NEW YORK, July 2 (Xinhua) -- Chicken Soup for the Soul Entertainment, owner of U.S. DVD rental operator Redbox, has filed for bankruptcy protection after months of financial struggle with a heavy debt load.
STRUGGLE WITH HEAVY DEBT
Filing documents submitted on Friday revealed that the Connecticut-based company has 970 million U.S. dollars in debts, compared to only 414 million dollars in total assets.
The company owes millions of dollars to over 500 creditors, including media giants Universal Studios, Sony Pictures, and Warner Bros, as well as retailers Walgreens and Walmart.
In a message to employees on Saturday, the company said it has applied for approval of a debtor in possession loan.
Redbox, founded in 2002, is best known for its red-colored, self-serve machines sitting outside of pharmacies or groceries stores to rent or sell DVDs.
In 2022, Chicken Soup for the Soul acquired Redbox. But its plan, aimed at transforming the company into an entertainment conglomerate combining the DVD rental business with free streaming services, failed after two years.
The company took on 325 million dollars in debt when it acquired Redbox, and has since been sued over a dozen times over unpaid bills.
According to the filing documents, Chicken Soup for the Soul currently operates about 27,000 kiosks across the United States, down from 36,000 in August 2022 when the Redbox acquisition was finalized.
"FINAL NAIL IN THE COFFIN FOR DVD"
Besides the financial distress, another reason of Chicken Soup for the Soul's failure is the decline of physical disc rentals.
The bankruptcy of Redbox's owner "is the final nail in the coffin for DVDs," said Fast Company, an online magazine focusing on business and technology, in a report.
"Redbox's demise isn't just reflective of broad corporate mismanagement; it also demonstrates the demise of the DVD," the report said. "The kiosks are pretty much the last hanger-on of an earlier era of technology."
DVD sales have plummeted in recent years after the industry peaked two decades ago, becoming almost a nostalgic media symbol today.
In 2010, Blockbuster, Redbox's storefront equivalent with its mail-in DVD service, filed for bankruptcy. Last year, Netflix had to quit the DVD renting service due to the dropping disc market.
In 2023, DVD purchases dwindled by 92 percent compared to its peak. Back then, DVDs made up 64 percent of the U.S. video market. Now, that statistic stands at under 10 percent, according to Fast Company.
