This is yet another reminder that the landscape of entertainment is changing. Redbox parent company Chicken Soup for the Soul Entertainment has filed for bankruptcy. The move also sheds light on the continuing challenges facing physical media in the streaming era.
According to Deadline, Chicken Soup for the Soul Entertainment has filed for Chapter 11 bankruptcy protection. The company, an offshoot of the famous self-help book series, had accumulated nearly $1 billion in debt and was struggling to meet payroll and employee benefit obligations.
Recently, bankruptcy courts allowed the transition from Chapter 11 to Chapter 7, which paves the way for the liquidation of assets, according to the Wall Street Journal.
In 2017, Chicken Soup for the Soul Entertainment went public and began an acquisition spree, including little-known digital services companies such as Popcornflix and Crackle.
In 2022, the company acquired Redbox for $375 million. Despite these acquisitions, the company’s financial problems became more severe, resulting in many lenders being unable to make payments. The latest court hearing shows that even a massive injection of cash will not be enough to rescue the company from its debt spiral.
It was also reported that the judge suggested there may have been financial mismanagement within the company. Chief Executive Officer Bart Schwartz resigned just weeks after taking the job, exacerbating the company’s problems.
Redbox was once the dominant player in physical media distribution, with more than 43,000 locations at its peak in the early 2010s. Today, the company claims to operate more than 34,000 kiosks distributing DVDs and Blu-ray discs.
However, reports indicate that many of these machines are now out of service and some even have their credit card slots taped shut.
Redbox’s collapse highlights the decline of physical media. Retail giants Best Buy and Target have announced plans to stop selling DVDs and Blu-ray discs in their stores.
The Digital Entertainment Group’s 2023 report shows that physical media accounts for only 3.6% of U.S. household video revenue, a 25% decrease from the previous year.
While I love physical media, and I still buy Blu-rays, its downward trend doesn’t surprise me.
