Two years after pulling the plug on its disastrous SVOD partnership with Verizon (NYSE: VZ), Redbox is giving OTT streaming a try again. The video rental service is trialing a transaction video on demand (TVOD) service with a "small subset" of its customers.
Redbox Digital will offer digital video rentals and sales and act as a complement to its existing retail kiosk business. Variety reports that Redbox published a new iPad app and updated its terms of service with details about the TVOD component, and later confirmed the trial to the publication.
Prices for online video rentals or sales weren't posted, and it isn't known how long the trial will take place or whether Redbox will expand Digital to all of its customers. The iPad app has several interesting features, Variety noted, including what appears to be a "cast" button that suggests the app may work with Google's Chromecast dongle.
That Redbox is going it alone with a streaming service this time isn't surprising -- nor is the transactional business model. Its previous OTT attempt, Redbox Instant utilized Verizon for its distribution and part of its data streaming architecture, not to mention Verizon FiOS' broadband and TV customer base. This initially looked like a sound strategy in terms of getting a streaming service off the ground at minimal upfront cost – but it backfired badly.
Verizon FiOS had an existing on-demand library that directly competed with Redbox's SVOD offerings. Worse, Redbox Instant had a limited content selection due to licensing issues. And the Redbox user base may not have been prepared to access movies online -- after all, the cord-shaving trend was just beginning to go mainstream in 2013.
Redbox Instant also was competing with a resurgent Netflix, whose early-to-market SVOD service sustained it through a huge financial blow in 2011 when the provider attempted to split its DVD-by-mail business into a separate company.
Outerwall, Redbox's parent company, and Verizon went their separate ways in October 2014, and Instant was shut down without fanfare.
Now, Redbox Digital will test the waters of the TVOD segment, an area that carries its own dangers. Transactional VOD has been slow to catch on in the online video world, not the least thanks to SVOD's all-you-can-binge appeal. Earlier TVOD services from Target Ticket to Microsoft (NASDAQ: MSFT) Xbox Studios and Samsung's Video & Media Hub are among those that bit the dust just a couple of years ago. However, Apple's (NASDAQ: AAPL) iTunes and Google's (NASDAQ: GOOG) Play store are top draws for transactional video, and M-GO has continued to make inroads thanks to its inclusion on many of the smart TVs sold in the U.S. Amazon (NASDAQ: AMZN) Instant Video also likely does steady business, though the company doesn't break out TVOD numbers.
And even smaller providers are making a play: FilmOn recently acquired CinemaNow, and is working to breathe life back into that TVOD service.
If Redbox Digital can resonate with the company's dedicated kiosk rental base, it may have a chance this time.
- see this Variety article
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