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The End of DVD Rentals?

The parent company of Redbox, which still operates thousands of DVD rental kiosks nationwide, has filed for Chapter 11 bankruptcy.

Growing up, VHS tapes were being replaced by DVDs. I collected DVDs of my favorite movies throughout elementary and high school, often buying from the $5 movie bin at Walmart. Over the years, I also began collecting Blu-ray and 4K discs. I have every edition of Star Wars: The Original Trilogy ever released in home video format, except for laser disc.

My family frequently rented physical copies of movies from Movie Gallery, Family Video, and Netflix, back when discs were mailed. Now as an adult, I mostly rent movies through streaming services, although I still prefer watching movies on hard copy for the better quality. According to The Verge, 4K Blu-ray discs hold more data than streaming, offering higher bitrate, better picture, and audio quality compared to compressed streams.

While I might always prefer physical copies over streaming, most people enjoy the convenience of streaming. Video rental stores like Family Video and Blockbuster have vanished, and Redbox kiosks might be next. The company, currently owned by Chicken Soup for the Soul Entertainment, has just filed for Chapter 11 bankruptcy.

Redbox, founded in 2002 by McDonald’s, was later acquired by Coinstar. The company went public in 2021 after merging with a special purpose acquisition company (SPAC), as reported by Variety. Chicken Soup for the Soul Entertainment bought Redbox Entertainment in an all-stock transaction valued at about $370 million in 2022. Apart from the physical Redbox kiosks, the company also owns the ad-supported streaming service “Crackle” and Redbox on Demand.

Chicken Soup for the Soul Entertainment has faced significant losses in recent quarters, accumulating nearly $1 billion in debt. According to WTHR, the company owes millions to over 500 creditors, including Sony Pictures, Warner Bros., Walgreens, and Walmart. As of March 2024, the company had about $414 million in assets and $970 million in debt, with shares plummeting over 90% in the past year.

WTHR also noted that Redbox currently operates about 27,000 kiosks across the U.S., down from 36,000 when the company was acquired in August 2022. Major retailers like Walmart, Target, and Best Buy have reduced their DVD selections over the past few years. Redbox’s financial troubles may signify the final end of DVD rentals and a precursor to the decline in DVD purchases. It indeed feels like the end of an era—a fun, magical, popcorn-infused era.

Source: The Verge, Variety, WTHR