Dvdplay Funding Fixed < 2027 >

In January 2012, DVDPlay filed for Chapter 7 liquidation. Total capital raised across all rounds and debt: . Total recovered for secured creditors: $3.1 million (mostly from selling kiosks for scrap metal and disc inventory to a liquidator in Texas). Unsecured creditors, including the Oregon drivers who had been paid in stock options, received nothing. Epilogue: What the Funding Bought (and What It Didn’t) The DVDPlay story is a textbook case of misaligned funding cycles . They raised equity when they needed debt, debt when they needed a strategic partner, and a growth round when they needed an exit.

The funding was deployed to launch (a kiosk that also rented Blu-rays) and a doomed pilot program with 7-Eleven to put mini-kiosks (200 discs) on convenience store counters. Both failed. The 7-Eleven pilot cost $800,000 and generated $42,000 in revenue over six months. Act V: The Death Spiral – Convertible Notes and Fire Sales By early 2011, DVDPlay was burning $400,000 per month. Redbox’s market share hit 38% of all physical rentals. Netflix’s streaming service had 23 million subscribers. DVDPlay had no strategic buyer—Redbox didn’t want the technology, and Coinstar wasn’t interested. dvdplay funding

The kiosks themselves were ground into plastic pellets. But the funding term sheets—the liquidation preferences, the ratchets, the vendor notes—remain, preserved in SEC filings, a quiet monument to the last time anyone thought renting a disc from a parking lot was a winning bet. In January 2012, DVDPlay filed for Chapter 7 liquidation

Enter , a Seattle-based VC firm focused on digital media. In February 2006, DVDPlay closed a $4.5 million Series A . The term sheet was brutal: 8% preferred liquidation preference, a full ratchet anti-dilution clause, and a board seat for Voyager’s managing director. Unsecured creditors, including the Oregon drivers who had

| Round | Year | Amount | Lead Investor | Notable Terms | Outcome | |-------|------|--------|---------------|----------------|---------| | Series A | 2006 | $4.5M | Voyager Capital | Full ratchet, board seat | Burned for expansion | | Mezzanine debt | 2008 | $3.0M | Wellington Financial | 14.5% interest, convertible | Defaulted | | Studio rev-share | 2008 | $2.0M (imputed) | Lionsgate/Warner | 15% of revenue | Raised COGS to 47% | | Series B | 2009 | $12.0M | Oak Investment | 2x liquidation pref, pay-to-play | Lost on streaming pivot | | Convertible notes | 2011 | $2.5M | Portland angels | 20% discount, $0.25 floor | Converted to zero | | | | $24.0M | | | Recovery: $3.1M |

The initial funding model was almost quaint: . Each machine cost $12,000 to build and $500 per month to service. If a kiosk pulled in $1,200 a month (roughly 40 rentals at $1.50 per night, plus late fees), Phillips plowed 90% of that back into building the next machine. By 2004, DVDPlay had 47 kiosks in Oregon and Washington. They were profitable, but tiny.