In a surprising turn of events, the parent company of Redbox, known for its iconic red kiosks offering DVD rentals, has officially filed for bankruptcy after facing significant financial challenges.
Chicken Soup for the Soul Entertainment (CSSE) made this announcement, revealing that the company is burdened with nearly $1 billion in debt. Among its creditors are major entertainment companies such as the BBC and Sony Pictures, as well as retail giants like Walmart and Walgreens.
Documents show that CSSE accumulated around $325 million in debt following its acquisition of Redbox in 2022 from Apollo Global Management. The initial plan was to transform the company into an entertainment powerhouse by merging the DVD rental business with its streaming services, including the once-popular platform Crackle owned by Sony.
Unfortunately, these plans were thwarted by the impact of Hollywood strikes and a declining demand for physical DVD rentals – a trend that even led Netflix to exit this segment of its business in the previous year.
When contacted for a response, CSSE declined to comment on the situation.
Reports from Deadline indicate that Redbox employees have gone unpaid for a week, with medical benefits suspended. Filing for Chapter 11 bankruptcy could potentially provide the company with a solution to these issues, pending approval from a Delaware court.
It’s important to note that the bankruptcy filing of its entertainment division will not affect the company’s publishing arm, responsible for the well-known self-help books that once captivated audiences worldwide.
Despite these challenges, the number of Redbox kiosks has steadily grown to approximately 34,000 locations across the US, predominantly found in grocery and drug stores. Since its inception in 2002, Redbox has successfully facilitated over 1 billion disc rentals, offering a cost-effective alternative to traditional cable services.
