Redbox, a stalwart in DVD rentals for over two decades, is set to shut down as streaming services dominate the home entertainment sector.
Redbox’s parent company, Chicken Soup for the Soul Entertainment, has announced the closure of its 24,000 DVD rental kiosks and streaming services. This decision follows the company’s conversion of its Chapter 11 bankruptcy case to a Chapter 7 liquidation proceeding on Wednesday.
In August 2020, Chicken Soup for the Soul Entertainment acquired Redbox business in a deal worth $370 million. As part of the acquisition, Chicken Soup for the Soul Entertainment took on $359.9 million of Redbox’s debt.
Furthermore, Chicken Soup for the Soul Entertainment has terminated all of its employees, who will not receive severance or extended benefits following the decision to liquidate its assets. As of late June, the company had reported a workforce of 1,033 employees.
Notably, before being acquired by Chicken Soup for the Soul Entertainment, Redbox’s business had been on a downward trajectory for over a decade. The company saw its revenue peak in 2013 at $1.97 billion and once operated more than 43,000 kiosks across the U.S. and Canada, offering a wide selection of movies, TV shows, and games.
On June 28, Chicken Soup for the Soul Entertainment (CSSE) filed for Chapter 11 reorganization, citing total debts of $970 million and consolidated assets of $414 million as of March 31, 2024. The list of creditors includes major players such as Universal Studios Home Entertainment, Lionsgate, Sony Pictures Home Entertainment, Warner Bros. Home Entertainment, Paramount Pictures, BBC Studios Americas, Walgreens, Walmart, and Vizio.
Judge Thomas M. Horan of the U.S. Bankruptcy Court for the District of Delaware approved Chicken Soup for the Soul’s request to transition its bankruptcy case to a Chapter 7 liquidation on Wednesday.
Additionally, Chicken Soup for the Soul Entertainment had been unable to pay its employees and vendors for at least four weeks. Court documents revealed that HPS, the company’s primary lender, accused the company of gross mismanagement.
Chicken Soup for the Soul Entertainment chairman and CEO Bill Rouhana Jr., in a declaration, said, CSSE’s ability to service the Redbox debt was “predicated on a partial return to pre-COVID levels in the number and cadence of theatrical releases that were available to the company for its kiosk network, as well as cost synergies. The corresponding rebound in demand for physical kiosk rentals was expected to return to approximately one-third of 2019 levels.”