Yahoo 2012 Annual Report Download - page 29

products and technologies that are more compatible with alternative devices and platforms, or to earn adequate
margins on revenues derived from these products and services, we will fail to capture opportunities as consumers
and advertisers transition to a dynamic, multi-screen environment.
A key to our strategy is focusing on mobile devices. If we are unable to generate and grow our revenue on mobile
or other alternative devices or incur excessive expenses attempting to attract such revenue, our financial
condition and operating results could be harmed. If monetization stays at current levels and we see an increase in
mobile search queries and deceleration of the growth of or decrease in desktop queries, our results may be
adversely impacted.
To the extent that an access provider or device manufacturer enters into a distribution arrangement with one of
our competitors, or as our competitors design, develop, or acquire control of alternative connected devices or
their operating systems, we face an increased risk that our users will favor the services or properties of that
competitor. The manufacturer or access provider might promote a competitor’s services or might impair users’
access to our services by blocking access through their devices or by not making our services available in a
readily-discoverable manner on their devices. If competitive distributors impair access to our services, or if they
simply are more successful than our distributors in developing compelling products that attract and retain users or
advertisers, then our revenue could decline.
In the future, as new methods for accessing the Internet and our services become available, including through
alternative devices, we may need to enter into amended distribution agreements with existing access providers,
distributors, and manufacturers to cover the new devices and new arrangements. We face a risk that existing and
potential new access providers, distributors, and manufacturers may decide not to offer distribution of our
services on reasonable terms, or at all.
If we are unable to license or acquire compelling content and services at reasonable cost or if we do not
develop or commission compelling content of our own, the number of users of our services may not grow as
anticipated, or may decline, or users’ level of engagement with our services may decline, all or any of which
could harm our operating results.
Our future success depends in part on our ability to aggregate compelling content and deliver that content
through our online properties. We license from third parties much of the content and services on our online
properties, such as news items, stock quotes, weather reports, music videos, music radio, and maps. We believe
that users will increasingly demand high-quality content and services, including music videos, film clips, news
footage, and special productions. We may need to make substantial payments to third parties from whom we
license or acquire such content or services. Our ability to maintain and build relationships with such third-party
providers is critical to our success. In addition, as new methods for accessing the Internet become available,
including through alternative devices, we may need to enter into amended agreements with existing third-party
providers to cover the new devices. We may be unable to enter into new, or preserve existing, relationships with
the third-parties whose content or services we seek to obtain. In addition, as competition for compelling content
increases both domestically and internationally, our third-party providers may increase the prices at which they
offer their content and services to us, and potential providers may not offer their content or services to us at all,
or may offer them on terms that are not agreeable to us. An increase in the prices charged to us by third-party
providers could harm our operating results and financial condition. Further, because many of our content and
services licenses with third parties are non-exclusive, other media providers may be able to offer similar or
identical content. This increases the importance of our ability to deliver compelling editorial content and
personalization of this content for users in order to differentiate Yahoo! from other businesses. If we are unable
to license or acquire compelling content at reasonable cost, if other companies distribute content or services that
are similar to or the same as that provided by us, or if we do not develop or commission compelling editorial
content or personalization services, the number of users of our services may not grow as anticipated, or may
decline, or users’ level of engagement with our services may decline, all or any of which could harm our
operating results.
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