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Major media giant follows Blockbuster into bankruptcy - in another victory for major streaming companies
The parent company of movie rental service Redbox has filed for bankruptcy on rocky footing, after months of financial struggles.
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 that the company owes millions of dollars to over 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, which is famous for its red self-service DVD machines that sit outside grocery stores 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 their domination of the entertainment landscape.
Redbox is known for its self-service DVD kiosks outside grocery stores and pharmacies
Filings show that CSSE took on around $325 million in debt when it purchased Redbox from private equity company 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 was previously owned by Sony.
Those plans did not pan out, however, deterred by last year's Hollywood strikes which limited the creation of new content, and the drop in people renting physical DVDs.
In the filing, CSSE reported it currently operates around 27,000 Redbox kiosks across the US.
This is down from around 36,000 when it acquired the company in August 2022.
While video rental chain Blockbuster filed for bankruptcy protection in 2010, streaming giant Netflix announced it was ending its DVD mailing service in September 2023.
The company said it had sent out 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 around $414 million in assets and $970 million in debts as of March 2024.
Over the last year, shares in the Connecticut-based company have plummeted more than 90 percent.
CSSE declined to comment when approached by The Associated Press on Monday.
In court documents, the company said its lenders were unwilling to cooperate with refinancing.
Deadline previously reported that Redbox had not paid employees for a week, and their medical benefits had also been suspended.
The publishing arm of the company, famous for its self-help books, is not affected by the bankruptcy filing.
CSSE aimed to combine Redbox's DVD rental business with its streaming services (Pictured: A DVD is dispensed from a kiosk in Los Angeles)
Video rental chain Blockbuster filed for bankruptcy protection in 2010
DVD sales have been on the decline for years, amid the meteoric rise in online streamers such as Netflix, Amazon and Apple TV.
Sales of the discs peaked in 2005, according to CNBC, and have long been surpassed by streaming services.
But competition among these major companies is also heating up - meaning many are being forced to up their prices for customers.
Last week, Paramount announced that it would be hiking the price of its streaming service, as it looks to boost falling profits.
Warner Bros. Discovery has also angered customers by raising the price of its ad-free Max subscription for the second time.
The $1 price rise to $16.99 a month for the ad-free tier took effect last month for new subscribers.