Redbox Closes DVD Rental Kiosks Across the Nation

The iconic red kiosks seen on countless corners and store entrances across the United States are becoming a relic of the past. Redbox is shutting down its DVD rental kiosks nationwide. This move marks the end of an era in movie rentals. The decision comes from Redbox’s parent company, Chicken Soup for the Soul Entertainment (CSSE), which has struggled to keep pace with the rise of streaming services and the declining demand for DVD rentals.

On June 28th, CSSE filed for Chapter 11 reorganization, listing total debts of $970 million and consolidated assets of $414 million as of March 31st. Creditors included several media giants like Universal Studios Home Entertainment, Sony Pictures Home Entertainment, Warner Bros. Home Entertainment, Paramount Pictures, Lionsgate, and BBC Studios Americas. Retailers such as Walgreens, Walmart, and Vizio were also among the creditors.

Initially, CSSE planned to raise funds by selling some assets while retaining around 100 employees. But on July 10th, the company filed for Chapter 7 liquidation in Delaware bankruptcy court. This resulted in the closure of all 24,000 Redbox kiosks nationwide, the shutdown of its streaming services, and the layoff of all 1,033 employees.

Judge Thomas M. Horan of the U.S. Bankruptcy Court for the District of Delaware, who oversees CSSE’s bankruptcy case, granted the company’s request to convert to Chapter 7 liquidation.

“There is no means to continue to pay employees, to pay any bills,” Horan stated via the Wall Street Journal. A bankruptcy trustee will investigate whether funds held for employees were misappropriated. “1,000 people are about to lose their jobs, and they’re not even going to be paid for work that they did,” the judge lamented.

CSSE failed to pay its employees and vendors for at least four weeks before its Chapter 11 filing. According to Engadget, the company had to secure an $8 million loan to partially pay workers’ salaries and restore their medical benefits, which had been inactive since mid-May.

HPS, the company’s top lender, alleged gross mismanagement by the company in court documents. However, in a declaration supporting the bankruptcy petition, CSSE Chairman and CEO Bill Rouhana Jr. claimed the firm’s financial struggles were partly due to the “refusals” by lenders to meet their obligations. This resulted in defaults and contractual terminations across critical content and service providers. On June 11th, Rouhana dissolved the company’s board of directors before stepping down as CEO on June 24th.

Chicken Soup for the Soul Entertainment acquired the struggling Redbox business in August 2020, in a deal valued at $370 million. The acquisition involved CSSE assuming $359.9 million of Redbox’s debt.

Redbox reached its revenue peak in 2013 with $1.97 billion and more than 43,000 kiosks in the U.S. and Canada stocked with movies, TV shows, and video games. However, in 2019, the company stopped renting out video games to focus on movie rentals and its on-demand streaming service.

CSSE is a subsidiary of Chicken Soup for the Soul LLC, known for its famous book series and pet food under the Chicken Soup for the Soul brand name. Besides Redbox, Chicken Soup for the Soul Entertainment operated Crackle, Popcornflix, and the eponymous Chicken Soup for the Soul streaming service. It also produced, acquired, and distributed films and TV series through its Screen Media and Chicken Soup for the Soul TV Group subsidiaries.

Source: The Wall Street Journal, Deadline, Engadget