That’s an important distinction, and a potentially risky strategy, for the new online service created by the joint venture between Verizon and DVD kiosk rental company Redbox. “We’re not the Netflix killer,” Redbox Instant By Verizon CEO Shawn Strickland said this morning at a briefing at the International CES confab in Las Vegas. While Netflix focuses on streaming TV series, his service’s ability to offer DVD rentals “is a core differentiator” while streaming “is positioning us for the future.” The problem with streaming movies is that the service can’t land most titles for about eight years — until they’re finished with the premium TV runs on channels led by HBO, Showtime and Starz. That’s baked into Redbox Instant deals with Warner Bros, Sony and MGM, although Strickland says that “there will be some exceptions.” One is from his pact with EPIX: It enables Redbox Instant to run movies from Paramount, Lionsgate and MGM about 60 days after they first appear on pay TV. Redbox Instant is still working on deals with other studios including Disney, Universal, and Fox.
But Redbox Instant customers who pay $8 a month for unlimited streaming also receive credits to secure four nights worth of DVD rentals from a Redbox kiosk. (People also can pay $6 for streaming only, or $9 to be able to use the credits for Blu-ray discs.) “We’re a little bit of a throwback,” Strickland says. “A lot of people believe the DVD isn’t relevant anymore.” He’s promoting discs because “that’s the freshest way to get the content” after its out of the theaters short of paying to buy a movie or rent it from a VOD service. In addition to the streaming and DVD rentals, Redbox Instant customers can pay extra to buy digital downloads or rent movies on a VOD basis the way they would from iTunes and Amazon. The service has about 4,200 titles available for streaming subscribers and 2,500 for electronic sell-through and VOD.
Another quirk with the movies-first strategy is that Redbox Instant must figure out how to handle UltraViolet titles — home videos that enable buyers to stream the movie on demand. Redbox Instant has signed on to support the entertainment industry initiative. But customers will have to wait until mid-2013 before they’ll be able to use Redbox Instant to access titles that they’ve bought from other retailers. A lot depends on criteria for information sharing that have yet to be worked out by UltraViolet, Redbox Instant Chief Technology Officer Jack Gallagher says. Strikland also says that his company is “working through” its relationship with Warner Bros’ Flixster, which aims to be a hub for consumers to access their UltraViolet movies.
Redbox Instant has more than 10,000 invited customers from the first few weeks of beta testing, and expects to be open to the general public by the end of March. Execs have found that new customers stream about three movies in the week after they sign up. After that it throttles down to about one a week. Users also redeem two of their four kiosk credits. The underlying software just had its first major update, with more planned.