Blame it on COVID: Redbox’s demise could further make DVDs a relic, UC Davis expert says

Redbox, the DVD rental kiosks that rose to prominence in the early 2010s, is shutting down after its parent company filed for liquidation on Wednesday, according to court documents.

The parent company Chicken Soup for the Soul Entertainment changed its bankruptcy filing in Delaware Bankruptcy Court to liquidate the business, assets and lay off 1,000 employees. This comes after the company filed for bankruptcy last month and was reportedly late in paying its employees.

The Redbox DVD kiosks at Sacramento locations including the Safeway grocery store at 1814 19th St. and CVS at 3710 Franklin Blvd. both had “out of service” messages on their screen Thursday. It was not know if all kiosks were out of service, as it was reported that some kiosks in Southern California were operational.

Hemant K. Bhargava, a UC Davis distinguished professor and director at the school’s Center for Analytics and Technology in Society, said the loss of Redbox was foreseeable after the COVID-19 pandemic in 2020.

“The pandemic was the final nail in the coffin,” Bhargava said. “They were actually doing alright, DVD rental is a pretty profitable business. You’re not going to be a huge company, because most people prefer streaming, but it was a business that worked.”

As fewer movies were being made during that time, Redbox had less content for their kiosks, he said.

Redbox revenue continued to steadily decrease during the pandemic, including a 40% drop in the two years after the coronavirus reached the U.S. The company reported $546 million in revenue in 2020 compared with $858 million in revenue in 2019. The following year, the revenue fell again to $288 million.

In the last quarter, Redbox’s total revenue was just $63 million.

Bhargava said the closure of the movie rental chain could impact the DVD player manufacturers.

“I think (Redbox closure) will have a spiral spillover effect of making the demand for players even less than it was. Already, the manufacture of players have been declining for many years,” Bhargava said.

He referenced an article from Variety showing a 92% decrease in sales of DVDs since 2006.