If you use Redbox’s streaming service, you may have noticed you can’t stream the movies you bought or even the free collection of movies they offer. For almost a week nowy, Redbox’s website has not been working. Now it just displaying an error message where you would typically find the free movies and movies or TV shows for sale.
Now, the Judge overseeing Redbox’s parent company’s bankruptcy has converted it to a Chapter 7 bankruptcy, meaning the company will shut down and sell off all assets. This was first spotted by Lowpass. With this move Redbox DVD rentals will end as will it streaming services. Other streaming services like Crackle and Chicken Soup for the Soul will also shutdown.
It is unknown what this means for people who bought movies from Redbox streaming. DVDs will reportedly be sold off at some point in the future. Exactly how fast they will pull the plug on the DVD rental kiosks is unknown, but soon, it will happen.
This comes as the company recently got $8 million to pay employees but now seems unable to find funding to keep moving forward.
Last month, Chicken Soup for The Soul Entertainment, the parent company behind Redbox, Crackel, and the streaming service of the same name, announced that the entire board of directors and board of managers of each subsidiary of the company other than William J. Rouhana, Jr., had been fired. This was quickly followed by news that Redbox was filing for bankruptcy.
Before this, employees had not been paid and benefits like health insurance had been canceled. With this loan, employees will be paid and health insurance will also be funded.
Recently the company missed a $4 million payment to NBCUniversal as a part of its settlement over unpaid royalties. Now, it faces a possible order to pay all the $16.7 million it owes NBCUniversal as questions about the future of the company grow. NBCUniversal sued, saying Redbox had not been paying royalties. It agreed to a payment plan but had missed the first payment.
Chicken Soup for The Soul Entertainment is in a tough situation after acquiring Redbox in 2022 for $50 million in stock and assumption of $325 million in debt. Add in a shaky media environment with cratering ad revenue and quarterly losses, and the company’s future is very much in the air. In August, CEO Rouhana said that the company was holding a strategic review to evaluate its opportunities, which is business speak for putting itself up for sale.
Last year, Chicken Soup for The Soul Entertainment announced that it was in active discussions for a potential sale but so far nothing has come from these talks.
Like many media companies, the company has been hit by a soft ad market that has negatively impacted revenues. For a company that heavily relies on ad-supported streaming, this market must negatively impact the service. Right now, the company seems confident that they will be able to work through these issues and pay their partners. We will have to wait and see what happens.