From 7th October, 2014 onward, Verizon Communications Inc (NYSE:VZ) and Outerwall Inc (NASDAQ:OUTR) would cease to be partners since the bond tying them – a movie-streaming service named Redbox Instant, will be shut down forever on this date. That such a decision was on the cards was evident from the service’s refusal to take on new subscriptions from 22nd June, 2014, although the reason quoted by both companies to explain this action was varied. However, both were unanimous in declaring that –
“The service is shutting down because it was not as successful as we hoped it would be.”
The joint venture between Verizon Communications Inc (NYSE:VZ) and Outerwall Inc (NASDAQ:OUTR) was cemented in 2012 when the latter thrived under the name of ‘Coinstar’ and the intention underlying the partnership was to provide streaming service to customers at a monthly rate of $8-$9. This combination of disc rentals and online video was meant to pose competition to bigger players in the field like Amazon (AMZN) and Netflix (NFLX), which unfortunately did not happen.
What probably played an instrumental role in reaching this decision was the 9.3% decline in the second-quarter earnings which amounted to 169.3 million as revenue from rentals, thus prompting the Outerwall Inc (NASDAQ:OUTR) CEO, J Scott Di Valerio to comment –
“If we don’t hit certain subscriber thresholds, then we have some decisions to make in March.”
Prior to the announcement of 7th October, 2014, being the D-day for closure of service, Outerwall Inc (NASDAQ:OUTR)’s stock value touched $57.63 on 3rd October, 2014, registering an increase by 3.6% while overall the share-value of the company has fallen by as much as 14% this year. Verizon Communications Inc (NYSE:VZ) on the other hand, experienced an increase of 0.9% wherein $49.71 was the value at which its shares closed.
Exact time when the Redbox Instant joint venture will completely halt is slated as 11.59 pm on 7th October, 2014, Pacific Standard Time (PST). To this effect, the statement issued by the companies reads as follows –
“Thank you for being a part of Redbox Instant by Verizon. Please be aware that the service will be shut down on Tuesday, October 7, 2014, at 11:59 p.m. Pacific Time. Information on applicable refunds will be emailed to current customers and posted here on October 10. In the meantime, you may continue to stream movies and use your Redbox kiosk credits until Tuesday, October 7 at 11:59 p.m. Pacific Time. We apologize for any inconvenience and we thank you for the opportunity to entertain you. Sincerely, The Redbox Instant by Verizon Team.”
As an assurance to clients, Verizon Communications Inc (NYSE:VZ) CEO has added that it will be launching its Internet TV service by 2015 and will provide the freedom of customized channels.
This article has bee written by Vinita Basu.