Redbox’s parent has reportedly filed for bankruptcy protection after defaulting on loans and missing payroll.
Chicken Soup for the Soul Entertainment, which acquired the DVD rental kiosk company in 2022, told employees of its bankruptcy plans late Friday, The Verge reported Saturday (June 29), citing an internal email.
The company says it has filed for a debtor-in-possession loan, which would let it secure additional working capital to meet payroll as it reorganizes. Employees have been waiting to get paid since June 21, the report said, while their health insurance lapsed in May.
But the report noted that it’s not clear whether Chicken Soup will be able to obtain the loan, as its bankruptcy filing shows it owing money to retailers such as Walmart and Walgreens, major Hollywood studios like Sony and Warner Brothers, plus various smaller studios, streaming platforms and smart TV companies.
According to the report, Chicken Soup took on $325 million in debt with the Redbox acquisition, and listed nearly three times that amount in debt in its bankruptcy filing. The company reportedly also struggled when Hollywood writers and actors went on strike in 2023, leading to a decline in physical DVD/BluRay rentals.
The company’s troubles come as Americans continue to demonstrate their love of streaming media. Findings from PYMNTS Intelligence’s new report “How the World Does Digital” show that almost 35.6% of people in the countries surveyed stream video every day. For the U.S., that figure jumps to nearly 70%.
But as noted here earlier this month — in a report on consumers enjoying “digital-first staycations” — home entertainments are becoming more difficult to afford as they become increasingly subscription-based.
For example, movie and TV services have been raising their prices in the last year, while Spotify is reportedly hiking the price of its Premium subscription by as much as an additional $5 per month.
Research from the September installment of the PYMNTS Intelligence series “New Reality Check: The Paycheck-to-Paycheck Report, The Nonessential Spending Deep Dive Edition,” found that 25% of consumers reported that they spend indulgently on streaming services. In addition, financially struggling consumers were the most likely to say that their spending in the category has been indulgent.
“As such, the cost of consumers’ at-home movie marathons, for instance, or their ad-free poolside playlist is becoming increasingly burdensome, even as these staycation experiences continue to be a more budget-friendly break than, say, the cost of an Airbnb and the airfare required for a physical getaway,” PYMNTS wrote.
