Classmates.com 2011 Annual Report Download - page 18

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Table of Contents
Online Nostalgia Services
As consumers continue to spend more time and money online, the competition for their time and engagement has continued to intensify.
Consumers have a great number of options for online content and entertainment, including, by way of example, games, websites offering news
and current events, movies, television shows, videos, information about any and virtually every topic, and the opportunity to communicate,
socialize and interact with acquaintances and others. Certain aspects of the value proposition of our online nostalgia services compete with major
social networking websites such as Facebook and Google+ as well as Internet search engines such as Google. Many of our competitors offer
their content and services free of charge. We believe the primary competitive factors are price, features, functionality, size and engagement of
the user base, and quality and scope of the content. We believe we compete favorably with respect to certain of these areas, although many
competitors have a significant advantage over us in certain other areas.
Online Loyalty Marketing
The market for online loyalty marketing services is highly competitive, and we expect competition to significantly increase in the future as
online loyalty marketing programs continue to grow in popularity. Our MyPoints online loyalty marketing business faces competition for
members from other online loyalty marketing programs as well as offline loyalty marketing programs that have a significant online presence,
such as those operated by credit card, airline and hotel companies. In addition, we also face competition for members from online providers of
discounted offerings and coupons, such as Groupon and LivingSocial. We believe the primary competitive factors in the online loyalty
marketing industry are the number, type and popularity of the participating merchants, the attractiveness of the rewards offered, the number of
points awarded for various actions, the ease and speed of earning rewards, and the ability to offer members a robust, user-friendly shopping
experience. We believe that we compete favorably in certain of these areas, although some of our competitors have an advantage over us in some
or all of these areas.
Internet Access Services
We compete with numerous providers of broadband services as well as other dial-up Internet access providers. Our principal competitors
for broadband services include, among others, local exchange carriers such as AT&T and Verizon, wireless and satellite service providers, and
cable service providers. Our principal dial-up Internet access competitors include established online service and content providers, such as AOL
and MSN, and independent national Internet service providers, such as EarthLink and its PeoplePC subsidiary. We believe the primary
competitive factors in the Internet access industry are price, coverage area, features, scope of services, speed, and quality of service. Our dial-up
Internet access services do not compete favorably with broadband services with respect to certain of these factors, including, but not limited to,
speed and, in certain cases, price. When compared to other dial-up Internet access services, we believe our dial-up Internet access services
compete favorably.
Seasonality and Cyclicality
Revenues and operating results from our FTD segment typically exhibit seasonality. Revenues and operating results tend to be lower for the
quarter ending September 30 because none of the most popular floral and gift-giving holidays, which include Mother's Day in the U.S. and the
U.K., Valentine's Day, Christmas, Easter, and Thanksgiving, fall within that quarter. In addition, depending on the year, Easter and the U.K.
Mother's Day sometimes fall within the quarter ending March 31 and sometimes fall within the quarter ending June 30. Furthermore, depending
on the year, certain of the most popular and gift-giving holidays, such as Valentine's Day, may occur on a weekend or government holiday. As a
result of these variations, we believe that comparisons of the FTD segment's revenues
16