DVD rental service Redbox is set to shut down after 22 years in business, as streaming continues to dominate the at-home entertainment market.<\/p>\n
Redbox\u2019s parent company, Chicken Soup for the Soul Entertainment, changed its Chapter 11 bankruptcy case, filed last month, to a Chapter 7 liquidation case on Wednesday. The conversion signifies that the company couldn\u2019t come up with a repayment plan for its outstanding debts and will soon turn to selling off assets to pay back creditors.<\/p>\n
With the change to a Chapter 7 case, all employees will now be laid off and Redbox\u2019s 24,000 kiosks will close. Lawyers for Chicken Soup for the Soul told the court they had worked \u201cday and night\u201d to find a solution to avoid the outcome, Deadline reported.<\/p>\n
A current Redbox employee, who asked not to be identified due to uncertainty over future legal actions he said some at the company are considering, said the news has been destabilizing.<\/p>\n
\u201cSentiment\u2019s in the gutter,\u201d he said. \u201cWe have coworkers who\u2019ve missed rent, facing eviction.\u201d<\/p>\n
The employee said staffers were told during a town hall meeting Thursday that they wouldn\u2019t be receiving pay for the hours they\u2019ve worked so far this month. Additionally, he said layoffs wouldn\u2019t be made official until a bankruptcy trustee is appointed, raising concerns about when employees can file for unemployment insurance.<\/p>\n
A Delaware judge overseeing the case indicated Wednesday that \u201cthere is no means to continue to pay employees,\u201d the Hollywood Reporter reported Thursday.<\/p>\n
A lawyer for Redbox and a representative for the company didn\u2019t immediately respond to requests for comment.<\/p>\n
Founded in 2002, Redbox at its peak shook up Hollywood with its rental service, which at the time was cheaper than buying a DVD. But with the rise of digital offerings and streaming platforms, DVD sales collapsed during the 2010s.<\/p>\n
In 2022, Redbox had $325 million in debt, and Chicken Soup for the Soul Entertainment acquired it.<\/p>\n
The parent company had accumulated $1 billion in debt by the time of its bankruptcy filing last month. According to court documents filed earlier this month, it was struggling to make payroll and pay for health care plans for its more than 1,000 employees.<\/p>\n
Redbox is just the latest physical media company that has struggled to survive streaming\u2019s dominance. Some 99% of U.S. households pay for at least one service, a Forbes survey found this year; others rely on free ad-supported streaming platforms. This year, Best Buy stopped selling physical media like DVDs and Blu-rays, attributing it to the shift in consumption of entertainment.<\/p>\n
Streaming, meanwhile, reached a record-high share of TV viewership in May, a recent Nielsen report found.<\/p>\n<\/p>\n
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