Redbox shuts down, customers locked out as company enters bankruptcy

If you use Redbox's streaming service, you may have noticed that you can't stream movies you've purchased or even the free movie collection it offers. Earlier today, the Redbox website went down. Now it's just displaying an error message where you normally find free movies and movies or TV shows on sale.

At this time, the issue is limited to Redbox, as Crackle, also owned by the same company, is still up and running. The exact cause of the issue is unknown and Cord Cutters News has reached out to Redbox for comment. If we hear back, we will update our story.

But for now, if you have movies on Redbox streaming services that you’ve purchased, you’ll need to wait and see what happens. This is likely a technical glitch as the company just secured $8 million in new funding.

Last month, Chicken Soup for The Soul Entertainment, the parent company of Redbox, Crackle, and the streaming service of the same name, announced that the entire board of directors and the board of directors of every subsidiary of the company, with the exception of William J. Rouhana Jr., had been fired. This was quickly followed by news that Redbox had filed for bankruptcy.

Now, according to a report from BloombergHPS agreed to give the company $8 million, but as part of the deal, Redbox’s parent company must reinstate the independent members of its board of directors who were fired last month. Now the judge in charge of that bankruptcy has approved the plan.

Before, employees were not getting paid and benefits like health insurance were canceled. With this loan, employees’ salaries will be paid and health insurance will be funded as well.

The company recently lost $4 million paid to NBCUniversal As part of its settlement over unpaid royalties, it now faces a potential order to pay all $16.7 million it owes NBCUniversal as questions mount about the company’s future. NBCUniversal filed a lawsuit, saying Redbox was not paying royalties. It agreed to a payment plan but missed the first payment.

Chicken Soup for The Soul Entertainment is in a tough spot after acquiring Redbox in 2022 for $50 million in stock and taking on $325 million in debt. Add to that an unstable media environment with declining ad revenue and quarterly losses, and the company’s future is up in the air. In August, CEO Rouhana said the company was conducting a strategic review to assess its prospects, which in business terms means putting itself up for sale.

Last year, Chicken Soup for The Soul Entertainment announced that it was in active discussions about a potential sale, but so far those talks have come to nothing.

Like many media companies, the company has been hit by a weak advertising market that has negatively impacted revenue. For a company that relies heavily on ad-supported streaming, that market is bound to hurt the service. For now, the company seems confident that it will be able to overcome these issues and pay its partners. We’ll have to wait and see.