Redbox Bankruptcy Spells Trouble for DVD and Blu-ray Collectors

Redbox, along with its parent company Chicken Soup for the Soul Entertainment, filed for Chapter 11 bankruptcy in a Delaware court on June 29, citing nearly $1 billion in debt. This move signals a reorganization rather than a dissolution, meaning those red vending kiosks are not disappearing just yet. However, this development still spells trouble for physical media.

The decline of physical movie rentals has been a slow process, starting from Blockbuster Video’s bankruptcy in 2010. Netflix, primarily known for its DVD-by-mail service back then, revolutionized the way we consume movies. Even though Netflix only stopped mailing DVDs in September 2023, streaming had already become its future years ago.

This year, the market saw Best Buy discontinuing DVDs and Blu-rays, with Disney halting its own physical home-entertainment production, outsourcing it to Sony. While chains like Walmart, Target, and Barnes & Noble still sell physical media, it’s largely relegated to bargain bins as digital formats take over. Modern video game consoles don’t even come with disc slots, reducing the prevalence of DVD players in homes.

If retailers are dropping out, why should studios continue producing DVDs? On the flip side, some view this shift as an opportunity for physical media enthusiasts.

Leah Aldridge, a professor of Film and Media Studies at Chapman’s Dodge College, told IndieWire, “If Disney can outsource to Sony, why couldn’t the studios outsource to places like Criterion or Kino Lorber? I’m banking on an entrepreneur stepping in, saying, ‘Let us do it. We’ll do it cheaper than Sony.’”

Joe Rubin, co-founder and director of acquisitions at cult DVD distributor Vinegar Syndrome, noted that the decline in studio interest in physical media has its perks. Studios are now more open to licensing titles for collectors’ editions, something that was a rarity in the past.

“The reduction in interest in physical media at studios has been something of a blessing because it’s made those titles available,” Rubin said.

However, this doesn’t indicate a burgeoning market for indie DVD distributors. A disparity exists between casual fans wanting a “Barbie” copy and collectors chasing a 4K edition of the 1986 Chuck Norris classic “Invasion U.S.A.”

“I don’t think that the home video or physical media market is expanding. It’s hit its peak and plateaued. If anything, it’s going to start contracting,” Rubin added. “This may not signal a death for physical media, but it’s definitely not growing.”

Vinegar Syndrome collaborates with around 30 independent partners, managing home video and DVD sales for smaller distributors, including names like Utopia and IFC Films. Rubin noted that although niche DVD distributors have emerged to fill the void left by major studios, none operate on a scale to handle studio-level outsourcing.

“I don’t know that we or any other companies of our size are set up for it,” he said. “The logistics of working with a major studio are more complicated than dealing with an independent filmmaker or a smaller distribution company due to more departments, clearances, and constraints.”

While revenue from DVDs has long ceased to be a major source for studios, production costs remain low. If a movie can justify the cost, studios still make DVDs, especially for markets where streaming hasn’t fully taken hold.

If Redbox and similar businesses go belly up, many consumers would lose access to new movies outside first-run theaters. With many consumers forced into monthly streaming subscriptions, studios have even less incentive to invest in physical media. Anticipating these shifts, Vinegar Syndrome has moved more of its operations online, opting for direct-to-consumer channels over third-party sellers.

Perhaps DVDs could experience a renaissance similar to vinyl records, turning their outdated format into a trendy collectible. However, vinyl has the advantage of record stores, which specialty video stores lack. Despite Rubin’s enthusiasm for preserving obscure titles, DVD releases most likely to be profitable already have a dedicated audience.

Redbox might have been a solution, but convenience ultimately trumped the need to leave home. Rubin revealed that Redbox once approached Vinegar Syndrome to fill kiosks with niche offerings, but their requirement for scale—thousands of discs without packaging—was impractical. As a result, Redbox kiosks continue to feature limited and mostly mainstream titles.

Shortly after acquiring Redbox in May 2022, former CEO Bill Rouhana remarked to IndieWire that there was “absolutely nothing in [the kiosks] today that you’d want to watch.” Now, Redbox feels almost as outdated as Blockbuster stores, which it set out to replace.

Source: IndieWire