Redbox, once the popular movie rental service and rival to Blockbuster, will see its brightly colored kiosks disappear from supermarkets and drugstores for good.
The era of Americans streaming movies on demand through a variety of services has claimed yet another victim.
The parent company Chicken Soup for the Soul Entertainment filed for Chapter 11 bankruptcy protection in late Junehoping to refinance nearly $1 billion in debt.
But on Wednesday, a court heard that the lenders were unwilling to provide more money, and the bank has now been closed under a Chapter 7 bankruptcy filing.
All 27,000 rental kiosks will be closed and then removed as the company looks to sell its assets to raise cash. All 1,033 employees will lose their jobs without pay.
Redbox is known for its self-service DVD kiosks outside supermarkets and pharmacies
The company has millions of dollars in creditors, including major retailers Walgreens and Walmart, and entertainment giants such as the BBC, Sony Pictures and Warner Bros.
At its peak in 2013, Redbox had annual revenues of $1.97 billion and operated 43,000 kiosks in the U.S. and Canada.
The company acquired Redbox in 2022, known for its red self-service DVD machines outside stores. Redbox was founded in 2002, when the DVD business was booming.
The bankruptcy is the latest victory for the major streaming services, which continue their dominance of the entertainment industry.
Documents show CSSE took on about $325 million in debt when it bought Redbox from private equity firm Apollo Global Management.
The plan with the purchase was to transform it into an entertainment conglomerate.
CSSE wanted to combine Redbox’s DVD rental business with its streaming services, including Redbox Live TV and Crackle, which was previously owned by Sony.
However, these plans fell through due to last year’s Hollywood strikes, which limited the creation of new content, and a decline in the number of people renting physical DVDs.
In the document, CSSE says it currently operates approximately 27,000 Redbox kiosks in the US.
That’s down from about 36,000 when the company was acquired in August 2022.
Video store Blockbuster filed for bankruptcy protection in 2010.
Streaming giant Netflix has announced that it will discontinue its DVD shipping service in September 2023.
The company said it had shipped more than 5.2 billion discs in its famous red envelopes since 1998, but that physical copies of movies and TV shows were becoming increasingly scarce.
According to the filing, CSSE had approximately $414 million in assets and $970 million in liabilities as of March 2024.
Shares of the Connecticut company have fallen more than 90 percent over the past year.
In court documents, the company said its lenders were unwilling to cooperate in refinancing.
Deadline It was previously reported that Redbox had not paid its employees for a week and that their medical benefits had also been suspended.
The company’s publishing arm, known for its self-help books, is not affected by the bankruptcy filing.
Redbox’s DVD rental service has 27,000 kiosks across America
Video rental chain Blockbuster filed for bankruptcy protection in 2010
DVD sales have been declining for years, while online streamers such as Netflix, Amazon and Apple TV are growing rapidly.
Sales of the discs peaked in 2005 and have long since been surpassed by streaming services.
But competition between these large companies is also increasing, meaning many companies are forced to raise their prices for customers.
Paramount announced last week that it would raise prices on its streaming service as it hopes to boost slumping profits.
Warner Bros. Discovery has also angered customers by raising the price of its ad-free Max subscription for the second time.
The price increase from $1 to $16.99 per month for the ad-free plan went into effect last month for new subscribers.