Redbox 2012 Annual Report Download - page 19

• other retailers like Walmart and other chain stores selling DVDs and video games;
• other forms of video game rental providers, like GameFly;
• other ticket distributors, like TicketMaster;
• noncommercial sources like libraries; and;
• general competition from other forms of entertainment such as movie theaters, television and sporting
events.
Our Coin 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 kiosks with competitor machines and operate such kiosks themselves or
through a third party, or not carry coin-counting kiosks 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, 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 kiosks could be significantly reduced. See the risk factor below
entitled, “—Events outside of our control, including the current economic environment, has negatively affected,
and could continue to negatively affect, consumers’ use of our products and services.”
Our business can be adversely affected by severe weather, natural disasters and other events beyond our
control, such as earthquakes, fires, power failures, telecommunication loss and terrorist attacks.
A catastrophic event that results in the destruction or disruption of any of our critical business or information
technology systems could harm our ability to conduct normal business operations and our operating results. For
example, our corporate headquarters and certain critical business operations are located in the Bellevue,
Washington area, which is near major earthquake faults. While we have taken steps to protect the security of
critical business processes and systems and have established certain back-up systems and disaster recovery
procedures, any disruptions, whether due to inadequate back-up or disaster recovery planning, failures of
information technology systems, interruptions in the communications network, or other factors, could seriously
harm our business, financial condition and results of operations.
In addition, our operational and financial performance is a direct reflection of consumer use of and the ability to
operate and service our kiosks used in our business. Severe weather, natural disasters and other events beyond
our control can, for extended periods of time, significantly reduce consumer use of our products and services as
well as interrupt the ability of our employees and third-party providers to operate and service our kiosks. For
example, in October 2012, Hurricane Sandy caused disruptions to our normal operations in the impacted region
for an extended period of time. In some cases, severe weather, natural disasters and other events beyond our
control may result in extensive damage to, or destruction of, our infrastructure and equipment, including loss of
kiosks used to provide our products and services, which losses may not be fully covered by insurance.
Our business involves the movement of large sums of money, and, as a result, our business is particularly
dependent on our ability to process and settle transactions accurately and efficiently.
Our business involves the movement of large sums of money. Our Coin business requires the effective transfer of
large sums of money between many different locations. Because we are responsible for large sums of money that
often are substantially greater than the revenues generated, the success of our business particularly depends upon
the efficient, secure, and error-free handling of the money. We rely on the ability of our employees and our
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