Big news in the world of entertainment and movie rentals: the parent company of Redbox, Chicken Soup for the Soul Entertainment (CSSE), has filed for Chapter 11 bankruptcy protection in Wilmington, Delaware. This filing comes after months of financial struggles and a nearly $1 billion debt load.
CSSE, known for its popular self-help books, acquired Redbox in 2022 with the ambitious plan to transform it into a major entertainment conglomerate. This purchase added around $325 million in debt to CSSE’s balance sheet, as they aimed to integrate Redbox’s DVD rental business with their streaming services, including Redbox Live TV and Crackle, which was previously owned by Sony.
Unfortunately, these plans did not pan out. The Hollywood strikes last year severely limited the creation of new content, and the ongoing decline in physical DVD rentals further exacerbated the company’s woes. As of the filing, CSSE reported operating around 27,000 Redbox kiosks across the U.S., a significant drop from the 36,000 kiosks in operation when they acquired the company.
The filing shows that CSSE owes millions of dollars to over 500 creditors, including major retailers like Walgreens and Walmart, and entertainment giants such as the BBC, Sony Pictures, and Warner Bros. This bankruptcy marks another victory for major streaming services, which continue to dominate the entertainment landscape.
It’s worth noting that DVD sales have been on a steady decline for years, peaking in 2005. The rise of online streaming services like Netflix, Amazon, and Apple TV has made physical copies increasingly redundant. In a related move, Netflix announced in September 2023 that it was ending its DVD mailing service after having sent out more than 5.2 billion discs since 1998.
CSSE’s financials paint a grim picture: as of March 2024, the company had around $414 million in assets and $970 million in debts. Over the past year, shares in the Connecticut-based company have plummeted more than 90 percent. Additionally, Redbox reportedly hadn’t paid employees for a week, and their medical benefits had been suspended.
Despite these challenges, the publishing arm of CSSE, famous for its self-help books, remains unaffected by the bankruptcy filing.
This bankruptcy filing underscores the significant challenges traditional media companies face as streaming services continue to rise. However, even streaming giants are feeling the pressure.
Last week, Paramount announced a price hike for its streaming service to boost falling profits, and Warner Bros. Discovery raised the price of its ad-free Max subscription for the second time, now costing $16.99 a month for new subscribers.
