America Online 2010 Annual Report Download - page 21

Table of Contents
former subscribers and increase the number and engagement of other consumers on AOL Properties in order to successfully execute our business model.
There can be no assurance that we will be able to maintain the engagement of former subscribers or attract and engage sufficient other consumers to sustain or
increase historical engagement levels on AOL Properties. If we cannot do so, our business could be adversely affected.
Even if we are able to attract new consumers to, and generate increased engagement on, AOL Properties, we may not be able to maintain or increase our
advertising revenues associated with AOL Properties.
Different AOL Properties generate varying volumes of advertising that are sold at a range of prices. To the extent our consumers are active on AOL
Properties where we do not deliver a high volume of advertisements or high-priced advertisements, we are limited in our ability to generate advertising
revenues from such activity. Accordingly, if we are not able to attract and engage consumers to those AOL Properties that typically generate higher-priced
and higher-volume advertising, our advertising revenues may not increase even if the aggregate number of consumers on AOL Properties increases and their
aggregate engagement increases.
If we are unable to develop our products and services to address the patterns of how consumers access information and communicate on the Internet
through media such as social networking, our business could be adversely impacted.
As the Internet continues to grow and evolve, consumers are also changing the way they access and use the Internet. Consumers are increasingly using
social networking sites to communicate and to acquire and disseminate information rather than through traditional means of instant messaging, electronic mail
and portals. As consumers migrate towards social networks, we seek to build social elements into our content, products and services in order to make them
available on social networks and to attract and engage consumers on our properties. There is no guarantee that we will be able to successfully integrate our
content with such social networking trends. In addition, companies are increasing marketing and advertising on social networks, and if we are unable to
penetrate this market it could adversely affect our business.
Any restructuring actions that we undertake may not deliver the expected results and these actions may adversely affect our business operations.
We may undertake various restructuring activities in an effort to better align our organizational structure and costs with our strategy. These restructuring
activities may not deliver the expected results as there is no guarantee that we will recognize the benefits of these restructuring activities. In connection with
such activities, we may experience a disruption in our ability to perform functions critical to our strategy. While we strive to reduce the negative impact of
such restructuring actions, such actions could result in significant disruptions to our operations, including adversely affecting the timeliness of product
releases, the successful implementation and completion of our strategic objectives and the results of our operations.
We face intense competition in all aspects of our business.
The Internet industry, with its low barriers to entry and rapidly shifting consumer tastes, is dynamic and rapidly evolving. New and popular
competitors, such as social networking sites, online advertising businesses and providers of communication tools, quickly emerge. Competition among
companies offering content, advertising products, technology and services, demand-side platforms and aggregators of third-party products and services, is
intense. Competitors are providing more free products and services, for example, data storage, that may require substantial expenditures by us in order to offer
comparable products and services. Internationally, we face intense competition from both global and local competitors. In addition, competition may generally
cause us to incur unanticipated costs associated with research and product development.
The competition faced by our subscription access service, especially from broadband Internet access providers, could cause the number of our
subscribers to decline at a faster rate than experienced in the past.
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