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Experts cite Redbox as one of the primary reasons for the closure of Blockbuster and its chain of video rental stores. Redbox, which operates kiosks outside of grocery stores, fast food restaurants and other shops, offered lower prices and made it easier for shoppers to return their movies after watching them. The chain of video rental kiosks announced in 2013 that it would launch its own streaming service to compete with Netflix. Though some thought Redbox would potentially boost higher sales than Netflix, the company announced in October that it would shut down its streaming service.

Redbox and Verizon

One reason why many thought Redbox would have a success on its hand with its streaming plan was due to its partnership with Verizon. Verizon threw a large amount of support behind this new concept. The company ran ads on television and in its store and encouraged its customers to use Redbox for their rentals. During the early stages of the concept, Verizon and Redbox allowed users to sign up for a beta version of the service. Though some loved the way the service worked, the service experienced a number of problems.

Constant Struggles

Netflix has millions of subscribers, but Redbox had a hard time luring any of those customers to try its services. One of the biggest problems that the company experienced online occurred during its beta testing. Limiting the number of people who had access to the service frustrated many, and some customers made the deliberate decision to not use it after the service opened to the general public. Redbox also discovered that an unsecured network led to hackers infiltrating the system and stealing customer information. Despite putting millions of dollars into the service, Redbox admitted that its streaming service never made a profit.

Plan Problems

Netflix offers programs starting at less than $10 per month, and Redbox hoped to lure users away with a lower price. Customers could purchase plans for just $6 per month. One problem registered by users was the price itself. Redbox primarily advertised its more expensive packages, which included one or more rentals from one of its kiosks. You don’t have to be a successful businessman like Bob Parsons to figure out shoppers disliked the idea of paying for something they might not use, and others complained that they didn’t want to return movies within 24 hours after visiting one of those kiosks.

Netflix is Supreme

Though Netflix primarily started as a DVD by mail company, it later introduced a streaming service that gave customers access to some of its movies and television shows online. After seeing the success of that service, it expanded its streaming services. Netflix now offers thousands of movies and TV shows and has more customers using its streaming services than customers renting films. Netflix offers streaming services for under $10 per month and gives shoppers the option of adding DVD by mail rentals for a few dollars more each month. Though Netflix still has some competition, it ranks as one of the top streaming service providers.

During the early days of Netflix, Blockbuster had the chance to buy the company and turned it down. Netflix later bounced back and now has sales higher than Blockbuster ever recorded. Though Redbox intended to topple the streaming service giant, high costs and other issues led to the company dropping its services in 2014.