Redbox Instant a triple-threat to Netflix


GigaOM’s own Janko Roettgers uncovered details this week about the forthcoming Redbox Instant service launching on December 6. According to Janko:

  • The service will offer a limited library of video content (with a few tentpole titles but not yet comparable to Netflix). No surprise here.
  • The cost is $6 per month for access to the basic library of content and $8 for the basic subscription plus 4 credits for Redbox physical disc rentals.
  • Redbox Instant will be available on the web, Android devices, iOS devices, the Xbox 360, and select Samsung TVs and Blu-ray players.
  • VOD for 99 cents per title.

Overall, it’s a respectable first effort, and I expect over time the library of content will grow.

Should Netflix be worried? Maybe not yet, but soon. The key appeal to a combined Redbox kiosk and OTT package is the instant access to video entertainment at the low prices that Redbox has been using to undercut the traditional DVD rental market.

But here’s the real problem for Netflix: The typical Redbox user likely uses the kiosk service on a fairly frequent basis, particularly around newer titles that aren’t available on demand. In fact, I believe Netflix’s own push to get customers to go over the top only with its streaming-only package has probably helped Redbox, particularly given the fact that many new titles are not available through Netflix streaming.

And it’s this growing Netflix-Redbox-combo user base that Redbox Instant will appeal to, all through one combined low-cost subscription. Sure, some will say “But all content will be streamed eventually” or “You can get the DVD through a Netflix DVD by mail.” But the problem is, again, Netflix is incentivizing users to go streaming only, and if a user uses the Netflix-by-mail service, she still has to wait two days to get a movie. But so much of movie-rental behavior is impulse-driven, which is the exact reason why Redbox has thrived.

Redbox’s key competitive advantage here is pricing. The Redbox DVD rental market still undercuts digital VOD delivery, and now its VOD delivery — which starts at 99 cents — looks to be very price competitive as well.

The triple threat of a subscription, on-demand, and kiosk is one Netflix should be worried about.



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