Say goodbye to Verizon's SVOD play, Redbox Instant

Taking on a company that’s got momentum, the support of its customers and also offers good customer support isn’t easy… just ask Verizon, which this week said it’s shutting down its lackluster foray into OTT, Redbox Instant.

The service, which was announced in December 2012 but didn’t actually launch until March 2013, announced its own demise on its website this weekend.

“The service is shutting down because it was not as successful as we hoped it would be,” read a notice on the site. “We apologize for any inconvenience and we thank you for giving us the opportunity to entertain you.”

Verizon’s Netflix killer never caught on, never mattered to consumers who saw the Netflix-lite offering as just that, a pale imitation.

That the joint venture maintained a connection to physical DVDs as well as streamed content was a sign that the telco couldn’t really commit, three years ago, to the concept that streaming was legitimate.

Redbox Instant subscriber numbers haven’t been shared, but it’s safe to say that – like Comcast’s Streampix – they were underwhelming.

Comcast, while not pulling the plug on its SVOD service, has move it into that netherworld of “value added products” that can easily be faded to black.

Concerns that Redbox Instant was on the ropes first surfaced back in May, when parent Redbox was reported to be trimming some of its 40,000 kiosks in the U.S. after yearly operating income that saw jumps of 74% in 2011 and 41% in 2012 was flat in 2013 at $239 million. The company is citing efforts to focus on efficiency rather than growth.

Back in December 2011, Verizon was rumored to be in talks with Netflix, but the talks turned out actually to be with Redbox, which analysts called “a better fit.”

Um, no.

Dish’s failed to resurrect the Blockbuster brand as its streaming service because it failed to bring enough content to the brand to make it attractive to consumers. In the case of Comcast’s stalled attempt with Streampix and now Verizon’s abandonment of Redbox Instant, the problem may be that consumers struggle with the idea of paying their providers extra for an SVOD service when they’re already paying north of $100 a month for standard services. Especially if it’s not Netflix.

Can a provider SVOD service work?

Sure. But it has to have a value proposition that’s obvious to consumers, the service needs to be robust and at least competitive with the market leader – Netflix, Amazon Prime instant and Hulu Plus – and it needs superior search, discovery and recommendation.

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