Redbox 2010 Annual Report Download - page 12

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19.6%, 13.7%, and 10.6% of our consolidated revenue from continuing operations, respectively, during 2010.
Although we have had, and expect to continue to have, a successful relationship with these retailers, changes to
these relationships will continue to occur both in the long and short-term, some of which could adversely affect
our business and reputation. For example, our Coin and DVD relationship with Walmart is governed by contracts
that provide either party the right to terminate the contracts in their entirety, or as to any store serviced by the
contracts, with or without cause, on 90 days’ notice. Cancellation, adverse renegotiation of or other changes to
these relationships could seriously harm our business and reputation.
There are many risks related to our DVD Services business that may negatively impact our business.
The home video industry is highly competitive with many factors affecting our ability to profitably manage our
DVD Services business. We have invested, and plan to continue to invest, substantially to establish and maintain
our nationwide infrastructure of DVD kiosks. The home video distribution market is rapidly evolving as newer
technologies and distribution channels compete for market share. There is no assurance that the DVD kiosk
channel will maintain or achieve additional market share over the long-term, and if it does not, our business,
operating results and financial condition will be materially and adversely affected. Some of the risks that could
negatively impact our participation in this industry include:
• Changes in consumer content delivery preferences, including increased use of personal video recorders
(e.g., a DVR or TiVo), pay-per-view delivered by cable or satellite providers and similar technologies,
digital downloads, online streaming, portable devices (e.g., iPhones), and other mediums, video on
demand, subscription video on demand, disposable or download-to-burn DVDs, DVDs with enhanced
picture or sound quality (e.g. Blu-ray or 3-D), or less demand for high volume of new movie content
due to such things as larger home DVD and downloaded movie libraries.
• Increased availability of digital movie content inventory through personal video recorders,
pay-per-view delivered by cable or satellite providers and similar technologies, online streaming,
digital downloads, portable devices, digital lockers, 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),
bonus content or other features on certain sell-through DVDs that are not included on DVDs made
available for rent, increased focus on digital sales, or movie content failing to appeal to consumers’
tastes.
• The risks described below in “—Our inability to receive delivery of DVDs on the date of their initial
release to the general public, or shortly thereafter, for home entertainment viewing could adversely
affect our DVD Services business” and “—If we do not manage our DVD inventory effectively, our
business, financial condition and results of operations could be materially and adversely affected.”
• Decreased costs related to purchasing or receipt of movie content, including less expensive DVDs,
more aggressive competitor pricing strategies and piracy.
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.
Our inability to receive delivery of DVDs on the date of their initial release to the general public, or shortly
thereafter, for home entertainment viewing could adversely affect our DVD Services business.
Traditionally, businesses that rent movies in physical formats, such as DVDs, have enjoyed a competitive
advantage over other movie distribution rental channels because of earlier timing of the distribution window for
physical formats by movie studios. After the initial theatrical release of a movie, the major studios generally have
made their movies available on physical formats for a 30- to 45-day release window before release to other
movie distribution rental channels, such as pay-per view, video-on-demand, premium television, basic cable, and
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