With Redbox’s Demise, the DVD Rental Business Bottoms Out
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Less than a year after Netflix mailed its last DVD, Redbox is ceasing operations and shuttering its 24,000 titular rental kiosks in another devastating blow to whatever’s left of the disc business.
A fixture outside grocery stores and pharmacies for the better part of two decades, Redbox defied expectations and outlasted rivals like Blockbuster. (The official Redbox Twitter/X bio reads “We still exist. Thanks for asking.”) Still, the company couldn’t escape the reality of running a physical media business in a post-streaming world, facing yearly profit declines for over a decade.
The DVD industry as a whole isn’t faring much better than Redbox. The Digital Entertainment Group notably stopped tracking DVD rental sales as its own category in its annual report issued earlier this year. Citing Netflix ceasing its DVD rental service as the cause, the report said that overall physical rental revenues declined by over 50% from the previous year.
DEG did not disclose the exact number in the report, instead opting to combine physical sales and rentals into a new “Physical Product” metric, but VIP+ estimated physical rentals revenue for 2023 to be around $225 million. Next year’s report will forego tracking physical rental revenue entirely, instead focusing solely on physical sales.
In other words, the Redbox situation simply confirms the writing already on the wall for physical media. Target confirmed plans to phase out DVD sales at its stores in April, while Best Buy already bowed out of disc sales last year, shortly after Netflix took its leave.
As physical media shrinks faster than ever, streaming continues to engulf the entire home entertainment industry. DEG began tracking streaming subscription revenue in 2011, which was a modest $994 million. That number ballooned to $37 billion in 2023, making for a 3,631% increase in just 13 years.
In fact, total spending for home entertainment in the U.S. in 2023 was just $43 billion. That means physical sales, physical rentals, VOD and electronic sell-thru only made a combined $6 billion — a total that has declined every year since streaming was introduced in DEG’s report.
SEE ALSO: Are DVDs Headed Down the Tubes? The Data’s In
It wasn't that long ago Redbox looked like it was poised to be a savior for the home entertainment business. In what seemed like a potential course correction, Chicken Soup for the Soul Entertainment bought Redbox (and assumed its $359.9 million debt) in 2020, with then-CEO Bill Rouhana Jr. saying the acquisition was part of the self-help company’s evolution into a Disney-esque media empire.
That dream didn’t exactly play out. CSSE filed for Chapter 11 bankruptcy protection on June 28, only to shift into Chapter 7 liquidation last week. Rouhana stepped down as CEO a few days before the filing, while CSSE’s 1000-plus employees hadn’t received pay or benefits for at least a month before losing their jobs entirely.
But ahead of this situation, Redbox and CSSE accumulated a pile of lawsuits, missed big payments and left numerous kiosks completely inoperable at places like 7-Eleven and CVS — two companies currently suing Redbox.
