While the struggles of the cable companies are a hot topic these days, October 7th marked the end of the line for an online streaming service. Redbox Instant has officially shut down, in a lesson to the burgeoning OTT industry that success is not guaranteed to all comers who jump on to the Netflix business model. Everyone wants a piece of the pie that Netflix largely had to itself for the early part of it’s existence, allowing it to become the entrenched leader in the streaming video space. Hulu was born out of the TV networks’ desire to cash in on that market. Amazon, whose bread and butter is selling content, couldn’t afford to miss out either, launching Amazon Instant Video. Verizon’s attempt to get in on what was perceived as the streaming video gravy train was partnering with Redbox to create RedBox Instant.
Most people know Redbox as the DVD rental vending machine commonly found outside large retail stores. The company, along with Netflix which at the time offered DVD rentals by mail, made headlines for their part in destroying the business of video stores, most notably Blockbuster. But while Netflix was quick to shift gears and focus on online streaming, Redbox was slower to embrace online offerings, and even then saw them more as a supplement to the physical DVD rentals from its kiosks.
The reasons for Redbox Instant’s failure are many, and their late entry is probably the least of them. They offered a smaller library of content than Netflix, but charged the same price for their service. They also failed to promote the offering, leading to confusion among consumers who may have been familiar with the Redbox brand, but not with their streaming service. Credit card security concerns also made sign-ups to the service unavailable for an extended period of time, meaning that both new users and those seeking to renew their subscriptions could not do so. It should come as no surprise that offering less for the same price as a competitor, while ignoring a major technical problem, is no recipe for success, and that’s a lesson that the entire entertainment industry should keep in mind going forward as the internet opens the door for new products and services of all kinds to reach consumers. The same dangers that face the cable companies right now can also sink the TV offerings of tomorrow in the same ways. Poor customer service, unreliable products, limited selection, and non-competitive pricing are bound to make any service as unpopular as cable TV, which boasts a similar list of complaints.
That’s a stark contrast to the successful companies in the streaming space, like Amazon and Netflix, both of which have great reputations for customer service and invest heavily in new content. As technology moves entertainment from traditional media to online formats, content providers are going to have to learn to behave more like the tech companies than the phone and cable companies of old. The tech industry is awash in competition thanks to low barriers to entry, and thus fiercely competitive, resulting in technology prices that quickly fall. The reason that Netflix has been so disruptive is that it’s brought that same mentality to the media industry, where it soon became infinitely more attractive than the apathy of the cable companies who have long taken advantage of the fact that subscribers were stuck with them for lack of a better alternative.