Redbox Instant, the streaming-video service developed in partnership with Verizon to take on Netflix, is closing its doors on Tuesday.
Customers who head to the Redbox Instant page on Monday find a "shutdown notice," saying that Redbox Instant by Verizon will end its operation on Tuesday at 11:59 p.m. PT. The companies plan to provide information on refunds to current customers on Friday. The site said customers who have paid for a full month's subscription fee, but have received service for only part of the month, will receive a full month's refund.
Its demise underscores the difficulty new players face breaking into the subscription streaming-video market dominated by Netflix, as it and other large rivals like Amazon's Prime Instant Video benefit from a huge head start on subscriber rolls. It also casts a sharp light on how those bigger competitors have already moved on to the next phase of subscription streaming video -- becoming a creator and distributor of original content, in the mold of a TV network for the digital age.
Redbox Instant was a joint venture between DVD-kiosk provider Redbox, the biggest business of the company Outerwall, and Verizon in 2012, with Verizon holding a 65 percent share and Redbox holding the rest at the outset.
The service officially launched to the public in 2013 with nearly 5,000 titles. Over the last year and a half, the service was made available on several different devices, including the Roku set-top box and Sony's PlayStation 4 game console, among others.
However, the platform never found much traction with consumers. During its second-quarter earnings call, the company said it was "not pleased with where the subscribers are to date" on Redbox Instant. During that call, Redbox said it could nix the contract in 2015, if it wanted to do so.
"The joint venture partners made this decision after careful consideration," said a Verizon spokesperson. "The service had not been as successful as either partner hoped it would be. We apologize for any inconvenience this may cause our customers."
In a statement to CNET, Verizon said the service just didn't live up to its expectations. A representative for Redbox said growing Redbox Instant's subscriber base over time was a major challenge. The red kiosks' main business of renting DVDs will continue as usual, she said.
The death of Redbox Instant comes also brings the end to the partnership between Redbox and Verizon, according to the carrier. The Verizon representative said the company's relationship with Outerwall "is limited to the Redbox Instant by Verizon joint venture," though Redbox said it has discussed ending only the joint venture.
Update, 11 a.m PT: Adds Redbox responses, context.