Can Redbox Instant Kill Netflix?


Verizon and Coinstar are putting the finishing touches on their long-awaited digital movie service. The product, known as Redbox Instant, is supposed to be a Netflix killer of the highest order. At least, that's the conclusion many observers are drawing from the preliminary details Coinstar and Verizon just published.

But you know what? I think we've seen this Netflix attack before, and it didn't work out all that well last time. Six years ago, it was called Blockbuster Total Access.

You don't buy that comparison? Let's compare and contrast the video services from different eras:

Total Access

Redbox Instant

Sell subscription services for less than Netflix.

Sell subscription services for less than Netflix.

Include extras like faster DVD shipping and free rentals when you return videos in-store.

Include extras like free DVD rentals with your streaming plan.

Offer the subscription plan as an alternative to other choices, like renting movies one by one or buying popcorn at the counter.

Besides subscription services, you can also rent or buy movies piecemeal or reserve discs to pick up at the nearest Redbox kiosk.

Honestly, the only serious difference between this service and the defunct Total Access is that Blockbuster was slinging physical media while Verizon and Coinstar peddle digital movies. It is a crucial difference indeed -- the sudden surge of free rentals often left Blockbuster without inventory to serve its regular customers, hastening the demise of Total Access and the company itself. That logistical issue doesn't exist in the digital world, so Redbox Instant won't collapse under its own weight.

To beat Netflix at its own game, Redbox Instant needs to find its own identity. At launch, the library appears to be stocked with back-catalog leftovers plus fresher material from cable channel Epix. The Epix tie-in could have been interesting if Redbox were allowed to stream new releases while they're still super-hot, given that Netflix and others have to wait three months after titles like The Hunger Games and The Avengers premiere on premium cable. But Redbox is stuck with the same delayed release window, so there goes that potential selling point.

In short, it's a pretty vanilla pay-per-view service like the ones offered byDell , K-Mart, and Vizio, coupled with a low-octane version of the Netflix service and the instant gratification of Redbox kiosk rentals. Or you can see it as a handful of prepaid monthly Redbox rentals with a low-cost streaming service thrown in for a few bucks more.

Will consumers feel that this combination is an unbeatable mix of value and convenience, or will they be confused by the jumble of options and turn elsewhere? Only time will tell, but I don't think it's much of a Netflix killer.

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Fool contributor Anders Bylund owns shares of Netflix and has built a bull call spread on top of that position, but he holds no other position in any company mentioned. Check out Anders' bio and holdings or follow him on Twitter and Google+.The Motley Fool owns shares of Netflix. Motley Fool newsletter services have recommended buying shares of Coinstar and Netflix. Motley Fool newsletter services have recommended creating a bear put ladder position in Netflix. The Motley Fool has a disclosure policy.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

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