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Redbox Instant is no Netflix killer

The streaming and DVD rental business wants to carve out a niche for movie lovers, but it's saddled with a confusing service.

Redbox Instant CEO Shawn Strickland at the venture's press briefing at CES 2013. Roger Cheng/CNET

LAS VEGAS -- Redbox Instant by Verizon isn't a Netflix killer, and it's okay with that.

Executives from the joint venture were at the Consumer Electronics Show to talk up its video streaming and DVD rental service, which went into beta a few weeks ago.

CEO Shawn Strickland, a former Verizon executive, wanted to make it clear Redbox Instant would not compete against Netflix. His service would offer up new and some older movies -- and only movies. He said he believes there's a segment of consumers who are hungry for nothing but a film experience.

"It's the core equity brand of Redbox," Strickland said.

The venture made some waves when it announced its pricing last month. Its standard service, which includes streaming and four one-night credits for DVD rentals, costs $8 a month. But a streaming-only service costs $6 a month -- $2 less than Netflix's comparable service -- leading some to speculate on the competitive threat (including, well, us).

Strickland said the business was still anchored on DVDs, arguing that discs remain a vibrant market. The streaming business is designed to set Redbox Instant up for the future, he said.

But a quick look at the service and a run through by Strickland suggests the likelihood of customer confusion over a limited and ever-shifting film selection. Because of an arcane and complicated set of video programming rights for movies, the streaming option will only ever be able to offer 10 percent of Redbox's total library of movies, which by Strickland's estimate may amount to about 4,200 films.

For newer movies, users face limited time windows for viewing. Unlike Netflix's streaming service, where you only have one option -- watch the video -- Redbox provides multiple options, including renting and purchasing, each with their own pricing.

The limitations aren't Redbox's fault. The service is working within existing rules that govern when movies can or can't be streamed. It's these rules that keep Netflix from carrying newer movies, forcing it instead to offer a vast library of older movies and television shows.

Strickland said he wants to work to make the industry more transparent, and acknowledged that Redbox needs to offer more customer education and to alert customers as films go in and out of availability.

The Redbox service, meanwhile, only has agreements with a few of the studios, so not every new movie will be available. It has deals with Sony, MGM, Epix, and Avail-TVN, which is a larger reseller of different movie programming.

Redbox plans to address some of the limitations by having a curated front page of movie selections that highlights recent blockbuster hits and older popular films. The company wants to put a "human voice" into the recommendations to make them simpler to use.

At $6 or $8, the service is attractively priced, particularly if a user is really into the latest movies.

Redbox doesn't appear to have a shortage of interested users. Strickland said hundreds of thousands of people have signed up for the beta, even though Redbox is only offering the service to a little more than 10,000 people. The company is working to open the service to the public, which will happen some time this quarter.