Image Source: Tiktok/Redbox
After 22 years, Redbox, the DVD rental service, is shutting down. Its parent company, Chicken Soup for the Soul Entertainment, shifted from Chapter 11 to Chapter 7 bankruptcy, indicating an intent to liquidate the business rather than reorganize it.
Key Points
- Bankruptcy and Liquidation: The company will terminate all 1,000 employees and shut down 24,000 kiosks.
- Financial Struggles: Payroll obligations required an $8 million loan; potential misappropriation of funds noted by the bankruptcy judge.
- Decline in Popularity: The rise of streaming services diminished demand for physical rentals; Redbox ceased renting video games in 2019.
- Consumer Impact: Loss of service for people without reliable internet access.
Chicken Soup for the Soul Entertainment initially filed for Chapter 11 bankruptcy in late June but switched to Chapter 7, planning to liquidate the business and shut down all operations. This shift resulted in the termination of 1,000 employees and the closure of 24,000 kiosks nationwide.
The financial struggles of Redbox were significant, requiring an $8 million loan to pay employees and restore their medical benefits. U.S. Bankruptcy Judge Thomas Horan noted the impossibility of continuing operations and mentioned the potential misappropriation of funds held in trust for employees (source).
Redbox kiosks, once common in grocery and convenience stores, offered DVD and Blu-ray rentals. However, with the rise of streaming services, the demand for physical rentals declined. In 2019, Redbox stopped renting video games to focus on movie rentals and on-demand streaming.
Despite the decline in popularity, Redbox continued to serve people without reliable internet access, providing a convenient way to rent movies. The shutdown means these consumers will lose a valuable service.
The closure of Redbox underscores the dominance of streaming services, which have made physical media rentals largely obsolete. This trend is expected to continue, further consolidating the streaming market.
The absence of Redbox may leave a gap for individuals without strong internet access, potentially increasing demand for affordable internet solutions or alternative rental services. Retail locations will need to find new uses for the space once occupied by Redbox kiosks. Here’s looking at you, Walmart, and 7-11.
