Video streaming company Chicken Soup for the Soul Entertainment has bought DVD rentals company Redbox in a share deal worth $375m, comprising equity and debt. The deal should help both firms in an extremely competitive streaming environment, taking out cost and enabling Chicken Soup to stream financially unviable Redbox content.
The combined company is expected to have $500m of revenue and over $100m of profit with Chicken Soup’s streaming channels reaching 40m monthly users who will be able to access the large Redbox content library. Redbox was founded in 2002 but has experienced recent difficulties with its rental model, with losses reaching 50% of revenue. Chicken Soup is attracted by the potential for digital advertising and expanded distribution for its core product.