Over 20 years, Redbox evolved from an experimental concept within McDonald‘s to the king of rental kiosks challenging Blockbuster and Netflix. Now under new ownership, Redbox seeks to stabilize declining revenues stemming from broader shifts in consumer behavior. This article explores key milestones, innovations, challenges and ownership changes across Redbox’s dynamic two-decade history.
An Empire Born Inside McDonald’s
Redbox’s origin traces back to 2001 when McDonald’s launched an experimental kiosk service for convenience store items called “Tick Tock Easy Shop.” After two years McDonald’s shuttered Tick Tock Easy Shop, but exec Greg Kaplan saw potential to repurpose the kiosks for DVD rentals. With McDonald‘s support, Kaplan tested the DVD rental concept in 2004.
The successful 2004 test run led McDonald‘s to brand the kiosks "Redbox." With Redbox gaining traction, McDonald‘s sold a 47% minority stake to Coinstar (operator of coin counting kiosks) for $32 million in 2005 to support expansion plans. Coinstar took majority control in 2008, then acquired Redbox outright in 2009 for $170 million.
Surging Past Rental Industry Leaders
Redbox opened 1,800 rental kiosks by the end of 2007 – surpassing Blockbuster‘s national retail store count that same year. In 2008, Redbox celebrated 100 million rentals. In 2010, they crossed 1 billion total rentals while erstwhile rental giant Blockbuster declared bankruptcy.
| Year | Redbox Rentals |
|---|---|
| 2007 | ~50 million rentals |
| 2008 | ~100 million rentals |
| 2010 | 1+ billion rentals |
By 2013, Redbox kiosks could be found within a 5 minute drive of 68% of Americans. Redbox cemented itself as the new rental industry leader in 2013 by capturing 51% market share and hitting an annual rental volume of 772.8 million discs.
Battling the Movie Studios
Despite wild popularity with consumers seeking cheap entertainment, tensions simmered between Redbox and major studios throughout the early 2010‘s. With Blockbuster gone, studios viewed Redbox‘s bargain rental pricing as damaging higher-value home entertainment revenue streams.
20th Century Fox, Warner Bros. and Universal Pictures withheld new releases from Redbox for 28 days – a window once reserved for rental stores like Blockbuster. Redbox retaliated by purchasing studio titles at retail to stock kiosks. Lawsuits ensued before eventual compromises granted Redbox access to new releases within 14-28 day windows.
Ownership Changes & Diversification
| Year | Key Events | Ownership |
|---|---|---|
| 2016 | Spun off by Coinstar as "Outerwall" | Outerwall |
| 2017 | Launches on-demand digital rentals/purchases | Outerwall |
| 2019 | Starts Redbox Entertainment production arm | Outerwall |
| 2021 | Goes public via SPAC at $693M valuation | Independent |
| 2022 | Acquired by Chicken Soup for the Soul | $375M |
From spinoffs to mergers and more, Redbox swapped owners while diversifying revenue streams amidst falling physical rental income. Redbox finds itself today under the umbrella of Chicken Soup for the Soul Entertainment – an entertainment company housing various production, distribution and advertising entities.
Redbox‘s Uncertain Future
Redbox‘s core kiosk rental business has declined sharply since 2013, with rental revenue down 50% year-over-year as of December 2021. Its new owner, however, sees potential – Chicken Soup for the Soul CEO Bill Rouhana cites Redbox’s wealth of consumer data and extensive retail relationships as strong assets if properly leveraged across the parent company‘s entertainment properties.
But making consumers flock back to those red kiosks in the age of streaming presents a tall order. Much depends on whether Redbox can modernize while retaining its unique appeal and cost advantage compared to digital rental marketplaces. If the ingredients align, Redbox may yet rediscover the magic that once made "Let‘s get a Redbox tonight!" a ubiquitous catchphrase across America.
