A Redbox kiosk with Chicken Soup for the Soul books on display
Illustration: Christopher T. Fong/Protocol; Chicken Soup for the Soul Entertainment

'I love chaos': Chicken Soup's CEO explains why he bought Redbox

Protocol Entertainment

Hello, and welcome to Protocol Entertainment, your guide to the business of the gaming and media industries. This Friday, we’re taking a closer look at Chicken Soup for the Soul Entertainment’s recently closed acquisition of Redbox, and we share some recommendations on what to read, watch and play this weekend.

Chicken soup for streaming

If you don’t follow the minutiae of the streaming wars, you may have missed this nugget: Last week, Chicken Soup for the Soul Entertainment closed the acquisition of Redbox. That’s right, a subsidiary of the company that’s best known for its inspirational books but for some inexplicable reason also happens to sell dog food is the new owner of those iconic red DVD kiosks.

Is your head spinning yet? That’s just how Chicken Soup for the Soul Entertainment CEO Bill Rouhana likes it. “I love chaos,” Rouhana said when I chatted with him earlier this week.

“The industry is completely chaotic right now,” Rouhana told me. “It's a total nightmare. It’s completely in a state of flux. I’m pretty comfortable with that.”

Rouhana’s company has been on a buying spree for a few years now, strategically acquiring video assets that weren’t able to fully flourish under their previous owners.

  • This includes the ad-supported video pioneer Crackle, which Chicken Soup for the Soul Entertainment acquired from Sony in 2019.
  • Other CSSE brands include Popcornflix, Frightpix and Truli. “Each one of these has got its own sort of voice,” Rouhana said.
  • By adding Redbox to the fold, Rouhana is gaining access not only to 36,000 DVD kiosks, but also a sizeable digital rental business, a FAST service with 145 streaming channels and a customer loyalty program with 40 million members — something he wants to use as a marketing vehicle for the company’s other services, as well as a source of insights.
  • “People do have a life outside of Netflix,” Rouhana told me. By learning about the things people are looking for at DVD kiosks, he hopes to gain better insights to fine-tune personalized recommendations. “We’re very interested in data,” he said.

And then there’s the actual business of renting DVDs, which is still a thing people do, even in this day and age. If there’s anything for them to actually rent, that is.

  • Not only did the pandemic disrupt film shoots and releases, it also led major media companies to move their finished films directly to streaming, further cutting off Redbox and the rest of the home video market.
  • “The kiosks themselves are about at the low point they're ever going to be at, because it's been two years of no theatrical releases,” Rouhana said.
  • But it’s not like people don’t have any interest in those cheap rentals anymore. Even during the pandemic, Redbox’s kiosks saw the same number of sessions as before, Rouhana said. “People kept coming and looking. They just didn’t have anything to [rent].”
  • That’s changing now, and not just because of an industry-wide recovery. A recent strategy U-turn at Warner Bros. Discovery is also giving Rouhana hope that there will be a lot more movies to rent in the near future.
  • The days of expensive streaming exclusives are over, he argued. “Everybody is going to end up back in a window strategy.”
  • Sure, eventually, people will stop buying or renting DVDs, and Rouhana is prepared to slowly scale down Redbox’s kiosk business, starting with locations that don’t perform well. “But [that’s] a 10- or 20-year time horizon,” he said. “It’s just not tomorrow.”
  • In the meantime, Redbox is also benefiting from its corporate legacy: As a descendent of the Coinstar kiosk empire, the company has been servicing kiosks for Coinstar and ecoATM as well as in-store lockers for Amazon, among others. “That [part of the business] is growing like crazy, making money,” Rouhana said.

Redbox’s kiosks are also a good insurance policy against inflation and a possible recession. Rouhana told me that he’s not losing too much sleep about advertisers pulling back from streaming. But if things do get really bad, Redbox may actually see a lot more business.

  • After all, checking out a disc is still a lot cheaper than an online rental.
  • “If there's ever been a place that benefits in an inflationary environment or recession, it's the place you can get the same thing at the same time, for one-third of [the] price,” Rouhana said.
  • Chicken Soup for the Soul Entertainment may also use any possible downturn to snap up a few more assets for its portfolio. “When there's massive disruption, you have people who get hurt,” he said.

— Janko Roettgers

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#TGIF: How to spend your weekend

How the Three Arrows Capital co-founders torched the crypto market — New York Magazine: The story of the so-called crypto geniuses Kyle Davies and Su Zhu behind crypto hedge fund Three Arrows Capital is almost too unbelievable, and you can already sense the limited-time HBO series or feature film Hollywood producers might try to cook up from these details. By far the best accounting yet of what exactly happened with TAC comes from Jen Wieczner at New York Magazine, who chronicled the rise and fall of the fund in a new feature this week, dishing out some hilarious new details, including the name of the duo’s $50 million super yacht that now sits vacant in Italy while Davies and Zhu remain in hiding.

“Prey” — Hulu: The Predator franchise isn’t exactly known for its sensitive portrayal of indigenous cultures. Yet, inexplicably, the new entry in the series about head-hunting alien assassins manages to accomplish many different things at once — including an award-worthy performance of a Comanche warrior from Sioux actress Amber Midthunder. The film features stellar action sequences and a refreshingly deep exploration of native gender roles as Midthunder’s Naru is pitted against a technologically advanced adversary.

Cult of the Lamb — Switch, PlayStation, Xbox and PC: Devolver Digital’s latest indie hit is Massive Monster’s Cult of the Lamb, an action-sim hybrid that blends elements of Animal Crossing with roguelike dungeon crawling. One part of the game involves growing a religious cult of followers through often vicious and manipulative means, as part of a vengeful plot to strike back at the gods of old who sent you to be sacrificed. The other involves venturing into randomized dungeons to grow your following and strike your enemies down, all while providing for your growing religious order. The game’s comically sinister overtones mixed with its cartoony art style keep the overall tone light, but with enough depth to say something meaningful about the perils of organized religion.

Fortnite’s Dragon Ball Z event — Android, Switch, PlayStation, Xbox and PC: Fortnite’s latest anime collab is really too good to miss. Following a successful crossover with the Naruto universe earlier this summer, Akira Toriyama’s “Dragon Ball Z” has finally landed in Epic’s battle royale, and it's even better than we could have imagined. There is of course skins for purchase featuring protagonists Goku and Vegeta and a quest tracker to unlock some other nice cosmetics for free. But it’s all the small touches — the in-game Kamehameha energy blast item and the ability to “power up” and transform your hair color, to name a few — that really push it over the edge and prove why Fortnite is truly at the forefront of the metaverse.

— Nick Statt

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Thoughts, questions, tips? Send them to entertainment@protocol.com. Enjoy your day, see you Tuesday.

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