DVD rental service Redbox is set to shut down after 22 years in business, as streaming continues to dominate the at-home entertainment market.
Redbox’s parent company, Chicken Soup for the Soul Entertainment, changed its Chapter 11 bankruptcy case, filed last month, to a Chapter 7 liquidation case on Wednesday. The conversion signifies that the company couldn’t come up with a repayment plan for its outstanding debts and will soon turn to selling off assets to pay back creditors.
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WATCH HEREWith the change to a Chapter 7 case, all employees will now be laid off and Redbox’s 24,000 kiosks will close. Deadline reported that lawyers for Chicken Soup for the Soul told the court they had worked “day and night” to find a solution to avoid the outcome.
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A lawyer for Redbox and a representative for the company didn’t immediately respond to requests for comment.
Founded in 2002, Redbox at its peak shook up Hollywood with its rental service, which was cheaper than buying a DVD at the time. But with the rise of digital offerings and streaming platforms, DVD sales collapsed during the 2010s.
In 2022, Redbox had $325 million in debt, and Chicken Soup for the Soul Entertainment acquired it.
The parent company had accumulated $1 billion in debt by the time of its bankruptcy filing last month. According to court documents filed earlier this month, it was struggling to make payroll and pay for health care plans for its more than 1,000 employees.
Redbox is just the latest physical media company that has struggled to survive streaming’s dominance. Some 99% of U.S. households pay for at least one service, a Forbes survey found this year; others rely on free ad-supported streaming platforms. This year, Best Buy stopped selling physical media like DVDs and Blu-rays, attributing it to the shift in consumption of entertainment.
Streaming, meanwhile, reached a record-high share of TV viewership in May, a recent Nielsen report found.
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