Technology

Redbox could launch a streaming service again

Redbox, the operator of DVD rental kiosks found in supermarkets and convenience stores, is reportedly attempting to launch a video streaming service again.

The Oakbrook Terrace, Ill., company is testing a new platform called Redbox Digital, which will compete with established video-on-demand services such as Netflix, Amazon and Apple, according to a report in Variety on Thursday citing unnamed sources.

Redbox declined to confirm the news and said in a statement: “Redbox continually looks for ways to enhance our customer experience while maintaining our priority of managing our business for profitability and cash flow. ... As such, we regularly conduct tests of potential offerings, as part of our ongoing commitment to provide value for our stakeholders.”

Redbox shuttered its first streaming service in 2014 after only 18 months. Redbox Instant, a partnership with Verizon, charged $6 a month to watch movies online, but the service proved unprofitable.

Analysts say Redbox struggled to compete with Netflix, which offered subscribers a wider array of content.

Redbox faces even more competition with the rise of Amazon’s streaming video platform, not to mention Netflix’s successful original programming.

Screenshots published by Variety suggest the new service offers on-demand video.

Unless the company develops an app for smart TVs, Redbox likely will struggle to compete against video-on-demand incumbents, said Michael Pachter, an analyst for Wedbush Securities.

“Few people still go on the Internet to watch movies, unless you’re one of those people with their laptops at Starbucks,” Pachter said. “It’s going to be an uphill battle.”

One way of winning fans, Pachter said, was offering a loyalty program that would give Redbox subscribers a free rental after a certain number of purchases.

He said Redbox, and its parent company Outerwall, should stick to what it knows: DVD vending machines and its brand of coin-counting kiosks, Coinstar.

Redbox saw the number of movie rentals decline nearly 25% year-on-year in its last quarter. Its revenue fell to $407 million compared with $490.7 million the same time a year ago.

Pachter blamed the drop in business on a surge of Amazon subscribers and a slew of Hollywood blockbusters that drew more movie fans to theaters. 

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