Redbox is dead, and with it a big question looms: What to do with all those giant kiosks? The answer seems to be that retailers will have to dispose of them at their own cost, as Redbox’s parent company went into liquidation with hundreds of millions in unpaid debts.
The Wall Street Journal reports that chains like CVS and Safeway are facing a predicament. They each have thousands of Redbox kiosks on their premises that are taking up space and have cost them a lot in electricity.
Brian Rady, a former finance executive at Redbox, told the Journal that it will easily cost $500 a piece to remove the kiosks, and said many outdoor units are embedded in the concrete.
You might think to yourself, Redbox seems like an easy business with low overhead. But DVDs continue to die in popularity (sorry, it’s really happening folks), and the electricity costs running a Redbox machine alone are prohibitive. Walgreens in arguing for permission to trash them told a judge it was spending a whopping $184,000 a month to power 5,400 kiosks. They also need to be regularly maintained by a fleet of technicians. Put that all together and it’s really not a good business. But hey, if you do still have a DVD collection, these machines can hold an estimated 500 discs.
While most machines will be salvaged for scrap, some film enthusiasts have already taken the initiative to visit retailers and take the machines home. Jacob Helton, a 19-year-old from North Carolina, convinced a contactor hauling one from a drugstore to let him have it instead. “I wanted a Redbox machine because I felt like Redbox is important in the history of American media,” he said. “Its collapse marks the end of the video rental era.”
Redbox’s parent owner, Chicken Soup for the Soul, briefly went into Chapter 11 bankruptcy over the summer, which would’ve cleared its debt and let the company continue operating. That was quickly converted to Chapter 7 after a judge determined it was unlikely the company could be viable going forward.
It’s hard not to see why. Redbox peaked all the way back in 2013 at over $1.97 billion in revenue and more than 43,000 kiosks across the U.S. and Canada. It was appreciated especially by the budget-conscious and those living in areas with poor internet connections. It also sometimes offered movies on DVD that weren’t available on a subscription streaming service.
But the business had been on the inevitable decline for years as people finally drop DVDs, and in 2022 it sold to Chicken Soup for the Soul for $357 million, most of which was assuming its debt. The pandemic especially hurt Redbox with a lack of new releases, but its new owner hoped it could use the Redbox brand to bolster a new streaming service. In 2019, the company also purchased Crackle from Sony.
Unsurprisingly, that didn’t work out—surviving in streaming has been a monumental task even for the Disneys and Comcasts of the world—and Chicken Soup for the Soul had taken on too much debt to buy a steeply declining business. It reported a loss of $636 million for 2023 and quickly fell behind on paying Redbox’s vendors. It’s very much a zero-interest rate story like so many others in tech from that time. The strategy just gave Redbox a few last years of dying breath.
Redbox’s shutdown was ugly, as it had fallen behind on many of its debts, including revenue share proceeds to the retailers that hosted its kiosks and licensing fees to the movie studios.
It never paid its own employees their final weeks of pay, so it’s not surprising that once it finally went under, it didn’t do anything to remove all those kiosks from retailers’ stores.
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