Redbox
Redbox Automated Retail, LLC was an American video rental and streaming media company, based in Oakbrook Terrace, Illinois, west of Chicago. Redbox specialized in automated DVD rental kiosks, and operated transactional and ad-supported streaming video and television services. From 2022 until its liquidation, Redbox was a wholly owned subsidiary of Chicken Soup for the Soul Entertainment.
Redbox kiosks, which rented and sold films on DVD and Blu-ray, were located at retail stores, including convenience stores, supermarkets, and pharmacies. At its peak in the early 2010s, the company operated kiosks at more than 34,000 locations, and controlled more than half of the US DVD rental market.
In June 2024, Chicken Soup for the Soul Entertainment filed for Chapter 11 bankruptcy; the following month, the company's case was converted to Chapter 7 liquidation. As part of ongoing liquidation proceedings, Redbox's online streaming services and mobile app ceased functioning in July 2024.
History
Founding under McDonald's
Redbox Automated Retail LLC was initially developed in Chicago as a part of "Project 361", a McDonald's business expansion initiative. John Sexton Abrams, a strategy executive at McDonald's, designed the original concept as an immersive kiosk leveraging McDonald's product supply chain and geographic footprint to provide 24/7 access to fresh dairy and other products. Initially, the kiosks sold a range of goods under the name TikTok Easyshops. In late 2003, McDonald's ended its use of the kiosks for the products. Instead, McDonald's executive Gregg Kaplan decided to use the kiosks for DVD rentals, which was tested in Denver in 2004.The company employed a "return anywhere" policy, different from competitors, which allowed consumers to return their rental to any Redbox kiosk, not just the one from which they originally rented it.
Purchase by Coinstar
In 2005, Coinstar bought 47% of the company for $32 million, after unsuccessful attempts to sell half the company to Blockbuster and Netflix. In early 2008, Coinstar exercised an option to increase its share to 51%, before acquiring the remainder for $169–176 million in February 2009. While traditional brick and mortar rental stores were closing at a high rate, Redbox moved into existing retail locations such as supermarkets, and placed kiosks within them or outside of them to gain access to that consumer base.Competitors included Netflix, Blockbuster, Movie Gallery and its subsidiary Hollywood Video, West Coast Video, and Family Video along with other DVD by mail rental services. Mitch Lowe joined Redbox in 2003, after spending five years as an executive at Netflix. At Redbox, he started first as a consultant and then as VP of Purchasing & Operations. In 2005, he became the Chief Operating Officer. Lowe owned and operated a video rental company named Video Droid from 1982 through 1997. Video Droid attempted a VHS rental vending machine concept, though the idea was quickly deemed impractical. Lowe was named President of Redbox in April 2009.
With growing concern in 2009 that DVD kiosks might jeopardize movie studio income from DVD sales and rentals, three major movie studios, 20th Century Fox, Warner Bros., and Universal Studios, each refused to sell DVDs to Redbox until at least 28 days after their arrival in stores. Fox and Warner Bros. represented 62% of home video rental revenue in 2008 and 2009. Redbox responded by filing lawsuits, first, against Universal in October 2008, then against 20th Century Fox and Warner Bros. in August 2009. In August 2009, the federal judge hearing the Universal case allowed the antitrust claim to continue. In October 2009, 20th Century Fox and Warner Bros. filed motions to dismiss Redbox's lawsuits against them. During that time, Redbox continued to rent films from the companies, purchasing them at retail from places like Walmart instead of receiving them from the movie studios, which in some cases saved Redbox money due to the discounted prices offered by retailers. Other major studios, such as Sony Pictures, Paramount Pictures, and Lionsgate, signed distribution deals with Redbox. The Walt Disney Company permits third-party distributors to sell to Redbox, but did not enter into a direct relationship with the company. Both sides of the studio lawsuits pointed to these revenue-sharing deals to shore up their argument, with Redbox president Mitch Lowe saying, "our growth can lead to theirs . For example, Redbox currently estimates we will pay more than a combined $1 billion over the next five years to Sony, Lionsgate and Paramount to purchase and then rent new-release DVDs to consumers," while Warner Bros. says the deals are proof that far from being shut out by Hollywood, "Redbox's business has thrived since its suit against Universal, underscored by lucrative distribution deals with Paramount Home Entertainment, Sony Pictures Home Entertainment, and Lionsgate." Redbox entered into an agreement with Warner Bros. on February 16, 2010, followed by Universal and Fox on April 22, 2010.
In the agreements which settle the lawsuits, Redbox agreed to not make available for rental films from these studios until 28 days after their initial home-video releases. Redbox continued to sign additional and new distribution deals with these and other movie studios; by 2017, titles from Fox and Warner became available on Redbox seven days after their initial home-video release.
Expansion and new products
With over 6,000 kiosks, Redbox surpassed Blockbuster as the largest U.S. video rental chain in November 2007. The company reached 100 million rentals in February 2008, and surpassed 1 billion rentals in September 2010. As of Q2 2011, 68% of the U.S. population lived within a five-minute drive of a Redbox kiosk. In Q2 2011, kiosks accounted for 36% of the disc rental market, with 38% of that attributable to rent-by-mail services and 25% to traditional stores, according to the NPD Group.Redbox announced in July 2010 that they would introduce Blu-ray movies at 13,000 kiosks; by that fall, Blu-ray discs were available across the Redbox network. In October 2010, the company began offering video game rentals in select markets, including Reno, Nevada; Orlando, Florida; Stevens Point, Wisconsin; Austin, Texas; Wilmington, North Carolina; and Corvallis, Oregon. Video games were available at all Redbox locations by June 2011. In February 2012, Redbox announced the acquisition of Blockbuster Express, a competing kiosk-based rental service operated by NCR in partnership with Blockbuster. The $100 million purchase, completed on June 27, 2012, included over 10,000 kiosks, inventory, and certain retailer contracts. As part of the agreement, Redbox entered a supplier arrangement of purchasing product and services from NCR. The company sold some Blockbuster Express kiosks in less competitive markets to third party providers in June 2013. Also in 2012, Redbox partnered with New Era Tickets and Sparkart to test sales of live event tickets at Redbox kiosks. Redbox Tickets launched in October 2012 in Greater Philadelphia, and later expanded to the Los Angeles area in early 2013.
Redbox announced its 3 billionth disc rental, including both movies and games, in July 2013. The number of items rented from kiosks annually peaked in 2013, with 772.87 million rentals creating $1.97 billion in revenue; that year, Redbox rentals comprised more than 50% of DVD rentals in the United States with 717.13 million units rented in 2014, and 587.55 million in 2015. This decline was widely attributed to consumers' preferences shifting from physical media to online streaming; although as of 2014, Redbox still represented half of the physical media rental market.
Expansion into Canada
Redbox began offering rentals in Canada in mid-2012. 1,400 kiosks were installed in Canada before Redbox ended operations in the country in March 2015, citing low demand. These kiosks were subsequently relocated to retail stores in the United States.Purchase by Apollo and IPO
In August 2012, Redbox's founder, Gregg Kaplan, resigned as president and COO of Redbox, and was succeeded as president by Anne Saunders. Throughout most of 2016, parent company Outerwall was seeking a buyer based on shareholder input. In early September, Outerwall was sold to Apollo Global Management and its three units were split into separate operating companies. In late September 2016, Outerwall CFO Galen Smith was announced as the new CEO of Redbox.In January 2017, Redbox began moving some of its then-40,000 kiosks, with the intention of analyzing consumer trends and reacting to under-performing neighborhoods. On December 13, 2017, Redbox offered a new video streaming service called Redbox On Demand. The percentage of consumers renting or purchasing movies from Redbox rose in the fourth quarter of 2017 from the third quarter, according to a TiVo survey. That month, Disney sued Redbox, accusing them of violating copyrights by selling codes to download Disney movies such as Star Wars: The Force Awakens and Beauty and the Beast.
In April 2018, Redbox acquired the independent film Benjamin for a 90-day release period through its kiosks and on demand service, as the first Redbox Original. In October 2019, Redbox formed a film and TV series production division, Redbox Entertainment, with Marc Danon as senior advisor of content acquisition. Redbox announced on December 9, 2019, that it would no longer be renting video games but continued selling used video game copies through the end of the year.
Redbox Free Live TV, a free ad-supported streaming television service, was soft launched in early February 2020 with a nationwide launch on February 18. The company's revenue fell 20% in 2019, 36% in 2020 and over 50% in 2021. On May 17, 2021, Redbox announced that it reached a definitive agreement to merge with Seaport Global Acquisition, a special-purpose acquisition company which would result in Redbox being publicly listed on the Nasdaq under the ticker RDBX. The company officially went public on October 25, 2021.