Redbox 2008 Annual Report Download - page 9

• mail-delivery and online retailers like Netflix or Amazon,
• other retailers like Wal-Mart and other chain stores selling DVDs,
• pay-per-view/cable/satellite and similar movie content providers like Comcast or HBO,
• other forms of movie content providers like Internet sites including iTunes, Hulu or Google, and
• noncommercial sources like libraries;
as well as general competition from other forms of entertainment such as movie theaters, television, sporting
events and video gaming.
• Changes in the sequential timing of when movie content is made available to the various movie content
distribution channels. Businesses that rent movies in physical formats such as DVDs currently enjoy a
competitive advantage over other movie distribution rental channels because of the early timing of the
distribution window for physical formats by movie studios. After the initial theatrical release of a movie, the
movie studios’ current practice is generally to make their movies available on physical formats for a 30 to
45-day release window before release to other movie distribution rental channels. However, movie studios
could change, including shortening or discontinuing altogether, movie distribution windows, including
simultaneous video-on-demand/computer downloads and DVD releases. For example, there have been
recent announcements that certain movie studios will make new release titles available on video-on-demand
or for online purchase on the same date as the DVD release. Studios also could attempt to lengthen the time
that certain video retailers must wait before renting movies following their release on physical format (e.g.,
waiting at least 45 days following DVD release before making certain movies available for rental as recently
proposed by Universal Studios).
• Changes in consumer content delivery preferences, including DVDs with higher picture/sound quality (e.g.,
Blu-ray), disposable or download-to-burn DVDs, more use of personal video recorders (e.g., TiVo),
pay-per-view/cable/satellite and similar technologies, computer downloads, portable devices, and other
mediums, and less demand for a high volume of new movie content due to such things as larger home DVD
and downloaded movie libraries.
• Increased availability of movie content inventory through personal video recorders, pay-per-view/cable/
satellite and similar technologies, computer downloads, portable devices, and other mediums.
• Decreased quantity and quality of movie content availability for DVD distribution due to:
• general-industry-related factors, including financial disruptions, labor conflicts (e.g., actor/writer strikes)
or movie content failing to appeal to consumers’ tastes, and
• distribution-related factors, including restrictions relating to the number of DVD selections made
available to DVD kiosks and the manner in which DVD kiosks may distribute movies, i.e., only through
rental (as recently proposed by Universal Studios).
• Decreased costs related to purchasing or receipt of movie content, including less expensive DVDs, including
more aggressive competitor pricing strategies and piracy, and cheaper use of pay-per-view/cable/satellite
and similar technologies.
In addition, although our subsidiary Redbox is majority owned and we have the right to appoint and have
appointed three of the five representatives to Redbox’s board of managers, prior to the expected February 26, 2009
closing of the GAM transaction described above, under the Redbox formulation documents, GAM has the right in
some circumstances to require the sale of Redbox, including Coinstar’s sale of its equity. Accordingly, should the
closing not occur and should GAM take specific actions, Coinstar could be required to sell all of its interests in
Redbox. Adverse developments relating to any of these risks, as well as others relating to our participation in the
home video industry, could significantly affect our business, financial condition and operating results.
7