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Redbox Instant Bowing Beta Launch This Month

12 Dec, 2012 By: Erik Gruenwedel, Chris Tribbey

The physical and digital rental service will include Epix movies, electronic sellthrough and transactional VOD

Coinstar and Verizon Communications Dec. 12 announced Redbox Instant by Verizon will launch a beta test to consumers, including free 30 days of service, this month.

Priced at $8 per month, Redbox Instant will offer unlimited streaming of movies, including titles from pay-TV service Epix, with four one-night credits per month for new releases on DVD at Redbox kiosks. For $1 more, or $9 per month, customers can opt to redeem their four credits for rentals on Blu-ray Disc at the kiosk.

Unlike other subscription video-on-demand services, Redbox Instant will offer electronic sellthrough and transactional VOD options for new releases on street date from Lionsgate, NBC Universal, Paramount, Relativity and Sony Pictures Home Entertainment.

“We are building a compelling entertainment choice through our ability to support both physical and digital distribution of movies that people love, made possible by the depth of relationships we’ve established with top Hollywood studios and distribution partners,” Shawn Strickland, CEO of Redbox Instant by Verizon, said in a statement.

The Epix agreement means Redbox Instant will offer new releases such as Mission Impossible: Ghost Protocol and The Hunger Games from Epix’s studio partners, Paramount Pictures, Lionsgate and MGM 90 days after their pay-TV window.

“Redbox Instant by Verizon will be an exciting new service for consumers in the digital entertainment marketplace and we are thrilled to be their partner, providing our movies from some of the world’s leading studios,” said Mark Greenberg, president and CEO of Epix. “We have a long and successful relationship with Verizon FiOS, which was our first distribution partner at the launch of EPIX, and we are excited to build on that relationship with Redbox Instant. We are confident that the movies we have will be a popular and important part of the success of this new service.”

At launch, Redbox Instant will be offered via the Web, as well as on tablet and mobile devices, including iOS, Android, Samsung Blu-ray players and TVs, LG Smart TV and connected Blu-ray players, and Google TV. More devices will be announced in the coming months.

Eric Wold, analyst with B. Riley & Co. in Los Angeles, said having Epix movies and sellthrough makes Redbox Instant a compelling player in the SVOD market.

"Given how the majority of content owners are moving toward making their content ubiquitous across a variety of SVOD providers, I continue to believe this will be an interesting experiment in variable content pricing on a per subscriber basis — and will allow the content owners to more effectively participate in the growth of a new offering," Wold wrote in an email.

Wold believes Redbox Instant offering VOD and EST played a big part in the content owners’ decision to move towards variable pricing — a first for a SVOD service.

"Without a doubt, there has been concern that the increased availability of SVOD could impact VOD and EST demand, and if consumers can now purchase some movies that are not yet available on streaming or choose to purchase a movie that they like and can now download to a device for offline viewing, the studios could see an incremental revenue boost," he said.

Scott Di Valerio, Coinstar’s chief financial officer, said the average Redbox customers comes to the kiosk 3-4 times a year. Getting the average Redbox renter to subscribe will help bring them to the kiosks more often, he said. “We think it’s going to be incremental to the business as opposed to cannibalistic,” he said, speaking Dec. 12 at the Wedbush Securities California Dreamin' Consumer Management Access Conference.

Di Valerio admitted the number of available titles available at launch wouldn’t equal “the heft” offered by some competitors, but Redbox and Verizon are taking a quality over quantity approach, he said.

“It’s an offering that really focuses on movies, that really focuses on what our consumers have been asking for, available to anyone who has a broadband connection, whether it be fixed or wireless,” Di Valerio said.

Redbox currently had more than 42,400 kiosks in 34,600 locations in the U.S., and owns a 44.1% physical rental market share.

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