Redbox Losses Doubled to $140.8 Million in 2021 as Crumbling of DVD Rental Biz Accelerated

Redbox Entertainment CEO Galen Smith
(Image credit: Redbox Entertainment)

Redbox Entertainment has reported more bad news to the SEC, revealing in its 10-K filing that its losses doubled in 2021 to nearly $140.8 million. 

Revenue, meanwhile, dropped around 47% to $288.5 million, as programatic ad sales generated by Redbox's nascent AVOD and FAST businesses couldn't grow nearly fast enough to keep up with the decline of its core DVD rental kiosk operation. 

Redbox stock, which opened last year trading at over $15 a share, was down to around $2.20 a share Monday. 

Data published two weeks ago by the former App Annie (now revealed that Redbox mobile app usage is heavily favored in the U.S. among millennial-age consumers, ranking No. 1 in monthly active users for all mobile OTT apps. 

However, it's well established that Redbox is in a bit of trouble. The company, which just went public via SPAC back in early October, reported the layoff of around 150 staffers two weeks ago. 

Also read: Redbox CEO Galen Smith: Why 40 Million ‘Late-Adopter’ Customers Will ‘Make the Digital Shift With Us’

And in a January 8-K filing to the SEC, Redbox confirmed that it was tapping into the last $15 million of a revolving credit line, noting that sustained COVID-19 restrictions on the theatrical distribution pipeline had badly cut into its core business -- with big movies like Paramount's Top Gun: Maverick kept on the shelf during the pandemic, there were simply fewer big movie titles available at Redbox's 38.3 million rental kiosks nationwide. 

Notably, Redbox earned nearly four times as much revenue in 2019, the last year unaffected by the pandemic, when it brought in around $858.4 million on the strength of 140 theatrical titles entering the physical home video rental window that year. 

In 2020, revenue slipped to $546.2 million, with the number of available rental titles cut by more than half to just 68. 

Last year's theatrical bounty was only down 16% to 57 titles, but revenue was cut nearly in half. So it wasn't just that there were fewer movie titles to justify consumers driving down the street to a 7-Eleven store to visit a Redbox kiosk. With the pandemic reshaping consumer habits, fewer folks are renting movies in physical formats. 

According to Digital Entertainment Group, overall rentals of DVD and Blu-ray titles declined just over 21% in the U.S. in 2021 for the entire domestic video business. 

Redbox ended 2021 with 38,379 rental kiosks in 32,586 locations, down from 40,026 kiosks in 33,661 locations in 2020. 

Redbox's stated goal is to transition its kiosk users, which it has termed late adopters, into users of the ad-supported streaming services also available in its app -- the AVOD service Redbox Free On Demand and the FAST-oriented Redbox Free Live TV. Redbox also supports rental and sale of digital titles (TVOD) on its app. 

"If you think about Redbox being an almost 20-year-old business, that becomes really, really powerful, because we're not necessarily competing for the same customers that everyone else is," Redbox CEO Galen Smith told Next TV back in September. "We've got this unique defined customer base that loves us and is loyal to us. And what we want to do is continue to expand the way that we serve their needs.”

Redbox hasn't released data on how many consumers are using its service, but the report suggests its digital offerings have at least some traction in the market. 

In terms of monetization, Redbox says its advertising business includes both programmatic and direct sales. 

Listing risks to its business its 10-K filing, Redbox cited "increased competition in the advertising video-on-demand segment," specifically noting platforms including YouTube, Crackle, Disney Plus and Peacock. 

Daniel Frankel

Daniel Frankel is the managing editor of Next TV, an internet publishing vertical focused on the business of video streaming. A Los Angeles-based writer and editor who has covered the media and technology industries for more than two decades, Daniel has worked on staff for publications including E! Online, Electronic Media, Mediaweek, Variety, paidContent and GigaOm. You can start living a healthier life with greater wealth and prosperity by following Daniel on Twitter today!