Redbox Closing Amid Chicken Soup for the Soul Bankruptcy

Ten days after declaring Chapter 11 bankruptcy, the Redbox parent company has converted to Chapter 7 and will liquidate its assets.

By Russ Burlingame

Redbox video rental kiosks are going away, and over 1,000 Chicken Soup for the Soul employees are now out of work, as the company has reportedly converted its Chapter 11 bankruptcy to a Chapter 7 liquidation. Chicken Soup for the Soul found itself in trouble after a series of big acquisitions, including Redbox, which cost the company $375 million. According to an SEC filing in June, Chicken Soup for the Soul Entertainment said that its losses in 2023 were over $600 million, up from $111 million the year before. Redbox itself peaked with almost $2 billion in revenue in 2013, but has been declining since. 

The company, which at one point operated more than 43,000 kiosks in the U.S. and Canada filled with DVDs, Blu-rays, and video games, has now shrunk to the point where as of the bankruptcy, there were around 25,000 active kiosks. Redbox stopped renting video games in 2019. Beginning in late 2017, Redbox also offered a streaming service for on-demand movies. When Netflix closed down their DVD-by-mail service last year, Chicken Soup for the Soul tried and failed to acquire it.

Chicken Soup for the Soul Entertainment, the parent company to Redbox, filed for Chapter 11 bankruptcy protection on July 1, announcing it to employees who were already owed money. The company's cash flow issues became a full-blown crisis recently, when reports emerged that the company was unable to make payroll, and that they had failed to make insurance payments, thus defaulting on their responsibilities to their employees and leaving workers without healthcare. 

The company is also behind on payments to movie studios, and have recently been slapped with a judgment in at least one of those cases. The financial turmoil left Redbox kiosks partially empty, or filled with Chicken Soup for the Soul exclusives that don't cost the company anything. The Redbox website is still active as of this writing, but any search you make for movies or local kiosks comes back with an error.

After the July 1 announcement, users around the country started reporting that their local Redbox kiosks were no longer processing rentals or returns. The bankruptcy comes at a time of upheaval for Hollywood, as most streaming platforms are bleeding money and the studios are struggling to figure out how to make up the shortfall left by falling home video and movie ticket sales.

Chapter 11 is a type of bankruptcy that allows the debtor to restructure their debts and assets, in the hopes of staying in business and making structured payments to creditors over time. Chapter 7 means liquidating the company's assets so minimize the long-term damage to creditors.

Variety first reported the news.

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Redbox, originally a competitor to traditional video stores and early Netflix, places rental vending machines on the property of popular retailers. The company spun out of a McDonald's initiative to sell a handful of items through vending machines, which started in the early 2000s. By 2003, McDonald's had given up on the idea, and one of their executives thought to use the vending machines for DVDs and video games. In 2005, Redbox was bought up by Coinstar.

As the home video market shrank throughout the 2000s and 2010s, Coinstar eventually sold Redbox off to Apollo Global Management in 2016, who in turn sold it to Chicken Soup for the Soul in 2022. Redbox was the last in a series of big investments Chicken Soup for the Soul made after going public in 2017. The brand spun out of the popular series of self-help books of the same name. Besides Redbox, Chicken Soup for the Soul had taken over Crackle, the streaming service formerly owned by Sony, and 1091 Pictures. When Netflix closed down their DVD-by-mail business last year, Redbox said that they had tried to acquire it.

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