A lot of people are asking that question today after the company behind the DVD rental kiosks reported disappointing results for Q2. Shares of Outerwall (formerly Coinstar) closed down 13.2% after it said that Redbox revenues increased just 4% compared with the same period last year — even though the total number of kiosks was up 13%. Redbox came up short as bargain-hunters took advantage of promotions and only kept discs out for one night, resulting in a 9.9% decline in average revenue per kiosk. (DVDs go for $1.20 a night with Blu-ray discs $1.50.) The company also cut its forecast for the number of kiosks it will add this year while the experiment to sell sports and entertainment tickets at the kiosks “did not meet expectations”, CEO J. Scott Di Valerio told analysts. These developments will “accentuate concerns that the DVD rental market is quickly approaching saturation, and we believe that this is probably true”, says Wedbush Securities’ Michael Pachter. He also has soured on the Redbox Instant By Verizon streaming joint venture, saying the rollout “is moving at a very slow pace” and “revenues and profitability remain elusive.”
The new streaming service from Redbox and Verizon says it will be available on Xbox 360 gaming consoles “in the very near future.” And the Microsoft operation says that it will be “the exclusive gaming and …
That’s an important distinction, and a potentially risky strategy, for the new online service created by the joint venture between Verizon and DVD kiosk rental company Redbox. “We’re not the Netflix killer,” Redbox Instant By Verizon CEO Shawn Strickland said this morning at a briefing at the International CES confab in Las Vegas. While Netflix focuses on streaming TV series, his service’s ability to offer DVD rentals “is a core differentiator” while streaming “is positioning us for the future.” The problem with streaming movies is that the service can’t land most titles for about eight years — until they’re finished with the premium TV runs on channels led by HBO, Showtime and Starz. That’s baked into Redbox Instant deals with Warner Bros, Sony and MGM, although Strickland says that “there will be some exceptions.” One is from his pact with EPIX: It enables Redbox Instant to run movies from Paramount, Lionsgate and MGM about 60 days after they first appear on pay TV. Redbox Instant is still working on deals with other studios including Disney, Universal, and Fox.
The long-awaited public beta test for the Redbox Instant By Verizon streaming service didn’t roll out today quite the way its marketing folks envisioned. The problem isn’t that the joint venture announced its public opening with a mere tweet. (“Today’s the day!” it said. “Get on the wait list & get excited!”) The trouble arose when the company sent to people who had pre-registered their interest an email with a link to a promotional music video. The theme: “Trigger Some Happy.” The Redbox Instant folks took it down in an instant after they realized that the slogan would strike some people as inappropriate following last week’s tragic shootings in Connecticut. A spokeswoman apologized for the timing and explained that the company changed plans because it felt “let’s not give anyone pause.” Too late. BTIG analyst Rich Greenfield found a copy and alerted investors that it’s “important to see the first real advertising/promotional spot for the service, even if the company does not want you to see it anymore.”
Aside from the timing, the whimsically strange promo probably will inspire strong feelings among some people about Redbox Instant’s ability to take on rivals including Netflix and Amazon Prime. Tell us what you think after you watch this:
This week, Deadline Executive Editor David Lieberman and host David Bloom discuss economic studies suggesting that movie moguls really are being rational when they favor a good story and dependable director over lots of big stars; what’s happening with Richard Schulze’s efforts to buy back Best Buy, the struggling big-box retailer he founded; and whether Netflix should be worried about streaming service Redbox Instant now that it has announced a price point and content providers.
We still don’t have a firm start date, although the joint venture between Redbox and Verizon says that consumers will be able to subscribe to a “beta product” sometime this month. Redbox Instant by Verizon‘s streaming service will cost a penny more than Netflix and will include four, one-night credits each month to rent DVDs at Redbox kiosks. For an additional dollar a month, customers can use the credits to rent Blu-ray discs. We still know little about the streaming content — Warner Bros is the only studio that has publicly said it will participate. But Redbox Instant says its new deal with EPIX will enable it to offer Paramount, Lionsgate, and MGM movies 90 days after they appear on EPIX’s pay TV channel. The venture also will sell and rent digital versions of new movies from Lionsgate, NBCUniversal, Paramount, Relativity and Sony Pictures Home Entertainment. The web-based service will work with mobile devices powered by iOS and Android operating systems as well as Samsung Blu-ray Players and TVs with SmartHub, LG Smart TV and Blu-ray Players, and Google TV. Here’s today’s release:
That’s one of the details disclosed by web site GigaOm, which found a help page for people beta testing the streaming service that’s due to launch next month — with hopes to challenge Netfllix and Amazon …