The parent company of movie rental company Redbox has filed for bankruptcy after months of financial troubles.
Chicken Soup for the Soul Entertainment (CSSE) filed for Chapter 11 bankruptcy protection in Wilmington, Delaware on Friday, citing 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 acquired Redbox in 2022, known for its red self-service DVD machines outside grocery stores and pharmacies. Redbox was founded in 2002, when the DVD business was booming.
The bankruptcy is the latest victory for the major streaming services, which continue their dominance of the entertainment industry.
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 wanted to combine Redbox’s DVD rental business with its streaming services, including Redbox Live TV and Crackle, which was previously owned by Sony.
However, these plans fell through due to last year’s Hollywood strikes, which limited the creation of new content, and a decline in the number of people renting physical DVDs.
In the document, CSSE says it currently operates approximately 27,000 Redbox kiosks in the US.
That’s down from about 36,000 when the company was acquired in August 2022.
While video rental store Blockbuster filed for bankruptcy protection in 2010, streaming giant Netflix announced it would discontinue its DVD shipping service in September 2023.
The company said it had shipped more than 5.2 billion discs in its famous red envelopes since 1998, but that physical copies of movies and TV shows were becoming increasingly scarce.
According to the filing, CSSE had approximately $414 million in assets and $970 million in liabilities as of March 2024.
Shares of the Connecticut company have fallen more than 90 percent over the past year.
CSSE declined to comment when contacted by The Associated Press on Monday.
In court documents, the company said its lenders were unwilling to cooperate in refinancing.
Deadline It was previously reported that Redbox had not paid its employees for a week and that their medical expenses had also been suspended.
The company’s publishing arm, known for its self-help books, is not affected by the bankruptcy filing.
CSSE wanted to combine Redbox’s DVD rental business with its streaming services (Pictured: A DVD is handed out at a kiosk in Los Angeles)
Video rental chain Blockbuster filed for bankruptcy protection in 2010
DVD sales have been declining for years, while online streamers such as Netflix, Amazon and Apple TV are growing rapidly.
According to CNBC, sales of the discs peaked in 2005 and have long since been surpassed by streaming services.
But competition between these large companies is also increasing, meaning many companies are forced to raise their prices for customers.
Paramount announced last week that it would raise prices on its streaming service as it hopes to boost slumping profits.
Warner Bros. Discovery has 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 plan went into effect last month for new subscribers.