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CEO: Redbox Instant Brings ‘Center’ of Video Store to Consumers

8 Jul, 2013 By: Erik Gruenwedel

Scott Di Valerio

Outerwall boss Scott Di Valerio says the upstart SVOD service affords subscribers unlimited access to content typically ignored in video stores

With Redbox kiosks and video stores catering to consumers looking for new-release movies, the upstart Redbox Instant by Verizon subscription video-on-demand service aims to attract users also looking for fare not predicated by a street date, said a senior executive.

In an interview with TheMotleyFool.com, Scott Di Valerio, CEO of Redbox parent Outerwall Inc., said Redbox Instant currently has about 5,000 titles available for unlimited streaming. The content is catalog TV shows and movies — testament to the cost and challenges Netflix and others face licensing fresher digital content.

Di Valerio says subscriber surveys indicate little dissatisfaction with the number of streaming titles offered on Redbox Instant — a tally that pales in comparison to Netflix and Amazon Prime.

“When you used to go to a brick-and-mortar store you'd walk around the outside walls because that's where the new-release content was,” Di Valerio said. “We've taken that new-release content, and that's Redbox. Basically we've taken those outside walls and put them into 12 square feet. With Redbox Instant, we now have the center of the store available to our customers.”

Redbox Instant subs also have access to four disc rentals for $8 a month ($9 for Blu-ray), which Di Valerio likens to new releases available on street date.

“We're always trying to find the best mix there,” he said, adding that the service will up marketing efforts in the second half of the year as it expands availability of its app on third-party CE devices.

“Redbox Instant will do a lot more work around promoting the service as we've brought on more CE device manufacturers so that people are going to get that 10-foot experience for being able to get it up on the TV in a much broader way,” Di Valerio said.

Interestingly, the executive said consumers’ free time — not Netflix or Amazon Prime — remain the biggest challenges to Redbox Instant.

Meanwhile, Di Valerio said Redbox Instant’s ability to license content based on subscriber counts, which means its pays for content on a per-subscriber basis, allows the service to become gross-margin positive more quickly. Netflix and Amazon Prime typically pay for content up front, which requires building an audiences for the programming as well.

The CEO said Redbox Instant was able to strike a unique license deal with studios due to the fact that it is also selling transactional VOD access on the service, which generate huge margins for content holders.

He added that consumers continue to buy Blu-ray Disc players in healthy numbers, which he said underscores ongoing demand for high-definition content not accessible via streaming.

“People love to get that physical disc and put it in, because there isn't a better way, from a Blu-ray perspective, to get really high-definition-quality picture and sound. The way you get it is through the disc. You can't get that through a stream,” Di Valerio said.

“We feel very good about that. We obviously are focused on it, and we think that combination, as you look at Redbox Instant, combined with Redbox on the physical side, is a winning combination.”



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