Redbox 2014 Annual Report Download - page 30

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following discussion and analysis should be read in conjunction with our consolidated financial statements and related
notes thereto included elsewhere in this Annual Report. Except for the consolidated historical information, the following
discussion contains forward-looking statements. Actual results could differ from those projected in the forward-looking
statements. Please refer to “Special Note Regarding Forward-Looking Statements” and “Risk Factors” elsewhere in this
Annual Report.
Overview
We are a leading provider of automated retail solutions offering convenient products and services that benefit consumers and
drive incremental retail traffic and revenue for retailers. Our automated retail business model leverages technology
advancements that allow delivery of new and innovative consumer products in a compact, automated format. We believe this
model positions us to address retailers’ increasing need to provide more in less space driven by increased urbanization and
consumers’ increasing expectation of instant gratification. Our products and services can be found at approximately 67,000
kiosks in leading supermarkets, drug stores, mass merchants, financial institutions, convenience stores, malls and restaurants.
While we are focused on four consumer sectors, collectively our business segments and strategic investments currently operate
within five consumer sectors: Entertainment, Money, Electronics, Beauty & Consumer Packaged Goods, and Health.
Core Offerings
We have two core businesses:
• Our Redbox business segment (“Redbox”), where consumers can rent or purchase movies and video games from self-
service kiosks is focused on the entertainment consumer sector.
• Our Coinstar business segment (“Coinstar”) is focused on the money consumer sector and provides self-service kiosks
where consumers can convert their coins to cash and convert coins and paper bills to stored value products. We also
offer self-service kiosks that exchange gift cards for cash under our Coinstar Exchange brand.
New Ventures
We identify, evaluate, build or acquire and develop innovative new self-service concepts in the automated retail space in our
New Ventures business segment (“New Ventures”).
In the Electronics sector we acquired and continue to build the ecoATM business which provides an automated self-service
kiosk where consumers can recycle mobile devices for cash and generates revenue through the sale of devices collected at our
kiosks to third parties. We began reporting the results of this business in our New Ventures segment subsequent to its
acquisition in the third quarter of 2013 and ended 2014 with approximately 1,890 kiosks in service. A self-service kiosk concept
we are currently exploring in the marketplace is our consumer product sampling concept SAMPLEit, which is in the Beauty
and Consumer Packaged Goods sector. Beginning in the first quarter of 2015, we anticipate reporting ecoATM results as a
separate segment.
New Ventures concepts and ecoATM are regularly assessed to determine whether continued funding or other alternatives are
appropriate.
Strategic Investments and Joint Venture
On occasion, we make strategic investments in external companies that provide automated self-service kiosk solutions. For
example, in the Health sector we have invested in SoloHealth, Inc. Additionally, we held an equity interest in ecoATM prior to
acquisition in the third quarter of 2013. On October 20, 2014, Redbox withdrew as a member of Redbox Instant by Verizon,
(the "Joint Venture") a joint venture between Redbox and Verizon Ventures IV LLC ("Verizon").
See Note 5: Equity Method Investments and Related Party Transactions in our Notes to Consolidated Financial Statements for
more information about our strategic investments.