but right now as it stands, I probably wont stay after the trail. 

    Though I will point out, currently in the subscription options, you can choose to go completely streaming (no rentals at the kiosk) for 6 bucks. That is its only selling point right now.

  • Michelle

    I just received my trial code and i have no intention of even activating it after reading this! If I cant use it on my PS3, WII and roku, I don't want it! I NEVER watch a movie more then once! Whats the point if you already know what happens? I also noticed there are restrictions to get the 4 free dvd rentals. Not sure what they are. We spend about $25 a month renting from the redbox. If there was no catch to the 4 free rentals, it might be a decent deal. The 4 rentals cost around $5 total. So for an extra $3 you can stream online.

  • Caferyer Johnson

    "... after years in the business, Netflix has noticed that two-thirds of its viewing is now for episodic content,"
    Netflix has noticed that, because their selection of movies SUCKS.

  • Heather Dryer

    I just signed up for the free trial, or should say I activated my trial, yesterday. I'm seriously underwhelmed with all the crap movies they have. Where did they dig these things up? And the lack of devices to watch on is severely limiting too. I have an Apple TV, Roku and BluRay that lets me stream Amazon and Hulu Plus, but I can't watch Redbox on any of them. I'm limited to sitting at my desk or watching on my phone. Neither is appealing to me. So this month long trial isn't likely to do much to convince me to want to shell out $8 a month. 

  • MOVIEFAN

    Redbox kiosks have a far better selection of new movies (i.e. newly released to DVD) than Netflix streaming which mostly has obscure and/or old movies. If Redbox's streaming content is the same as what they offer on their kiosks, they'll be able to differentiate themselves versus Netflix streaming. Those who love TV shows, foreign movies, old movie hits might prefer Netflix streaming.

  • redbox BETA SUX

     based on the beta I'm using...It is the weakest beta I have ever seen. I have been a movie fan for a long time. I remember blockbuster online beta and the netflix beta...but this beta is by far the worst beta I have ever seen.. Beta's are suppose to hook you in and make you want morel; the poor selection of 35+ movies like rango, lincoln lawyer, and 33 other crap movies did just the opposite... I'm appalled that this is the secret beta I got into.. Whoever thought that this selection of movies via subscription would hook people is an idiot. It is like someone leaked that redbox was adding a streaming section and then they had to just whip something together in a couple of weeks.

     But lets talk about renting via redbox streaming 4.99 stream a movie like ted or pitch perfect or 5.99 to stream blu ray...To me is retarded.. Considering 95% of the people at the moment can only stream on their computers. I guarantee are not planning on renting this movie now and watching it later..they are planning on more likely to watch it now and that is it. It is not like this subscription is on a tv, xbox, tablet..they should have set the rental prices up to a nightly rent like I don't know say 1.20$online or 1.50$blu ray that would have been a hook considering the only device this beta is open too is cellphones and computers. On that basis I will just go out and rent the movie for one night for 1.20 or 1.50...not 4.99 or 5.99...dumb I have about 10 kiosks 5 minutes away from where I am situated.

    Another thing I guarantee they are going to do away with is the physical kiosks and focus more to the streaming so those 1.20 and 1.50 movies...not going to happen anymore. My real guess as to why they went with streaming the physical kiosks are too costly to run and maintain and not worth the pay out. so pretty soon get ready for a physical kiosk movie rental hike in the near future. If that happens they are going to do away with the best thing they have going for them right now which is their physical locations.

    So I got a little off track moviefan but I am now replying to your statement above........Trust me I thought the same thing when I signed up for the beta moviefan they are going to have an awesome selection of streaming content because of their physical kiosk selection.. If you go into it with that mind set like I did you will be sorely disappointed as I am ;,,,,,,,(

  • johnnyrocket

    What an idiotic service. I thought they were going to offer the movies they had in the DVD Kiosks, except via streaming, AND for the same $1.20 per movie.

    Otherwise, it's pointless and redundant. RedBox wants to charge $6 to stream a movie. This has already been done.

  • Mohan Kompella

    The value prop, as it stands today, is certainly weak, to put it mildly...Perhaps thinking of this as a "beta" service that allows Redbox and Verizon to test the waters makes more sense. Verizon certainly has deep pockets and in the long-run battle for viewers, this has the potential to go any which way.

    Mohan | BminusC.com

  • newbitz

    I dont think you are really looking at this in the right way.  I think this is more of a complement service than a replacement service.  Like Gussy2000 says, he has three services right now.  why?  Because none have all the content, they compliment each other.  For me, I already use the Redbox Kiosks.  I used to have Netflix but dumped them after the price doubled and the content there was just horrid.  A friend said to try Redbox and I have been hooked ever since.  I can get all new and recent releases for $1.20 on DVD or $1.50 on bluray.  All the other services have them but for $4 to $6.  That is triple to quintuple the price.  For me, the Redbox kiosks are all around me and I pass at least 10 of them on the way to work so its no big deal to swing in and grab or drop off a movie. I can also reserve them on my phone so im not bumbling at the kiosk trying to find a movie I like.  So, I average a movie a week which is $4.80 a month.  For another $3.20 I can have the streaming.  Its a no brainer for me.  This just puts me one step closer to cutting the cable as I pay $125 a month for commercial laden crap on cable TV.  I wish it were available for Xbox, but im sure it will be on that soon enough.

  • Gussy2000

    They are on crack.  I have Netflix, Amazon Instant and HBO Go.  The first two only set me back $15 a month.  I spend more than that on coffee.  Why would I give that up for Redbox especially where it has ZERO advantage (for me) over the other services. 

    Say what you want about Netflix but it works on EVERY device in the house and the streaming is great.