Redbox 2013 Annual Report Download - page 10

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1
PART I
ITEM 1. BUSINESS
Overview
We were incorporated in Delaware on October 12, 1993 and are a leading provider of automated retail solutions that offer
convenient products and services that benefit consumers and drive incremental retail traffic and revenue for retailers. In 2013,
we changed our name from Coinstar, Inc. to Outerwall Inc. Our core offerings in automated retail include our Redbox business,
where consumers can rent or purchase movies and video games from self-service kiosks (“Redbox” segment), and our Coinstar
business, where consumers can convert their coin to cash or stored value products at self-service coin counting kiosks
(“Coinstar” segment). Our New Ventures business (“New Ventures” segment) is focused on identifying, evaluating, building or
acquiring, and developing innovative self-service concepts in the marketplace.
Summary of Recent Divestitures and Acquisitions
The following is a summary of the acquisitions and divestitures that we made during the last five years:
Year Transaction
2009 • We increased our ownership percentage of Redbox from 51.0% to 100.0% in the first quarter.
• We sold our subsidiaries comprising our entertainment business in the third quarter.
2010 • We sold our subsidiaries comprising our electronic payment business in the second quarter.
2011 • We sold our subsidiaries comprising our money transfer business in the second quarter.
2012 • We entered into a joint venture, Redbox InstantTM by Verizon, with Verizon Ventures IV LLC (“Verizon”) in the
first quarter.
• We acquired NCR Corporation’s self-service entertainment DVD kiosk business in the second quarter.
2013 • We sold certain kiosks previously acquired from NCR through the sale of a previously consolidated entity in the
second quarter.
• We acquired ecoATM, Inc. ("ecoATM") in the third quarter.
• We reclassified four concepts previously included in our New Ventures operating segment as discontinued
operations, Orango™, Rubi™, Crisp Market™, and Star Studio™, in the fourth quarter.
Additional information can be found in our Notes to Consolidated Financial Statements.
Business Segments
Redbox
Within our Redbox segment, we operate approximately 44,000 Redbox kiosks, in 36,400 locations, where consumers can rent
or purchase movies and video games. Our Redbox kiosks are available in every U.S. state, Puerto Rico, and Canada, and are
installed primarily at leading grocery stores, mass retailers, drug stores, restaurants and convenience stores including
Walgreens, Walmart, Kroger and 7-Eleven. Our Redbox kiosks supply the functionality of a traditional video rental store, yet
typically occupy an area of less than ten square feet. Consumers use a touch screen to select their titles, swipe a valid credit or
debit card, and receive their movie(s) or video game(s). The process is designed to be fast, efficient and fully automated. We
have also entered a joint venture, Redbox Instant by Verizon, to provide consumers a nationwide “over-the-top” video
distribution service that offers rental of physical DVDs and Blu-ray Discs™ from our kiosks. Revenue attributable to the rental
of DVDs and Blu-ray Discs is recorded within our Redbox segment. Redbox’s ownership interest in the joint venture is
accounted for using the equity method of accounting. See Note 6: Equity Method Investments and Related Party Transactions
in our Notes to Consolidated Financial Statements for additional details.
Typically, the daily rental fee at a Redbox kiosk is a flat fee plus tax for each disc and, if the consumer chooses to keep the
movie or video game for additional days, the consumer is charged for each additional day at the same daily rental fee. Our
consumers can rent a movie or video game from one location and return their rental to any of our Redbox locations.
Additionally, our consumers may reserve a movie or video game online or via a smart phone application and pick it up at the
selected Redbox location.