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Could Netflix’s red DVD envelopes and Redbox’s bright red DVD kiosks someday be part of the same company?
Bill Rouhana, the CEO of Redbox owner Chicken Soup for the Soul Entertainment, sure hopes so.
“I’d like to buy it,” Rouhana said of Netflix’s DVD business in an interview with The Hollywood Reporter on Wednesday. “I wish Netflix would sell me that business instead of shutting it down.”
Redbox is already the biggest DVD rental company in the U.S., with a network of some 32,000 red DVD kiosks across the country. Just this week, it announced plans to add another 1,500 kiosks at Dollar General stores (Rouhana says the Dollar General kiosks are some of the company’s most profitable).
Netflix on April 18 announced that after 25 years, it would mail out its last DVD in September. While the DVD business kickstarted Netflix’s meteoric rise, in recent years it has been on the decline. In 2022, it had $146 million in revenue, down $40 million from the year prior. Q1 had revenue of $32 million, suggesting a further decline this year.
And Rouhana says he has reached out to Netflix over the years expressing a desire to acquire the DVD business, to no avail.
“I have tried like three or four times to reach out to the corporate development people about it but just got rebuffed each time,” Rouhana says. “So when I saw it being closed, I thought, ‘Well, maybe they’ll do it now.'”
A Netflix source tells THR that the company is winding down the business, and not selling it. (As for what happens to those warehouses full of DVDs that fueled Netflix’s red envelope business, they seem to be in limbo for now.)
Even if that is the case, Rouhana says he believes Netflix’s decision to shutter the service will benefit his company. “This could be a great boon to us because now there are a whole bunch of people who are going to look for a new place to get their DVDs, and we’re close to 90 percent of them based on where our kiosks are located,” he says.
And, he notes, he does not expect the DVD business to go away anytime soon.
“We believe in it, and we believe it’s going to be around for a while. Like most legacy things, it’s a lot harder to kill them than people say, I believe,” he adds.
In fact, he believes the DVD business is in a position for growth over the next few years, thanks to a larger slate of movies hitting theaters and a desire from studios to reengage with windowing strategies.
“We programmed our business plan for us to get back to about 30 percent of the 2019 level,” Rouhana says. “I feel that’s pretty conservative, I think we’ll be better than that. But, you know, that’s how we built the business plan that we’ve articulated. So people can decide for themselves whether they think that’s overly optimistic or overly pessimistic.”
But adding Netflix’s red envelopes, and its estimated million or so customers, would be another feather in the cap.
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