Rental kiosks company, Redbox, ceases operations, now known as Redbox Inactive.
Rewritten Article:
In a tough blow for the streaming world, Redbox, a popular rental platform, finds itself ensnared in bankruptcy as its parent company, Chicken Soup for the Soul Entertainment, heads towards liquidation.
Chicken Soup for the Soul Entertainment, the company behind the famous self-help books, sought Chapter 11 bankruptcy protection back in June, according to Deadline. The company's mountainous debt of nearly a billion dollars led to problems with paying employees and covering their benefits. The bankruptcy court has now greenlit the transformation of Chapter 11 to Chapter 7, meaning the company's assets can start getting sold off, as reported by the Wall Street Journal.
Chicken Soup for the Soul went public in 2017 and started snagging various less-famous digital services, including Popcornflix, Crackle, and later Redbox in 2022 for $375 million. With a host of lenders to foot the bill, the latest court hearing suggests that a cash injection wouldn't be enough to dig the company out of its massive debt pit. The judge also hinted at a potential misuse of funds. The CEO, Bart Schwartz, suddenly stepped down from his position just weeks into the job.
At its prime in the early 2010s, Redbox boasted over 43,000 locations. Today, the company's site claims they still have over 34,000 kiosks distributing DVDs and Blu-Rays. However, some machines have been spotted unplugged with credit card slots taped over, sparking concerns.
Redbox's downfall highlights the dwindling relevance of physical media in today's world. Big names like Best Buy and Target have announced they will no longer sell DVDs and Blu-Ray discs in their physical stores, while Netflix, which started by mailing DVDs, closed its physical media service last year. As per the 2023 report by the Media industry analysis group Digital Entertainment Group, physical media made up only 3.6% of the U.S. home video revenue, down a staggering 25% from the year before.
Sources
- Chicken Soup for the Soul Entertainment: 'Egregious' Mismanagement Led to Chapter 7 Bankruptcy
- Why Redbox's Parent Company Chicken Soup for the Soul Entertainment Failed Miserably
- Redbox's parent company, Chicken Soup for the Soul Entertainment, files for bankruptcy
- The future of Redbox, a once-popular rental platform, hangs in the balance as its parent company, Chicken Soup for the Soul Entertainment, navigates through Chapter 7 bankruptcy, a liquidation process.
- The downfall of Redbox serves as an early warning for the tech industry, as physical media such as DVDs and Blu-Rays diminish in relevance, with major retailers like Best Buy and Target discontinuing their sales, and Netflix abandoning its physical media service in the recent past.
- The bankruptcy of Chicken Soup for the Soul Entertainment, which amassed a near-billion-dollar debt, raises concerns about the potential misuse of funds, particularly due to egregious management practices, as reported by various sources.
- The benefits of the digital transition for the tech industry, as demonstrated by the case of Redbox, might outweigh the short-term challenges faced by traditional rental companies, including changes in employment structure and the shift away from physical media.
