Redbox 2006 Annual Report Download - page 6

entertainment services office is located in Louisville, Colorado. As of December 31, 2006, we had approximately
1,900 employees. We were incorporated in Delaware on October 12, 1993.
Coin services
We are the leader in the self-service coin-counting services market. We own and operate the only multi-
national fully automated network of self-service coin-counting machines across the United States, Canada,
Puerto Rico and in the United Kingdom. We estimate that at any one time, there is more than $10.5 billion worth
of coin sitting idle in households in the United States. In 2006, consumers processed more than $2.6 billion worth
of coin through our coin-counting machines.
We own and service all of our coin-counting machines, providing a “turn-key, headache-free” service to
retailers. Our machines are easy to use, highly accurate, durable, easy to service and capable of processing up to
600 coins per minute. Consumers feed loose change into the machines, which count the change and then dispense
vouchers or, in some cases, issue stored value cards or e-certificates, at the consumer’s election. Each voucher
lists the dollar value of coins counted, less our transaction fee, which is typically 8.9% of the value of each
transaction. There is no transaction fee to the consumer when a stored value card or e-certificate is issued. Our
patented, proprietary technology helps us to maintain high up-time, remotely monitor performance and minimize
the potential for losses associated with voucher fraud.
Since we pay a percentage of our transaction fees to our retailers, our coin services benefit our retailers by
providing an additional source of revenue. In addition, third-party studies show that our coin services increase foot
traffic in our retailers’ stores and that approximately 46% of our customers spend all or a part of the proceeds of their
vouchers in the store. Our leading coin services retailers include The Kroger Co. and Supervalu, Inc. supermarket
chains, and our leading stored value cards or e-certificate offerings are Starbucks, Amazon.com and iTunes.
Entertainment services
We are the leading owner and operator of skill-crane and bulk vending machines in the United States. We
estimate that the market for our entertainment services is approximately $1.1 billion annually in the United States.
As with our coin services, we own and service all of our entertainment services machines, providing a
convenient and trouble-free service to retailers. Our entertainment services machines consist primarily of skill-
crane machines, bulk vending and kiddie rides, which are installed in more than 35,000 retail locations, totaling
more than 300,000 pieces of equipment. The majority of our entertainment services revenue is derived from skill-
crane machines that dispense plush toys, novelties and other items. For each play, customers maneuver the skill-
crane into position and attempt to retrieve the desired item in the machine’s enclosed display area before play is
ended. We utilize displays of quality merchandise, new product introductions and other merchandising
techniques to attract new and repeat customers. Our leading entertainment services partners include Wal-Mart
Stores, Inc. and Kmart, a subsidiary of Sears Holdings Corporation.
Since we pay our retailers a portion of the fee per play, our entertainment services machines, like our coin-
counting machines, provide an additional revenue stream for our retailers. In addition, our entertainment services
machines add an element of entertainment for consumers.
E-payment services
We offer e-payment services, including activating and reloading value on prepaid wireless accounts, selling
stored value cards, loading and reloading prepaid debit cards and prepaid phone cards, prepaid phones and
providing payroll card services such as balance inquiry and wage statement printing. In addition, subsequent to
the acquisition of CMT, we provide money transfer services in 142 countries. We believe these and other
e-payment services represent a significant growth opportunity for us. We offer various e-payment services
through 14,000 point-of-sale terminals, 400 stand-alone e-payment kiosks and 8,200 e-payment-enabled
coin-counting machines in supermarkets, drugstores, universities, shopping malls and convenience stores. As
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