Redbox 2010 Annual Report Download - page 17

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the market and establish third-party relationships necessary to develop and commercialize such product and
service offerings. We are exploring new businesses to enter, and new products and services to offer. We may
invest in other companies offering automated retail services, such as our investment in ecoATM, a company that
provides an automated eCycling station that captures, tracks and recycles mobile devices, or we may seek to
grow businesses organically, such as our coffee kiosk pilot program, or we may seek to offer new products on
our current kiosks, such as video games on the DVD kiosk, or new Coin-to-Commerce products on our Coin
kiosk. Any new business opportunity may have its own unique risks related to operations, finances, intellectual
property, technology, legal and regulatory issues, or other challenges, for which we may have limited or no prior
experience. In addition, if we fail to timely establish or maintain relationships with significant retailers and
suppliers, we may not be able to provide our consumers with desirable new products and services. Further, in
order to develop and commercialize new products and services, we will need to enhance the capabilities of our
DVD and coin-counting kiosks or create new kiosks, as well as adapt our related networks and systems through
appropriate technological solutions, and establish market acceptance of such products or services. We cannot
assure you that new products or services that we provide will be successful.
Competitive pressures could seriously harm our business, financial condition and results of operations.
Our DVD Services business faces competition from many other providers, including those using other
distribution channels, having more experience, greater or more appealing inventory, better financing, and better
relationships with those in the movie industry, than we have, including:
• mail-delivery and online retailers, like Netflix or Amazon;
• traditional video retailers, like Blockbuster and other local and regional video stores, and other DVD
kiosk businesses, like NCR
• other retailers like Walmart and other chain stores selling DVDs;
• cable, satellite, and telecommunications providers, like Comcast;
• traditional movie programmers, like HBO or Showtime;
• other forms of movie content providers like Internet sites including iTunes, YouTube, Hulu or Google;
• noncommercial sources like libraries; and
• general competition from other forms of entertainment such as movie theaters, television, sporting
events and video gaming.
Our Coin Services business faces competition from supermarkets, banks and other companies that purchase and
operate coin-counting equipment from companies such as ScanCoin, Cummins-Allison Corporation and others.
Our retailers may choose to replace our coin-counting machines with competitor machines and operate such
machines themselves or through a third party, or not carry coin-counting machines at all deciding that floor space
could be used for other purposes. In addition, retailers, some of which have significantly more resources than we
do, may decide to enter the coin-counting market. Some banks and other competitors already provide coin-
counting free of charge or for an amount that yields very low margins or that may not generate a profit at all. An
expansion of the coin-counting services provided or a reduction in related fees charged by any of these
competitors or retailer decisions to use floor space for other than coin-counting, could materially and adversely
affect our business and results of operations.
In addition, the nature and extent of consolidations and bankruptcies, which often occur during or as a result of
economic downturns such as the recent crisis, in markets where we install our kiosks, particularly the
supermarket and other retailing industries, could adversely affect our operations, including our competitive
position, as the number of installations and potential retail users of our machines and equipment could be
significantly reduced. See the risk factor below entitled, “—Events outside of our control, including the current
economic environment, has and could continue to negatively affect consumers’ use of our products and services.”
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