Redbox 2005 Annual Report Download - page 7

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entertainment services machines add an element of entertainment for consumers. As with our coin services
business, we own and service all of our entertainment services machines, providing a convenient and trouble free
service to retailers.
E-payment services
We estimate that the e-payment services market is approximately $5.0 billion in the United States. We offer
e-payment services, including loading prepaid wireless accounts, loading and reloading stored value cards,
reloading prepaid MasterCard®cards and prepaid phone cards and providing payroll card services. We believe
these and other e-payment services represent a significant growth opportunity for us. We offer various e-payment
services through point-of-sale terminals, stand-alone e-payment kiosks and e-payment-enabled coin-counting
machines in supermarkets, drugstores, universities, shopping malls and convenience stores. These services
provide an easy way for consumers to perform a variety of useful transactions without having to obtain a bank
account or credit card. Our key e-payment services partners include Albertson’s, Inc. supermarket chain and
Walgreens Co. and CVS Corporation drug stores.
We generate revenue for ourselves and pay our retail partners a fee through our commissions earned on the
sales of e-payment services. We have relationships with national wireless carriers, such as Sprint, Verizon,
T-Mobile, Virgin Mobile and Cingular Wireless.
Competitive strengths
We believe our key competitive strengths are:
Market leadership. We are the market leader in the self-service coin-counting services market and in the
skill-crane and bulk vending markets. We own and operate the only multi-national fully automated network of
self-service coin-counting machines in the United States, Canada and the United Kingdom. To date, we have
installed more than 12,800 of our coin-counting machines in those countries, which account for approximately
80% of the installed base in those markets. Currently, we estimate that 75% of the US population lives within
five miles of one of our coin-counting machines. We estimate that there is $10.5 billion worth of coin sitting idle
in US households alone. Our coin-counting machines provide consumers with a convenient and reliable means of
converting loose coins into cash. In addition, we are the leading owner and operator of skill-crane and bulk
vending machines in the United States, with more than 320,000 pieces of equipment installed in more than
33,000 retail locations.
Profitable, turn-key solutions for our retail partners. We own, operate and maintain all of our machines
and provide our retail partners with low-maintenance, turn-key solutions and revenue-generating services. In
addition, our array of services allows retailers to work with a single-source provider for key front-of-store needs.
Our studies show that our coin-counting machines increase foot traffic to host stores, and that approximately
45% of customers spend all or a part of the proceeds of their vouchers in the retail partner’s store. Retail partners
also receive a portion of our revenues from our coin, entertainment and e-payment services transaction fees. We
believe that these sources of revenue are very attractive to retailers. For example, our self-service coin-counting
machines and skill-crane machines generate five to eight times the supermarket average for profitability per
square foot, among the most profitable per square foot in a supermarket, compared to the supermarket average
reported in an independent survey.
Differentiating, patented coin services technology. We believe that our proprietary technology sets us
apart from our competitors. We have over 60 United States and international patents covering various aspects of
our coin services business, including our networked coin-counting machines, coin-cleaning technology and
voucher security features. Our coin-counting machines have a multi-step coin-cleaning process to remove debris,
which helps prevent our equipment from becoming jammed. Our network allows our field service team to
remotely monitor each individual coin-counting machine, thereby allowing us to optimize pickup of coins for
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