Redbox 2012 Annual Report Download - page 14

opportunity also may have its own unique risks related to operations, finances, intellectual property, technology,
legal and regulatory issues, corporate governance 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 certain new products and services, we will need to create new kiosks or
enhance the capabilities of our DVD and coin-counting 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 or profitable.
Defects, failures or security breaches in and inadequate upgrades of, or changes to, our operating systems
could harm our business.
The operation of our business depends on sophisticated software, hardware, computer networking and
communication services that may contain undetected errors or may be subject to failures or complications. These
errors, failures or complications may arise particularly when new, changed or enhanced products or services are
added. In the past, there have been limited delays and disruptions resulting from upgrading or improving these
operating systems. Future upgrades, improvements or changes that may be necessary to expand and maintain our
business could result in delays or disruptions or may not be timely or appropriately made, any of which could
seriously harm our operations.
Further, certain aspects of the operating systems relating to our business are provided by third parties, including
telecommunications. Accordingly, the effectiveness of these operating systems is, to a certain degree, dependent
on the actions and decisions of third parties over whom we may have limited control.
Failure to adequately comply with information security policies or to safeguard against breaches of such
policies could adversely affect our operations and could damage our business, reputation, financial
position and results of operations.
As our business expands to provide new products and services, such as Redbox Instant by Verizon, Redbox
Tickets, and Coin-to-Commerce, we are increasing the amount of consumer data that we collect, transfer and
retain as part of our business. These activities are subject to laws and regulations, as well as industry standards, in
the United States and other jurisdictions in which our products and services are available. These requirements,
which often differ materially and sometimes conflict among the many jurisdictions in which we operate, are
designed to protect the privacy of consumers’ personal information and to prevent that information from being
inappropriately used or disclosed. We maintain and review technical and operational safeguards designed to
protect this information and generally require third party vendors and others with whom we work to do so as
well. However, despite those safeguards, it is possible that hackers, employees acting contrary to our policies,
third-party agents or others could improperly access relevant systems or improperly obtain or disclose data about
our consumers, or that we may be determined not to be in compliance with applicable legal requirements and
industry standards for data security, such as the Payment Card Industry guidelines. A breach or purported breach
of relevant security policies that compromises consumer data or determination of non-compliance with
applicable legal requirements or industry standards for data security could expose us to regulatory enforcement
actions, card association or other monetary fines or sanctions, or contractual liabilities, limit our ability to
provide our products and services, subject us to legal action and related costs and damage our business
reputation, financial position, and results of operations.
Litigation, arbitration, mediation, regulatory actions, investigations or other legal proceedings could result
in material rulings, decisions, settlements, fines, penalties or publicity that could adversely affect our
business, financial condition and results of operations.
Our business has in the past been, and may in the future continue to be, party to class actions, regulatory actions,
investigations, arbitration, mediation and other legal proceedings. The outcome of such proceedings is often
difficult to assess or quantify. Plaintiffs, regulatory bodies or other parties may seek very large or indeterminate
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