Redbox is planning to lay off more than 1,000 workers and shut down its direct-to-consumer streaming service after a federal judge approved a request to concert a bankruptcy case involving its parent company from Chapter 11 to Chapter 7.
The move means assets associated with Redbox parent company Chicken Soup for the Soul Entertainment (CSSE) will be liquidated in order to cover certain debts. Among those unpaid creditors are major media and retain brands like Comcast’s NBC Universal, Paramount Global, Lionsgate, Sony Pictures, Warner Bros Discovery, Walmart, Vizio and Walgreens.
Redbox is best known for its iconic DVD kiosks that are peppered throughout the United States, most of which are located in front of big box retailers, pharmacies and discount stores. CSSE acquired Redbox for $325 million two years ago, figuring it could extend its business from media into advertising sales and distribution.
That bet didn’t pay off, and there were signs that acquiring Redbox might not have been the right move. Redbox’s revenue peaked more than a decade ago, with the company earning just under $2 billion in 2013. Finance-wise, it has been a downhill affair ever since.
Redbox captured the video rental market left bare by the likes of Hollywood Video and Blockbuster, with its iconic red kiosks allowing movie fans to rent the latest titles for around $1 per day. Over time, it offered Blu-ray discs to rent for a premium fee, and eventually included video games in its catalog.
CSSE saw potential in using Redbox kiosks to display out-of-home advertising, and began inking partnerships with content platforms like TikTok to help bring more consumers and marketers to the platform. It also hoped to tap into the free, ad-supported streaming TV (FAST) craze that has drawn billions of dollars in advertising money to such streaming platforms over the last few years.
“Our acquisition of Redbox will accelerate the scaling of our business as it combines complementary teams and services to create the streaming industry’s premier independent [ad-supported streaming service],” a Chicken Soup executive said in a statement at the time.
Virtually none of that strategy panned out the way CSSE hoped it would.
