Redbox’s Parent Company Files for Bankruptcy Protection and Misses Payroll

Chicken Soup for the Soul Entertainment, the parent company of Redbox, has reportedly filed for bankruptcy protection after defaulting on loans and missing payroll. The company, which acquired the DVD rental kiosk company in 2022, informed employees of its bankruptcy plans late Friday, according to a report by The Verge.

Employees have been waiting to get paid since June 21, with their health insurance lapsing in May. Chicken Soup for the Soul Entertainment has filed for a debtor-in-possession loan to secure additional working capital to meet payroll as it reorganizes. However, it is uncertain whether the company will be able to obtain the loan, as its bankruptcy filing shows debts owed to retailers, major Hollywood studios, and various other entities.

The company’s financial troubles stem from taking on $325 million in debt with the Redbox acquisition, listing nearly three times that amount in debt in its bankruptcy filing. Additionally, the company faced challenges when Hollywood writers and actors went on strike in 2023, leading to a decline in physical DVD/BluRay rentals.

These developments come at a time when Americans are increasingly turning to streaming media for entertainment. However, the rising costs of subscription-based services are making home entertainment more difficult to afford for some consumers. Movie and TV services have been raising their prices, while Spotify is reportedly increasing the cost of its Premium subscription.

Research from PYMNTS Intelligence also found that 25% of consumers indulge in spending on streaming services, with financially struggling consumers being the most likely to do so. As the cost of at-home entertainment rises, consumers are finding it increasingly burdensome to enjoy staycation experiences that were once considered budget-friendly alternatives to physical getaways.