Redbox Instant To Shutter: Netflix Rival Ends Service Tuesday

Redbox Instant is signing off. The video service operated by Verizon and the DVD kiosk company Redbox Automated Retail will cease operation at the end of the day on Tuesday, a sudden announcement that highlights the difficulty of competing with Netflix, Amazon and others in an increasingly crowded streaming market.

Redbox Instant subscribers were told the news on short notice in an email Saturday, with the company offering refunds to customers. The service has struggled since its launch last year. Among other things, it was hit by a credit-card fraud that prevented Redbox Instant from enrolling any new customers for three months.

“The joint management of Redbox Instant by Verizon has elected to cease operation of the service effective Tuesday, October 7, 2014,” a company spokesperson told GigaOm via email. “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 for our customers.”

The venture launched in early 2013, letting customers stream titles for a monthly fee of $8 to $9. They also got coupons to redeem at Redbox kiosks each month, with Redbox trying to gain favor over Netflix’s TV-heavy options with new movie releases.

Yet even that selection was relatively spare compared to Netflix and Amazon Prime, with J. Scott Di Valerio, the CEO of Outerwall, Redbox’s parent company, admitting that he and Verizon were both “not pleased” with the number of instant subscribers.

“If we don’t hit certain subscriber thresholds, then we have some decisions to make in March,” Di Valerio told investors last year, according to Bloomberg News.