Redbox Owner Files for Bankruptcy: The Final Blow to DVD Rentals?

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

When I was growing up, VHS tapes were in the process of being phased out and replaced with DVDs. I collected DVDs of my favorite movies all through elementary school and high school. I bought hundreds of movies and was a frequent patron of the $5 movie bin at Walmart. As time went on, I started collecting Blu-ray discs and later 4K discs. In fact, I have every edition of Star Wars: The Original Trilogy that was ever released in home video format, excluding laser disc.

My family would often rent physical copies of new movies from Movie Gallery, Family Video, and Netflix, when discs were still sent by mail. As an adult, I now rent movies mostly via streaming services. That said, I still prefer to watch movies in hard copy format, as the quality is significantly better. According to The Verge, one advantage 4K Blu-ray discs have over streaming is the amount of data they can store. This allows for a much higher bitrate and, thus, higher-quality picture and audio than a typical compressed stream.

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While I will likely die on the "physical copy is better than streamining" hill, it's safe to say most of the population prefers the ease of streamining. Video rental stores like Family Video and Blockbuster are now extinct, and it's very possible the Redbox kiosks might be next on the list. The company is currently owed by Chicken Soup for Soul Entertainment, which has just filed for Chapter 11 bankruptcy.

Redbox was founded in 2002 by McDonald's. Coinstar later bought the majority of company shares, and the company even went public in 2021 after merging with a special purpose acquisition company (SPAC), according to Variety. Chicken Soup for the Soul Entertainment acquired Redbox Entertainment in an all-stock transaction valued at about $370 million in 2022. In addition to the physical Redbox kiosks, the company also owns the ad-supported streaming service known as "Crackle" along with Redbox on Demand.

Chicken Soup for the Soul Entertainment has experienced stark losses over the last several quarters, and according to WTHR, it has accumulated nearly $1 billion in debt. The filing revealed that Chicken Soup for the Soul owes millions to over 500 creditors, including Sony Pictures, Warner Bros., and even major retailers like Walgreens and Walmart. As of March 2024, the company had about $414 million in assets and $970 million in debt. Shares have fallen more than 90% over the last year.

WTHR added that Redbox currently operates about 27,000 kiosks across the U.S., but that's down from 36,000 during the company's acquisition in August 2022. Even major retailers like Walmart, Target, and Best Buy have slashed their DVD selections over the last few years. Redbox's latest financial woes might be the final nail in the coffin for DVD rentals and a prelude to the end of DVD purchases. It certainly feels like the end of an era—the end of one fun, magical, popcorn-infused era.