Redbox Instant venture with Outerwall to shut down

Redbox Instant, the movie-streaming venture between Outerwall Inc. and Verizon Communications Inc., will cease operations on Oct. 7, according to a notice to customers on its website.

"The service is shutting down because it was not as successful as we hoped it would be," according to the statement.

While the site had stopped taking new customers on June 22 after Redbox detected it was being used to validate and test stolen credit-card information, that wasn't the reason for its closing, Les Kumagai, a spokesman for Verizon, said today in an email. No customer information was compromised, he said.

Both partners made the decision to close the site for business reasons, Kumagai and Rosemary Moothart, Outerwall's vice president of investor relations, wrote in separate emails.

Verizon and Outerwall's predecessor company, Coinstar, formed the Redbox Instant venture in early 2012. The service, which combined kiosk-based disc rentals with online video, began streaming content to consumers in March 2013 for $8 or $9 a month in a bid to compete with Netflix Inc. and Amazon.com Inc. Subscriber numbers were disappointing, Outerwall chief executive J. Scott Di Valerio told investors on July 31.

"If we don't hit certain subscriber thresholds, then we have some decisions to make in March," he said, referring to what would have been the venture's two-year anniversary.

Rental Decline Redbox reported 169.3 million rentals during its second quarter, a 9.3 percent decline from the year-earlier period and cited the lack of available new releases.

Outerwall has said it plans to report third-quarter results on Oct. 30.

The Redbox Instant joint venture will end at 11:59 p.m. Pacific Time on Oct. 7, according to the statement.

Outerwall's stock rose 3.6 percent to $57.63 in New York on Oct. 3, before the shutdown of Redbox Instant was reported by Reuters. The Bellevue, Washington-based company's shares have fallen 14 percent this year. Verizon, based in New York, rose 0.9 percent to $49.71.