Redbox Plans to Launch New Streaming Service ‘Redbox Digital’ (Exclusive)

Redbox Digital leaked logo
Courtesy of Redbox

Redbox is getting ready to give online video another shot: The DVD rental service has plans to launch a new video streaming service called Redbox Digital, Variety has learned from multiple sources familiar with the company’s plans as well as a series of leaks that included concept screenshots and the logo of the service. A closed beta test may be available soon, according to one of those sources.

A Redbox spokesperson sent Variety the following statement: “Redbox continually looks for ways to enhance our customer experience. For tens of millions of consumers, Redbox is their source for new release rentals without a subscription. As such, we regularly conduct tests of potential new offerings, that may or may not be brought to market, as part of our ongoing commitment to provide additional value.”

In many ways, the streaming service will be a déjà vu for Redbox customers: The DVD rental company had launched a streaming service dubbed Redbox Instant in a joint venture with Verizon in early 2013, only to shut it down some 18 months later.

But while Redbox Instant aimed to challenge Netflix with a subscription bundle, the company now seems to have more modest plans. Redbox Digital is being built as a video-on-demand store similar to iTunes, Vudu or Google Play. Consumers will be able to rent movies or TV show episodes for streaming, or purchase digital copies.

Design concepts of the service that have surfaced online show a tight integration with the existing Redbox service. Redbox users will find the digital content store as a tab on the Redbox website, next to existing tabs for movies and games, if the company follows through with the plans laid out in those images.

The service would also plug into Redbox’s existing loyalty program, allowing consumers to earn points with every digital rental or purchase. There are plans to integrate the service directly into Redbox’s mobile apps, and extend support to TV-connected platforms like Chromecast and Roku.

Redbox’s plans for a new digital storefront come at a critical time for the company. Redbox’s revenue was down 17 percent last quarter. Rentals declined to $587.6 million in 2015, down from a high of $772.9 million in 2013. For this year, parent company Outerwall expects another DVD rental decline of 15 to 20 percent.

SEE MORE: The Slow Death of Redbox: Why the Kiosk Colossus Is the Next Blockbuster

Some of this may have to do with a lack of huge blockbuster movies, but a shift in consumption patterns from physical media to digital clearly also plays an increasing role — and has many believe that Redbox’s business may sooner or later evaporate.

However, Redbox’s past attempt at building a digital business was anything but successful. Redbox Instant tried to package Netflix-like subscription plans with physical disc rentals in a standalone product. The joint-venture also aimed to combine Redbox’s marketing muscle with Verizon’s technology chops. In the end, neither could measure up to Netflix, which offered consumers a much bigger catalog, and was starting to heavily invest into original content at a time when neither Redbox nor Verizon had the stomach to do so.

There is a case to be made that Redbox will be more successful this time around. By integrating tightly with its existing service, the company is essentially targeting millions of Redbox users who already use its website and apps to review and reserve their DVDs. Soon, those consumers may have a choice: Hold a movie for $1.50 at the local store, or start watching it right away without leaving the house for a few dollars more.

Still, the digital video market is a crowded one. A number of digital storefronts, including Target Ticket and Samsung’s video hub, have closed in recent years, despite backing from strong brands. Others were forced to consolidate in light of strong competition. Earlier this year, Fandango bought M-Go from DreamWorks Animation and Technicolor.

What’s left are a few big players with massive reach: Apple’s iTunes is tied deeply into iPhones and iPads, and Google’s Play Store is pre-installed on hundreds of millions of Android devices. One could argue that there’s a relatively small overlap between heavy users of either two stores and the typical Redbox customer — but that still doesn’t mean that Redbox Digital will add enough streaming revenue to turn things around for the company.

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  1. IMM says:

    Keep the prices low, same as the kiosk prices. I have a Roku and do not use the pay on demand apps. Too expensive.

    • I wish they would do this! I pay for a few on demand apps on roku now. We don’t get out so would gladly pay the extra buck, besides we always keep them for an extra day anyway. This would help out a lot of people!!!

  2. Becky says:

    There will don’t be any more people doing this. You have to think about elderly
    And the poor. Cause the rich are wealthy
    Have all the need with out red box do to cable. Diret t v Dish and much more

  3. For myself, I’m not wasting a trip to a kiosk to rent a movie, waste another trip to drop it back off under a time constraint – I’m not wasting $15 to purchase a digital copy for which I may watch 2 times. I’m not wasting $5 for a digital rental. I’m not wasting $9 for a theater ticket either. Eventually, it all makes it’s way onto network TV, where my overpriced, monopolized cable provider will broadcast it…..”eventually”!! I’m patient enough to wait for the cash-cow DVD-Stream-Rentals to dry up and drop to the network TV when they are no longer in demand.

  4. I'm a little tea pot says:

    Nice mention of UV services there author. Last time I looked they were at or close to 25 Million users. With Vudu one of the UV consortium partners having the largest catalog of them all compared to I-Tunes, Google, Amazon, Microsoft. but why mention that?!?

  5. oconnellsa says:

    This is what the service should have been in the first place, not the subscription model that was launched. It’s all about the brand. Redbox users associate the brand with rental, so online rental and purchase would have made sense. Redbox users never associated the brand with a service, so subscription was doomed from the start.

    Now, in order to be successful they would have to enter the fray with Amazon and Vudu, the two rental/purchase companies who own the “view on TV” space (again, Redbox users associate watching content on a TV – still sticking with the important brand issue here). If they’re going after device viewers, as you pointed out, they are going after a completely different audience as well as taking on Apple and Google. Lots of luck… they will need it.

    • I'm a little tea pot says:

      “This is what the service should have been in the first place, not the subscription model that was launched. It’s all about the brand. Redbox users associate the brand with rental, so online rental and purchase would have made sense. Redbox users never associated the brand with a service, so subscription was doomed from the start.” –

      I don’t agree. I was there for the early CLOSED beta of the Redbox Verizon venture. What killed them was opening up show with a SMALL library of 70’s and 80’s and a few 90’s movies and expecting people to cough up $8 – $9 for their plan. Yes, they offset that with 4 DVD or 4 Blu-ray Credits but you still had to pay Netflix prices for 1/30th the library.
      IF they had grown the library and titles in the first place BEFORE launching into something that competed with Netflix’s selection at the time it would have been game on. Competition for Netflix would have been a good thing, but studios were none to eager to support Redbox at that time and so contract negotiations did not bear fruit, it’s too bad because having both systems in one would have offered advantages over Netflix. Alas, it was poorly planned and managed and the contracts should have been IN HAND before the service debuted to the public. Once it went Alpha and people saw just a few thousand titles old titles from the 70’s – 90’s with only promises of more to come at a price higher than $2 cost, well that opening was also it’s wake.

  6. celticpride says:

    $4.99 is too much to rent a movie! If redbox was smart they would jump right in to 4k streaming all their movies then i might be willing to pay $4.99! heck i can BUY blu ray movies at best buy for $5.00!

    • Shy Ronny says:

      Exactly! Also, why do any streaming rental places make any distinction between SD/HD? This is 2016. Set a flat reasonable price for a rental and let the connection speed dictate the highest quality delivered. If a customer doesn’t want to eat into their monthly data allotment, have an option to restrict throughput.

  7. Ken McDowell says:

    If Red Box can work out agreements with the studios to rent digital titles at the same price point as their physical media that could be big. Most digital rentals run 3.99/4.99 if they can rent then for 1.50 that’s quite the savings. I’d surely give it a shot.

    • I'm a little tea pot says:

      That will never happen. The reason Redbox or you or I or Family Video can rent out purchased physical copies is because the copyright law in a supreme court decision allows us to. We are able to set our own prices. If I wanted to buy a $35 movie and rent it for $0.10 I am free to do so and the studios can not say BOO about it.

      DIGITAL on the other hand they have an iron grip on it’s copyright law. There is NO WAY IN H3!! they are going to give up the digital golden goose that keeps laying for them for $1.50 and in that, they have complete autonomy.

      Redbox in the physical world is one of the largest buyers of physical media and the studios have begun to change their toon about Redbox in the wake of the lawsuit settlements and contracts that were negotiated with all the major studios except Disney. In the physical world, they have some weight to throw around with those enormous buys, in the digital world they have none.

  8. D. Matlick says:

    The issue with renting from Redbox is that a lot of their videos are “rental” versions that have all of the extras found on retail versions removed. If I can’t see the extras, I might as well stream it.

  9. Mike says:

    i would like to here more info on the RedBox deal my Wife and i use redbox a lot

  10. jhs39 says:

    The problem with getting into this market is that they will end up offering the same movies as Vudu and Amazon for the same prices as those two existing services. Because of the way the digital contracts work everybody essentially offers the same exact stuff for the same exact prices. There’s little chance to add extra value to your service since prices are set by the studios.

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