This Netflix Killer Will Have to Wait

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It seems as if Redbox Instant by Verizon -- the video service bankrolled by Coinstar (NASDAQ: OUTR  ) and Verizon (NYSE: VZ  ) -- isn't ready for prime time just yet.

The digital movie offering won't roll out of its invitation-based beta mode until March, the platform's head told VentureBeat and other journalists gathered for a CES breakfast yesterday.

Yes, this is the same service that was supposed to roll out last year. Before teaming up with Verizon, Coinstar's Redbox had been promising a digital strategy for two years with little to show for it.

As it stands, Redbox Instant doesn't seem very compelling. The digital smorgasbord consists of just 4,500 titles. There are another 3,000 more recent movies that can be streamed for a fee per digital rental, just as (NASDAQ: AMZN  ) enhances its larger unlimited library with thousands of pay-per-stream rentals. Matching Netflix (NASDAQ: NFLX  ) at $8 a month is brazen given the limited selection, though Redbox will be quick to point out that you get four Redbox credits a month for disc rentals at any of the more than 40,000 DVD-heaving kiosks around the country.

The rub here is that the appeal of physical rentals -- especially the round-trip process -- won't be popular for too much longer. Besides, these aren't four actual rentals unless the subscriber plans on returning the optical disc the next day every single time. We're really talking about four nights of a Redbox rental. On that basis, Netflix offers a substantially larger catalog of movies, an unmatched collection of TV shows, and 30 credits a month for twice what Redbox Instant will try to charge consumers.

Netflix and Amazon have little to worry about here, unless the largely forgotten Verizon part of the Redbox pair raises the stakes. If Verizon Wireless begins bundling this with its smartphones, including it free with tablet plans, or offering customers streaming off the data plan, this may make a difference. However, even in these cases it would be a matter of educating the market or widening the user base rather than gnawing on audiences that Amazon and Netflix have amassed.

For now, the only real mystery is whether this service will actually launch later this quarter. The alarm clock's ticking, but Coinstar has a habit of tapping the snooze bar to give itself a little more time.

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Read/Post Comments (4) | Recommend This Article (4)

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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 10, 2013, at 11:43 AM, oghowie wrote:

    I don't think this info is correct. I got in the beta yesterday and have a 1 month free trial. It's definitely not as good as Netflix or Amazon Prime though.

  • Report this Comment On January 10, 2013, at 5:37 PM, TMFBreakerRick wrote:

    The service is still in beta, oqhowie. You may have misread the second paragraph:

    "The digital movie offering won't roll out of its invitation-based beta mode until March."

    That means that it will remain in beta until March, rolling out OF its beta, not rolling out the beta mode.

    Thanks for the feedback, and for your initial thoughts on the service itself.

  • Report this Comment On January 11, 2013, at 12:51 AM, Threedollarbill wrote:

    Good article. I have some NFLX, and I'm still holding onto it. One reason goes back to the old Peter Buffet adage: Buy stock from companies you use. I still think they have a pretty good moat around them, however, it's a pretty competitive business and in the future, probably subject to change. Still, until somebody builds a better mousetrap...

  • Report this Comment On January 13, 2013, at 11:27 PM, Fang007 wrote:

    Maybe it's time to think outside the box. Every commentator seems to think in terms of an adversarial relationship between NFLX and CSTR. Why does CSTR have to beat NFLX to succeed. So what if they only take some customers from NFLX, There is a huge niche for them. Even though they aren't saying the obvious, Redbox Instant only needs to rely on the tens of millions of existing customers. You and everyone else completely overlook this xfactor. If you are already renting 2 to 4 or more movies a month, why not supplement your streaming portfolio for a mere $5.60 ($8.00 minus 2 X 1.20) or as little as $3.20($8.00 minus 4 X 1.20) per month. Seems like a no brainer to me.

    The bonus is that if a hard core Redbox customer gets 4 freebies, why not rent a few extra at a buck twenty. The math is uncertain, but customers might very well end up renting about the same beyond the freebies.

    Long live coexistence.

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