Why the Redbox Bankruptcy Is Very Bad News for DVD and Blu-ray Collectors

Update July 11: Redbox parent company Chicken Soup for the Soul Entertainment’s bankruptcy is being upgraded from Chapter 11 to Chapter 7, leaving 1,000 employees who have allegedly yet to be paid to lose their jobs, a Delaware bankruptcy court judge said Wednesday (via THR). The company will sell off its businesses, including 24,000 Redbox DVD rental kiosks and the company’s streaming service Crackle.

Original story follows:

More from IndieWire

• Nicolas Cage Says He Won't Play Another Serial Killer After 'Longlegs': 'I Don't Like Violence'

• 'I'll Be Your Mirror' Trailer: 'Wetlands' Star Carla Juri Rediscovers Her Joie de Vivre in Japan

Redbox and its parent company, Chicken Soup for the Soul Entertainment, filed for Chapter 11 bankruptcy in a Delaware court June 29 and claimed nearly $1 billion in debt. It’s a reorganization, not a dissolution, so the red refrigerator-sized kiosks often found outside drug stores and in-grocery vestibules are not (yet) going the way of the VHS. However, it’s already bad news for physical media.

The obituary for physical movie rental has long been a work in progress, dating back to Blockbuster Video filing for bankruptcy protection in 2010. Netflix, then primarily a DVD-by-mail service, destroyed the brick-and-mortar business. Within a few years, it was clear that streaming was Netflix’s future although it didn’t mail its last DVD until September 2023.

This year, we saw Best Buy stop carrying DVDs and Blu-rays while Disney pulled the plug on its own physical home-entertainment business, outsourcing production to Sony. Walmart, Target, and Barnes & Noble still carry a torch for physical media, but DVDs increasingly populate their bargain bins. With Prime Video, Amazon has a homegrown incentive to move toward digital delivery. Next-gen video-game consoles won’t even have disc slots, which means a lot fewer homes will have DVD players.

If retailers can’t be bothered, why should studios continue making DVDs? Rather than see it as a death knell, some wonder if this shift in the market opens a door for physical media enthusiasts.

“I’m really hoping they see it as an opportunity. If Disney can outsource to Sony, why couldn’t the studios outsource to places like Criterion or Kino Lorber?” said Leah Aldridge, a professor of Film and Media Studies in Chapman’s Dodge College told IndieWire. “I’m banking on an entrepreneur to come through and say, ‘Let us do it. We’ll take it on. We’ll do it cheaper than Sony.'”

It's time. 50% off of the entire @Criterion. Ends 7/28.https://t.co/mkdD0FRFZt pic.twitter.com/o9s7JHsuxo

— Barnes & Noble (@BNBuzz) June 28, 2024

Joe Rubin, co-founder and director of acquisitions at cult DVD distributor Vinegar Syndrome, said the upheaval has some advantages. Studios now seem more willing to license their titles for collectors’ editions; in the past the answer would be a flat no or an impractical yes — the kind that comes with astronomical expectations.

“The reduction in interest in physical media at studios has been something of a blessing, because it’s made those titles available,” Rubin said.

That doesn’t mean we’re in for a boon of opportunity for indie DVD distributors. There’s a growing gap between the casual movie fans who want their own copy of “Barbie” and the collectors who want the 4K edition of the 1986 Chuck Norris thriller “Invasion U.S.A.”

“I don’t think that the home video or physical media market is expanding,” Rubin said. “It’s hit its peak. It’s plateaued. If anything, it’s going to start contracting. And this may not be a true sign of death for it, but it’s definitely not getting any bigger. We’re not seeing growth.”

Vinegar Syndrome handles home video and DVD sales for smaller distributors. It has about 30 independent partners, including the smallest niche distributors and more mid-sized players like Utopia and IFC Films. Rubin said many other niche DVD distributors have cropped up to fill the void left by the major studios, but none of them operate on a scale that could handle outsourcing for an entire studio.

“I don’t know that we or any of the other companies of our size are really set up for it,” he said. “The logistics of working with a major studio is always going to be more difficult than working with an independent filmmaker or a smaller distribution company just because of how their own businesses are structured — more departments to go through, more clearances, more strictness.”

It’s been a long time since DVDs were a key revenue stream for studios, but DVD production is very cheap. If a movie can justify the cost, studios will still make the effort. Aldridge said some international markets haven’t fully matured with streaming and still need discs, as do some pockets of the U.S.

If places like Redbox go out of business entirely, those consumers could be completely out of luck for new movies outside of first-run theaters (and some regions don’t even have that). With more forced to pay monthly streamer subscription fees, score that as another reason for studios to lose interest in physical media. Places like Vinegar Syndrome have anticipated some of these changes and moved more of their operations to their website and DTC offerings rather than rely on third-party sellers.

Maybe there’s a possibility that DVDs could become the new vinyl — another outdated format, which turned its impracticality into cachet. However, LPs have an advantage that DVDs do not: Record stores exist across the country; specialty video stores are few and far between. As much as Rubin said he’d like to champion more obscure titles in need of discovery and preservation, the DVD releases most likely to see a return have a built-in audience.

Redbox could have been a solution, but it still required you to leave your home in an age when everything is available at your fingertips. According to Rubin, Redbox courted Vinegar Syndrome to supply the kiosks with more niche offerings. But Redbox required scale — thousands of discs sans packaging — to pack their kiosks. The partnership never came to pass, and the movie selection at most Redbox locations remained limited to more recent, forgettable studio movies you probably wouldn’t watch if they were available on a streamer for free.

Shortly after the now-ousted Redbox CEO Bill Rouhana acquired Redbox in May 2022, he told IndieWire that there was “absolutely nothing in [the kiosks] today that you’d want to watch.” Now Redbox feels as antiquated as the Blockbuster video stores it was meant to replace.

Best of IndieWire

• 'Song of the South': 14 Things to Know About Disney's Most Controversial Movie

• The 55 Best LGBTQ Movies and TV Shows Streaming on Netflix Right Now

• A History of Unsimulated Sex Scenes in 17 Cannes Films, from 'Mektoub' to 'Antichrist' to 'Caligula'

Sign up for Indiewire's Newsletter. For the latest news, follow us on Facebook, Twitter, and Instagram.