In September of last year, Chicken Soup for the Soul Entertainment (CSS Entertainment) acquired the popular movie-rental chain Redbox for $158 million. Only a year later, CSS Entertainment has made significant cost-cutting moves as it looks to diversify its business and maintain profitability in a competitive market.
The newly formed company has closed 210 underperforming Redbox kiosks, which represented about 11% of its total footprint. It has also restructured its executive team, eliminating roughly 25 positions and laying off other employees at the corporate headquarters. This followed a 23% reduction in staff and a 50% reduction in office space in its Los Angeles headquarters earlier in 2020.
CSS Entertainment has also announced a strategic review of its businesses, which it says will include a comprehensive evaluation of cost savings initiatives, investments, and operational efficiencies. The company says the review is designed to “ensure that CSS Entertainment maintains a disciplined approach to cost management and to position it to maximize returns for its stakeholders.”
CSS Entertainment also recently announced a new partnership with Lionsgate, which will see them co-produce and co-finance a number of original, feature films. The collaboration is expected to reduce the cost of producing films, as well as provide greater access for both companies to a wider variety of content.
The move to cut costs follows the Redbox acquisition, and marks a major shift in the strategies of both companies. Redbox had long been a bottom-line business model, relying on low rental fees and low overhead costs. CSS Entertainment, however, is now focusing on diversifying its business and expanding its range of offerings to include production and distribution.
It’s unclear how the cost-cutting strategies will ultimately affect Redbox’s profitability or its overall business model. The company is investing heavily in new initiatives and collaborations, and the long-term success of these efforts remains to be seen. For now, CSS Entertainment has sent a clear signal that it is willing to take calculated risks and make bold changes as it looks to stay competitive in the increasingly crowded entertainment industry.
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