The parent company of movie rental service Redbox has filed for bankruptcy in a difficult situation, after months of financial difficulties.
Chicken Soup for the Soul Entertainment (CSSE) filed for Chapter 11 bankruptcy protection in Wilmington, Delaware, on Friday, with nearly $1 billion in debt.
The filing also shows the company owes millions of dollars to more than 500 creditors, including major retailers Walgreens and Walmart and entertainment giants such as the BBC, Sony Pictures and Warner Bros.
The company bought Redbox in 2022, famous for its red self-service DVD machines found outside supermarkets and pharmacies. Redbox was founded in 2002, when the DVD business was booming.
The bankruptcy is the latest victory for major streaming services as they continue to dominate the entertainment landscape.
Redbox is known for its self-service DVD kiosks outside supermarkets and pharmacies.
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 aimed to combine Redbox’s DVD rental business with its streaming services, including Redbox Live TV and Crackle, which were previously owned by Sony.
However, those plans fell through, due to last year’s strikes in Hollywood, which limited the creation of new content, and a drop in the number of people renting physical DVDs.
In the filing, CSSE said it currently operates about 27,000 Redbox kiosks across the United States.
This figure represents a decrease from the 36,000 it had when it acquired the company in August 2022.
While video rental chain Blockbuster filed for bankruptcy in 2010, streaming giant Netflix announced it would end its DVD-by-mail service in September 2023.
The company said it had shipped more than 5.2 billion discs in its famous red envelopes since 1998, but physical copies of movies and TV shows had become increasingly redundant.
According to the filing, CSSE had about $414 million in assets and $970 million in debt as of March 2024.
Over the past year, the Connecticut-based company’s shares have plunged more than 90 percent.
CSSE declined to comment when contacted by The Associated Press on Monday.
In court documents, the company said its lenders were unwilling to cooperate with the 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 division, known for its self-help books, will not be affected by the bankruptcy filing.
CSSE intended to combine Redbox’s DVD rental business with its streaming services (pictured: a DVD is distributed from a kiosk in Los Angeles)
Video rental chain Blockbuster filed for bankruptcy in 2010
DVD sales have been in decline for years, amid the meteoric rise of online streaming services like Netflix, Amazon and Apple TV.
Album sales peaked in 2005, according to CNBC, and have long since been surpassed by streaming services.
But competition between these big companies is also intensifying, meaning many are forced to raise their prices for customers.
Last week, Paramount announced it would be raising the price of its streaming service as it looks to boost declining profits.
Warner Bros. Discovery 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 tier went into effect last month for new subscribers.