Redbox's Demise: The Great Kiosk Dilemma
Grabbing an Abandoned Redbox: Seize the Opportunity While Supplies Last
In a era where convenience is king, it's a shock to see the downfall of a seemingly simple business like Redbox. But alas, times have changed, and the giant kiosks that once gracefully dispensed DVDs are now a predicament for retailers. As Redbox's parent company, Outerwall Inc., tumbled into liquidation with a staggering $800 million in unpaid debts, retail giants like CVS and Safeway are left scratching their heads.
These retail champions are saddled with thousands of Redbox kiosks on their premises, taking up valuable space and driving up electricity bills. According to a report by The Wall Street Journal, it'll cost around $500 per kiosk to remove them, with outdoor units often embedded in concrete.
One might assume that Redbox was an effortless business, given it operates self-serve machines that dispense DVDs. However, the popularity of DVDs is on a steady decline, and the electricity costs of running these machines alone can be staggering. For instance, Walgreens argued for permission to dump them, citing a whopping $184,000 monthly electricity bill for powering 5,400 kiosks. The machines also requried regular maintenance by a fleet of technicians and frequent updates with new DVD titles.
If you still harbor a DVD collection, don't fret - these machines can hold an estimated 500 discs. But it seems the business model was far from profitable. With the rise of streaming services, the writing was on the wall for Redbox.
What's more, the pandemic dealt a crushing blow, with a shortage of new releases. In 2022, Redbox was sold to Chicken Soup for the Soul for $357 million. Initially, Chicken Soup for the Soul had hoped to utilize the brand to launch a new digital service, having purchased Crackle from Sony in 2019. But alas, the streaming industry proved no easy nut to crack, and Chicken Soup for the Soul eventually found itself drowning in debt.
In the summer of 2022, Chicken Soup for the Soul filed for Chapter 11 bankruptcy, which would've wiped out its debt and allowed the company to continue operating. However, a judge soon ruled that the company was unlikely to be viable even with the reduced debt burden, and the bankruptcy was quickly converted to Chapter 7.
Redbox's heyday was back in 2013, when it raked in over $1.97 billion in revenue and hosted more than 43,000 kiosks across the U.S. and Canada. The budget-conscious and those with poor internet connections appreciated Redbox's offering. It sometimes even supplied DVDs that weren't available on subscription streaming services.
Sadly, the business had been on a downturn for years as DVDs gradually fell out of favor. With the boom of streaming services in 2022, it seemed the end was nigh for Redbox.
The closure of Redbox was messy, with debts left unpaid to retailers hosting kiosks and movie studios owed licensing fees. Redbox's employees were left unpaid for their final weeks of work, which likely contributed to the company's failure to remove the kiosks from retail stores.
In the face of this dilemma, some film enthusiasts have already taken matters into their own hands. A 19-year-old from North Carolina, Jacob Helton, convinced a contractor hauling a Redbox kiosk from a drugstore to let him have it instead. Helton sees Redbox as an important piece of American media history, and acquiring a Redbox machine marks the end of the video rental era for him.
As retailers grapple with the removal of these unwanted kiosks, it's a reminder of how quickly technological trends can change. From DVDs to streaming services, the way we consume media has drastically evolved in just a few short years. Time waits for no man, and neither does progress. So, let's raise a glass to Redbox, the kiosks that time forgot.
- The future of retail giants like CVS and Safeway is uncertain as they grapple with the disposal of thousands of Redbox kiosks, which come with a significant cost of removal and continue to drive up electricity bills.
- The popularity of DVDs, a mainstay of Redbox, is dwindling in the face of advancing technology and the rise of streaming services, making the business model far from profitable.
- With the downfall of Redbox, tech companies might need to rethink their business models and adapt to the changing trends in the tech industry, just as Chicken Soup for the Soul found out when they bought the brand but struggled to crack the streaming industry.
- The rise of streaming services signifies a shift in technology and consumer behavior, leading to the decline of conventional tech such as kiosks and DVDs, and heralding a future where technology continues to transform the way we consume media.
