Is the red zone location entirely random?

I was told that there had to be people in the area of the red zone in order for it to spawn, is this true? I was always under the impression it was entirely random.

Yes they are, no matter where or how many players are at grouped up, the redzone will still spawn randomly. Source:

Although the developers have said that the red zone is completely random in the past. Since the red zone was updated it seems more likely to target areas where players are present or target areas that players are likely to travel into. For example, if the circle is coming in then the zone might appear between the player and the fastest route to the new circle forcing the player to enter the red zone.