Redbox Instant is shutting down and issuing refunds

Redbox Instant, the joint venture between Verizon and Outerwall, has decided to shut down the service effective early next week.

The news was communicated to customers earlier today via the official Redbox Instant website. An official shut down date is scheduled to happen October 7, but the site is allowing current customers stream videos as usual until that date.

The service, which officially launched to the public in March 2013, offered people the option of signing up for a $6 monthly subscription for access to over 4,500 streaming movies, and $8 per month for access the the streaming library as well as four “credits” that let you rent newly released films from a physical Redbox DVD kiosks. Redbox Instant insisted it was not trying to directly compete with streaming video leader Netflix, which is somewhat true given that it takes about three months after a DVD release before new movies become available on Netflix.

But it appears consumers weren’t very keen on the idea of juggling between physical media and streaming services. This is likely due to the drop in consumer interest in physical media in general, which has caused Netflix’s DVD/Blu-ray rental-by-mail business to take a back seat to streaming. But subscriber numbers are also thought to be down due to a credit card fraud issue  that prevented new customers from signing up for the service over the last few months.

Redbox Instant is, however, offering a refund to current subscribers. Details about that refund, the service said, will be announced October 10.