The company, known for its nationwide network of DVD-rental kiosks, publicly launched Redbox On Demand on Wednesday, a service stocked with more than 6,000 movie and TV show titles available for VOD rental or electronic sell-through.

Redbox has inked deals for the service with Warner Bros., Paramount Pictures, Lionsgate, Sony Pictures Entertainment, 20th Century Fox and Universal Pictures.

Disney is the notable exception. The Mouse House hasn’t had a direct deal with Redbox for DVDs since 2012, and it is now suing Redbox, seeking to stop it from selling digital codes (extracted from DVD combo packs) for downloading or streaming Disney movies. Redbox has said in response that it’s “confident in our pro-consumer position.” Meanwhile, Disney operates a digital-locker service, Movies Anywhere, for storing and accessing content purchased from different retailers and has buy-in from other studios — but which Redbox On Denand isn’t a part of.

Redbox’s goal with the digital VOD and EST service isn’t really to take on giants like Apple’s iTunes or Amazon. Rather, the company wants to extend its base of kiosk users to digital video, and capture share of that spending.

“This is really about expanding the options for our consumers,” said CEO Galen Smith. “This allows us to go a lot broader and deeper than the selections we’re able to offer in the kiosk.”

Pricing for Redbox On Demand will be in-line with competing services. New-release VOD rentals start at $3.99 for 48-hour VOD rentals and movie purchases start at $9.99. Library content starts at $1.99.

Redbox On Demand offers many of the same new-release movies available at the kiosks, along with older movies and TV shows for rental or purchase. Initial titles available on electronic sell-through include “Dunkirk,” “The Lego Ninjago Movie” and “Flatliners”; VOD rentals include “Kingsman: The Golden Circle,” “Home Again,” “Detroit” and “All Saints.”

Ideally, Redbox On Demand service should help offset the long, slow decline of the DVD business. Redbox’s revenue peaked in 2013, and it saw a steady decline of DVD rentals over the next three years as digital streaming has boomed. (Redbox is now privately held by investment firm Apollo Global Management and does not disclose financials.)

Smith, however, sees the DVD kiosks living a long and fruitful life, catering to consumers who are price-sensitive and see convenience and value in $1.50-per-day rentals. “We think physical [discs] will be around for a very, very long time,” Smith said.

Indeed, after paring back its kiosk footprint in recent years, Redbox will have added a 1,750 net new kiosks in 2017 with Dollar General locations making up the large majority of the new installs. At the end of 2017, Redbox expects to have around 42,000 kiosks in service. And they still turn a nice profit, Smith said, calling the Redbox kiosks the “most efficient 12 square feet in retail.”

“It’s really, really important to understand that there’s segmentation in the market,” said Smith. “Having one solution, which is digital only, is not right for every consumer.”

Even absent a deal with Disney, Redbox On Demand should have more staying power than Redbox’s last attempt to push into the streaming biz. That was in 2013, when Redbox’s then-parent company Outerwall — in a joint venture with Verizon — launched Redbox Instant, a Netflix-style subscription service with about 6,000 movies. With mostly older content, it failed to gain traction and the partners folded the JV in October 2014.

Smith said Redbox On Demand differs from Redbox Instant by Verizon in key respects — and aligns with its current kiosk business much better. The new service is transaction-based instead of subscription-based, and is focused around new studio releases (which aren’t available on Netflix, Hulu or Amazon Prime) instead of catalog content.

“We think it’s a really interesting, natural extension to what we’re already doing,” he said.

The public launch of Redbox On Demand comes after the company has been kicking the tires on a digital service for more than a year and half. In July 2016 it quietly launched a closed test of “Redbox Digital,” an iPad app that offered titles for rent or purchase.

The Redbox On Demand service builds on that test. It’s launching as an integrated part of the main Redbox app, which has been downloaded more than 35 million times. The new service currently is available on Redbox’s site, iOS and Android devices, and Apple TV, Google’s Chromecast, Roku, and LG and Samsung smart TVs.

Redbox’s real opportunity is driving consumers who have used its kiosks to digital VOD and EST, Smith said. The company maintains more than 90 million consumer-marketing “touch points” in the U.S. (although the number is not unduplicated reach). That includes 45 million active email subscribers, 35 million app users and 27 million loyalty club members. In addition, the kiosk network delivers 350 million consumer impressions each week, according to the company.

“We have a powerful ability to connect with and transact with consumers,” Smith said.

In early 2018, Redbox plans to roll out a new loyalty program to let customers earn rewards points digitally and physically. Right now, Redbox’s loyalty program offers one free rental after you rent 10 movies.

In the home-entertainment sector, digital VOD has been stagnant or in decline in the past year. Through the first nine months of 2017, digital VOD revenue in the U.S. was down 3% year-over-year, according to DEG’s latest report. Smith believes Redbox On Demand can help drive up revenue for itself and its studio partners. “We think this is a good way to introduce next wave of consumers to digital on demand,” he said.

A Redbox spokesperson sent Variety the following statement: “Redbox continually looks for ways to enhance our customer experience. For tens of millions of consumers, Redbox is their source for new release rentals without a subscription. As such, we regularly conduct tests of potential new offerings, that may or may not be brought to market, as part of our ongoing commitment to provide additional value.”

In many ways, the streaming service will be a déjà vu for Redbox customers: The DVD rental company had launched a streaming service dubbed Redbox Instant in a joint venture with Verizon in early 2013, only to shut it down some 18 months later.

But while Redbox Instant aimed to challenge Netflix with a subscription bundle, the company now seems to have more modest plans. Redbox Digital is being built as a video-on-demand store similar to iTunes, Vudu or Google Play. Consumers will be able to rent movies or TV show episodes for streaming, or purchase digital copies.

Design concepts of the service that have surfaced online show a tight integration with the existing Redbox service. Redbox users will find the digital content store as a tab on the Redbox website, next to existing tabs for movies and games, if the company follows through with the plans laid out in those images.

The service would also plug into Redbox’s existing loyalty program, allowing consumers to earn points with every digital rental or purchase. There are plans to integrate the service directly into Redbox’s mobile apps, and extend support to TV-connected platforms like Chromecast and Roku.

Redbox’s plans for a new digital storefront come at a critical time for the company. Redbox’s revenue was down 17 percent last quarter. Rentals declined to $587.6 million in 2015, down from a high of $772.9 million in 2013. For this year, parent company Outerwall expects another DVD rental decline of 15 to 20 percent.

Some of this may have to do with a lack of huge blockbuster movies, but a shift in consumption patterns from physical media to digital clearly also plays an increasing role — and has many believe that Redbox’s business may sooner or later evaporate.

However, Redbox’s past attempt at building a digital business was anything but successful. Redbox Instant tried to package Netflix-like subscription plans with physical disc rentals in a standalone product. The joint-venture also aimed to combine Redbox’s marketing muscle with Verizon’s technology chops. In the end, neither could measure up to Netflix, which offered consumers a much bigger catalog, and was starting to heavily invest into original content at a time when neither Redbox nor Verizon had the stomach to do so.

There is a case to be made that Redbox will be more successful this time around. By integrating tightly with its existing service, the company is essentially targeting millions of Redbox users who already use its website and apps to review and reserve their DVDs. Soon, those consumers may have a choice: Hold a movie for $1.50 at the local store, or start watching it right away without leaving the house for a few dollars more.

Still, the digital video market is a crowded one. A number of digital storefronts, including Target Ticket and Samsung’s video hub, have closed in recent years, despite backing from strong brands. Others were forced to consolidate in light of strong competition. Earlier this year, Fandango bought M-Go from DreamWorks Animation and Technicolor.

What’s left are a few big players with massive reach: Apple’s iTunes is tied deeply into iPhones and iPads, and Google’s Play Store is pre-installed on hundreds of millions of Android devices. One could argue that there’s a relatively small overlap between heavy users of either two stores and the typical Redbox customer — but that still doesn’t mean that Redbox Digital will add enough streaming revenue to turn things around for the company.

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

A Redbox Instant spokesperson added via email:

The joint management of Redbox Instant by Verizon has elected to cease operation of the service effective Tuesday, October 7, 2014. The joint venture partners made this decision after careful consideration. The service had not been as successful as either partner hoped it would be. We apologize for any inconvenience this may cause our customers.

The shutdown comes after the service had disabled new sign-ups for three months due to a credit card fraud issue, which not only prevented Redbox Instant from acquiring new customers, but also resulted in existing customers with expiring or revoked credit cards being booted from the service because they weren�t able to add any new payment information. Redbox Instant was quick to point out that the customer�s credit card information wasn�t impacted by the issue; instead, Redbox Instant�s sign-up process was used to verify credit card numbers stolen from other retailers.

Rumors about a shutdown first surfaced about a week ago; at the time, a Redbox Instant spokesperson curiously replied with �no comment� when I asked whether a shutdown was imminent. On Saturday, a spokesperson Redbox Instant officially launched in early 2013 with a hybrid model that tried to tie subscription video streaming to physical disc rentals. Subscirbers were given coupons to redeem at Redbox kiosks every month, and also had access to a catalog of subscription titles that mostly focused on movies, as opposed to the TV-heavy catalog that has been a big factor in Netflix�s success.

Redbox Instant�s catalog was also significantly smaller than Netflix�s or even the Amazon Prime Instant streaming video catalog, and the service never really gained traction with consumers, leading the CEO of Redbox parent Outerwall to remark that both his company and Verizon were ��not pleased� with the subscriber numbers. In that context, the credit card fraud issue may have just have been the final straw.

It�s still unclear what is going to happen to the team behind the service as well as Redbox Instant�s assets. I�ve heard from a source close to the company that the team is still in place; my guess is that at least some of Redbox Instant�s engineers may end up working for Verizon�s online video service, which the company plans to launch some time next year. Asked about possible layoffs, Redbox Instant�s spokesperson had this to say:

While Human Resources matters are private, I can tell you that the Redbox Instant by Verizon team is made up of talented individuals who made great contributions to the service.

And here�s the official word on Redbox Instant�s assets: We are always looking for innovative ways to serve our customers, but don�t have anything further to discuss at this time.

Will the moribund home entertainment sector actually finish 2012 up over 2011?

Year-over-year growth in Hollywood�s �homevid� business hasn�t happened since George W. Bush was midway through his second term, with the market following the inexorable decline of DVD. But on Sunday, studio-backed research firm the Digital Entertainment Group released data showing that the U.S. home entertainment industry is up 1.4 percent through the first six months of the year.

The digital side of the business generated $2.4 billion during this period, according to the DEG, a 78 percent uptick. Leading the way has been subscription video on demand, which the group says has spiked in revenue by 430 percent for the first six months to $1.1 billion.

With Netflix reporting $1.04 billion in U.S. streaming revenue during the first two quarters, it�s easy to tie this metric to Los Gatos, Calif. Yes, it�s all true you � the company with the cratering stock price has turned the home entertainment business around.

Other research groups, including IHS Screen Digest, have suggested that the SVOD market will never replace DVD sales as a profitability driver, given the vast difference between margins. At least in the short term, however, SVOD is generating real revenue.

Revenue from electronic sell-through (i.e. downloads on iTunes and Amazon) in the U.S., the DEG also notes, was up 22 percent to $329.4 million.

The overall disc business keeps declining, with sales of physical video media dropping 3.6 percent to $3.7 billion during the six-month period and disc rentals declining 26 percent to $2.3 billion.

However, the kiosk rental business, led by Redbox, is still expanding nicely � it was up 23% to $990 million, according to DEG.

Cheerleading a bit for the studios� pet initiatives, the DEG also says that U.S. consumer spending on Blu-ray was up over 13 percent (but it didn�t release a revenue figure).

DEG also claims that the major studios� cloud initiative, UltraViolet, has now signed up 4 million users. While still underwhelming, that represents an acceleration of growth, with the Wal Mart-backed UltraViolet group reporting 3 million users as recently as early June.

The joint venture plans to introduce the product portfolio in the second half of 2012. It will offer subscription services and more in an easy-to-use, flexible and affordable service that will allow all consumers across the U.S. to enjoy the new and popular entertainment they want, whenever they choose, using the media and devices they prefer. Additional brand and product information will be revealed in the coming months.

"When you consider the core elements the parties bring to this venture � our powerful brands; our national rental kiosk footprint; our anytime, anywhere network presence; and our mutual commitment to customer-focused innovation � it's clear that Verizon and Redbox are a powerful entertainment team," said Bob Mudge, president of Verizon consumer and mass business markets.

"Consumers rely on Redbox for the latest new release movies at a great value, and our joint venture with Verizon will enable us to bring them even more value by offering expanded content offerings and greater flexibility for how and when they enjoy entertainment," said Paul Davis, chief executive officer of Coinstar, Inc. "This alliance is the result of a deliberate and strategic process to identify a partner who shares our commitment to delivering innovative solutions to consumers. We look forward to rolling out the shared benefits this venture will bring to consumers, retailers, and shareholders."

This venture between Verizon and Redbox will create the kind of national multi-platform product that customers are demanding from video entertainment service providers. It will leverage Verizon's industry-wide relationships with entertainment content providers, its advanced cloud computing technologies and state-of-the-art IP network infrastructure to distribute video on-demand content to its customers.

"The joint venture will combine the accessibility and value of Redbox with Verizon's vision for a borderless lifestyle � where consumers easily accomplish what they want or need to do, on their terms, through the power of the network," said Mudge. "Together, we are erasing old technology boundaries, freeing people to spontaneously enjoy the entertainment they want, whenever they choose, using the devices and media they prefer, at home or away."

By offering instantly available online and mobile content with immediate access to physical media through rental kiosks, Verizon and Redbox will be uniquely positioned to deliver the best of both worlds � digital and physical � to consumers across the country.

The joint venture is a limited liability company with Verizon holding a 65 percent ownership share and Redbox holding a 35 percent ownership share at the outset.

The development of the service has taken longer than expected because it has involved negotiations with several potential go-to-market partners, according to Coinstar CEO Paul Davis, speaking at a Feb. 16 analyst day. Coinstar is Redbox’s parent company.

“So we could have moved a lot quicker quite a few months ago had we decided to do this on our own,” Davis said, according to **a transcript of the presentation**. “But we made a conscious decision as a team to not do it on our own because the price tag of doing that was prohibitive. We also didn’t feel like we could have an offering working on our own that would distinguish ourselves and be a real winning proposition.”

Davis did not disclose which companies Redbox has been approaching about a partnernship.

Separately, **Amazon.com** reportedly is readying a service that would stream 5,000 movies and TV shows members of its $79-per-year Prime free-shipping membership program.

Redbox is a wholly owned subsidiary of Coinstar. The Oakbrook Terrace, Ill.-based company claims to have rented more than 1 billion DVDs to date through vending machines at about 24,900 U.S. locations nationwide, including select McDonald’s, Wal-Mart Stores and Walgreens locations.

“We’re very confident that the brand can extend into [Internet streaming] given our position,” Davis said at the analyst event.

Netflix, which offers more than 20,000 selections available to stream online to more than 200 devices, had about **20 million subscribers at the end of 2010**.

The development of the service has taken longer than expected because it has involved negotiations with several potential go-to-market partners, according to Coinstar CEO Paul Davis, speaking at a Feb. 16 analyst day. Coinstar is Redbox's parent company.

"So we could have moved a lot quicker quite a few months ago had we decided to do this on our own," Davis said, according to a transcript of the presentation. "But we made a conscious decision as a team to not do it on our own because the price tag of doing that was prohibitive. We also didn't feel like we could have an offering working on our own that would distinguish ourselves and be a real winning proposition."

Davis did not disclose which companies Redbox has been approaching about a partnernship.

Separately, Amazon.com reportedly is readying a service that would stream 5,000 movies and TV shows members of its $79-per-year Prime free-shipping membership program.

Redbox is a wholly owned subsidiary of Coinstar. The Oakbrook Terrace, Ill.-based company claims to have rented more than 1 billion DVDs to date through vending machines at about 24,900 U.S. locations nationwide, including select McDonald's, Wal-Mart Stores and Walgreens locations.

"We're very confident that the brand can extend into [Internet streaming] given our position," Davis said at the analyst event.

Netflix, which offers more than 20,000 selections available to stream online to more than 200 devices, had about 20 million subscribers at the end of 2010.