It’s hard to remember now, but there was a time when getting a movie meant driving to a strip mall, praying the single copy of Shrek 2 was actually behind the cardboard sleeve, and then paying a $15 late fee because you forgot to drop it off on Sunday. Then came the big red boxes. They were everywhere. You couldn't buy a Big Mac or a gallon of milk without seeing one. But when did Redbox start, and how did a company born inside a fast-food giant end up killing the video store?
The answer isn't as straightforward as a single launch date.
Redbox didn't start as a movie company. Not really. It was actually a "business incubator" project at McDonald’s Corporation. In 2002, a team at McDonald's was looking for ways to drive more foot traffic to their restaurants. They weren't thinking about DVDs yet. They were thinking about literally anything that could fit in a vending machine. We're talking convenience store staples like milk, eggs, and even phone chargers. The idea was simple: make McDonald’s a one-stop shop for everything you forgot to buy at the grocery store.
The 2002 Beta Test That Changed Everything
If you were living in Washington, D.C. in 2002, you might have seen the very first iterations. They were bulky, strange, and definitely didn't just sell movies. Gregg Kaplan, who is often credited as the founder, led this team under the McDonald’s umbrella. They deployed about 11 kiosks in the D.C. area to see if people would actually buy grocery items from a machine outside a burger joint.
It failed.
Well, the groceries failed. People didn't really want to buy lukewarm milk from a vending machine while waiting for their McNuggets. But the team noticed something interesting. Out of all the products they tested, the DVDs were the only things people consistently rented. It made sense. A DVD is the perfect shape for a machine. It's high-value, easy to return, and doesn't spoil.
By 2003, the focus shifted entirely to movies. This is when the Redbox we recognize today truly began to take shape. They pivoted away from the "everything kiosk" and leaned hard into the $1-a-night rental model. This price point was the "secret sauce." At the time, Blockbuster was charging $4 or $5 for a new release. A dollar was a psychological breakthrough. It was basically "couch change."
The Tipping Point: When Did Redbox Start Dominating?
While 2002 was the birth, 2005 was the year the company grew up. This is a crucial distinction for anyone asking when did Redbox start to actually matter in the entertainment industry. In 2005, Coinstar—the company that owns those change-counting machines—bought a 47% stake in the company for about $32 million.
📖 Related: Influence: The Psychology of Persuasion Book and Why It Still Actually Works
This was a massive turning point.
Coinstar knew how to manage kiosks. They had the logistics, the technicians, and the relationships with grocery stores like Kroger and Safeway. Suddenly, Redbox wasn't just at McDonald’s. It was everywhere. By the end of 2005, they had 1,200 kiosks. A few years later, that number would explode to over 40,000.
Think about that scale.
At its peak, there were more Redbox locations in the United States than there were Starbucks and McDonald’s combined. It was a logistical marvel. Every Tuesday, when new movies were released, a fleet of "merchandisers" would drive from machine to machine, swapping out the old discs for the new ones. It was a physical version of the "algorithm" we see on Netflix today. If a movie wasn't renting in a specific zip code, it was yanked and replaced with something that would.
The Battle with Hollywood
Hollywood hated it.
Seriously. In 2008 and 2009, the major studios—Universal, 20th Century Fox, and Warner Bros.—tried to kill Redbox. They saw the $1 rental price as a threat to their DVD sales. Why would anyone buy a $20 DVD if they could rent it for a buck? The studios tried to stop selling discs to Redbox. They even told wholesalers not to provide them with stock.
Redbox didn't blink.
👉 See also: How to make a living selling on eBay: What actually works in 2026
Instead, they sent employees to retail stores like Walmart and Target to buy thousands of copies of movies at full retail price just to stock their machines. It was a legendary move in the business world. Eventually, the studios realized they couldn't stop the red wave. They reached "revenue-sharing" agreements, though most involved a "blackout period" where Redbox couldn't rent a movie until 28 days after it went on sale.
Why the Redbox Model Eventually Cracked
Nothing lasts forever, especially in tech. By the time 2013 rolled around, Redbox reached its peak. They had over 43,000 kiosks. But the wind was shifting.
Netflix had already pivoted from its "red envelope" mailer service to streaming. Internet speeds were getting faster. People were becoming okay with "digital ownership." The convenience of a kiosk at the grocery store couldn't compete with the convenience of not leaving your couch.
Honestly, the decline was slow and then very fast.
The company went through several owners. Apollo Global Management took them private in 2016. Then, Chicken Soup for the Soul Entertainment bought them in 2022. It was a strange fit. By this point, the business was struggling with massive debt and a changing consumer landscape. The "magic" of the dollar rental was gone, too. Prices had crept up to $2.00, then $2.25, and higher for Blu-rays.
The final blow came in July 2024.
Chicken Soup for the Soul Entertainment filed for Chapter 7 bankruptcy liquidation. Unlike Chapter 11, which allows a company to reorganize, Chapter 7 means it's over. The machines were ordered to be shut off. The 24,000 remaining kiosks became giant red paperweights.
✨ Don't miss: How Much Followers on TikTok to Get Paid: What Really Matters in 2026
What We Can Learn From the Redbox Era
The story of when Redbox started and how it ended is a masterclass in "disruption." They didn't invent the DVD. They didn't even invent the vending machine. They just realized that the "video store" was a bloated, inefficient model. They cut out the overhead of buildings and staff and passed those savings to the customer.
But they also fell into the same trap as Blockbuster. They became too reliant on a physical product in a digital world.
If you're looking at the history of Redbox, it’s a perfect three-act play:
- Act I (2002-2005): The McDonald's experiment. Failure turns into a pivot.
- Act II (2006-2013): Total market domination. The death of the traditional video store.
- Act III (2014-2024): The slow retreat as streaming becomes the default.
It's kinda wild to think that a generation of kids now won't know the feeling of scanning those digital rows of movies while their parents bought groceries. It was a specific moment in time.
Actionable Insights for the Modern Collector or Business Enthusiast:
If you’re a fan of physical media or just interested in how these legacy systems work, here is what you should know about the current state of things:
- Check the Abandoned Kiosks: While the machines are officially dead, many still sit in front of grocery stores. Do not try to use them; your card will likely be declined, or worse, the machine will "eat" your data without providing a disc.
- The Secondary Market is Growing: Since Redbox’s liquidation, the supply of cheap, used DVDs has dried up. If you are a physical media collector, sites like Gruv or Hamilton Book have become the new go-to for those $5 deals.
- Understand Platform Risk: Redbox’s "On Demand" digital service also vanished during the bankruptcy. This is a stark reminder that when you "buy" a digital movie on a smaller platform, you only own it as long as the company exists. Stick to major players like Apple, Fandango (Vudu), or Amazon for digital libraries.
- Watch for the "Kiosk" Rebirth: Other companies like DVDXpress still operate in certain regions, mostly in supermarkets catering to demographics that still prefer physical discs. The niche isn't 100% dead, but it will never be the 40,000-machine behemoth Redbox was.
The legacy of Redbox isn't just about movies. It's about the fact that for about a decade, a big red box at a McDonald's was the most sophisticated distribution network in the world. It started as a way to sell eggs and ended as a cultural icon. Not bad for a failed grocery experiment.
Sources and References:
- McDonald’s Corporation Historical Archives regarding "Project Redbox."
- SEC Filings from Outerwall (formerly Coinstar) 2005-2016.
- U.S. Bankruptcy Court records for Chicken Soup for the Soul Entertainment, 2024.
- Interviews with Gregg Kaplan, Redbox Founder (Business Insider, 2011).