Verizon Communications (NYSE: VZ) and Outerwall Inc. are pulling the plug on their struggling SVOD service, Redbox Instant by Verizon. The move could be part of Verizon's plans to focus on its own wireless streaming service.
The service notified customers via email on Oct. 4 that it will cease operation on Oct. 7.
"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," the email reads. "We apologize for any inconvenience and we thank you for the opportunity to entertain you. Sincerely, The Redbox Instant by Verizon team."
Launched in February 2013, the subscription video-on-demand service offered all-you-can-stream access to a selection of recent and archival movie titles, plus four disc rentals a month of new titles at Redbox kiosk locations.
The service didn't take off amid a competitive SVOD market. Outerwall (formerly Coinstar) reported a 7 percent drop in Redbox revenue for the second fiscal quarter. Redbox, meanwhile, has been working on licensing renewals with several major studio vendors, as well as a credit card fraud issue that kept it from billing new customers over the past several months.
For its part, Verizon has shifted focus to a new programming service that it said will target wireless phones. Specifically, Verizon is talking to content owners about the possibility of delivering their content over its wireless LTE multicast network, but the sticking point appears to be the business model. Speaking at the recent 2014 Bank of America Merrill Lynch Media Communications and Entertainment Conference, Verizon Communications CFO Fran Shammo said that the company is currently talking to content providers but that there is "lots of work to be done on that ecosystem."
Verizon plans to launch LTE Multicast technology on its wireless network sometime next year. The company hasn't said exactly how it plans to use the technology or what exact services it will provide.
Verizon and Redbox aren't the only companies to retreat from the space. Comcast recently decided to scale back its own SVOD service, Streampix.
"As a top entertainment destination, Redbox will continue to find new ways to satisfy consumer demand for new release entertainment at an unrivaled value," a company rep said in an email to Variety.
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