I for one would prefer it if redbox kept to what they do best which is the rental boxes. It seems very risky for them to try to attempt to move to digital distribution in a market that's controlled by netflix.
Sorry for resurrecting a zombie thread, and it looks like Redbox Instant is no more
, but I'd like to throw in my $0.02 from a business perspective.
Like Blockbuster before them, Outerwall (the parent company of Redbox) is facing increased pressure from Netflix, Hulu, Amazon, and even minor services like Crackle. Unlike Blockbuster, they don't have the massive overhead of retail space and labor. What used to take 15 FTE employees and 5,000 square feet of expensive retail space is now done in the space of two vending machines and a technician to redeploy disks to and from dozens of kiosks or repair any broken ones.
But streaming content is rapidly overtaking DVDs and BluRay disks. Between On Demand television and streaming services, there's just not as much impetus to go out and rent a disk anymore, and that's why killed the bloated and obsolete Blockbuster Video chain. For the reasons described above, Outerwall is better able to deal with this and will last longer, but its market will continue to shrink.
So from a business perspective, it makes sense for Redbox to continue offering rental kiosks where they are profitable; but their investors are going to demand that they continue to grow and generate earnings. So Outerwall has to either enter the streaming content market, be acquired by someone like Netflix or Amazon, or find some other business area to grow, whether it's generating new content or something entirely unrelated.
There's no reason a new Redbox streaming service can't command the same $1.29-$2.99-per-day premium they currently enjoy with DVD/BluRay as long as they get their content earlier than Netflix and Amazon Prime, and they offer it at the same reliability as their kiosks or their streaming competitors. They can even compete directly with Netflix and offer a subscription service that offers less-expensive, older content, though it's probably not wise to poke the bear until the streaming service is established and customers are returning regularly. That's why they should continue the rental kiosks, more than anything: Milk the established, mature market to help sustain the new service.
I think the main reason Redbox Instant failed was because the two companies involved, Verizon and Outerwall, didn't really understand the business they were delivering. Verizon understands communications, but isn't a media content distributor. Outerwall offers media through Redbox, but they're really a retail kiosk vendor. Video rental made sense as a business venture for a kiosk company, but its future is in doubt.
Were I to take a job at Outerwall with the intention of building a new streaming content service, I'd have a five-to-seven-year plan that goes something like this: Start with the Crackle/Hulu (pre Hulu-Plus) model of advertising-supported, cheap content, delivered reliably with hundreds of titles. I might even try to buy an existing independent content provider as a base, or perhaps I'd partner with a media giant like News Corp, Disney, or NBC Universal to get my content at a discount. Then I'd take that to the next level with individual rentals, like the Blockbuster Video application now found on Roku and other devices or Amazon Prime rentals. I'd do it with thousands of recently-released and hard-to-find-elsewhere titles, matching as closely as possible to the items available in the kiosks. Having established the service and delivered reliable streaming content with satisfied customers, I'd offer a subscription package similar to and competitively priced with Amazon Prime, Hulu or Netflix, again with thousands of titles. I might even tier it like Hulu, with ad-supported and ad-free subscription prices. And finally, with those three areas established, I'd begin offering original content exclusive to my service.
And if I were Netflix, Hulu, and Amazon, I'd be looking to shut Redbox, Crackle, or any other comparatively minor provider out of the market by occupying all of those spaces and sucking up every streaming content dollar people are willing to spend.
All that to say, I believe Redbox Instant failed because the companies involved didn't understand the business. Outerwall more stumbled into the media content delivery market than made a strategic decision to enter it. If it was actually a strategic decision, it was entirely based around it's kiosk enterprise; and Outerwall did effectively use its muscle and size as a kiosk vendor to build a profitable enterprise out of Redbox, so either way there's no faulting that. However because they really didn't understand what they were delivering on a higher level, because until then they'd been a transactional business, when they started offering streaming content they didn't understand how to gain, satisfy, and keep streaming content customers.