NetFlix 2004 Annual Report Download - page 53

parties from acquiring domain names that are similar to, infringe upon or otherwise decrease the value of our
trademarks and other proprietary rights.
Because our business is accessed over the Internet, if the Internet infrastructure is not developed or
maintained, we will lose subscribers.
The Internet may not become a viable commercial marketplace for many potential subscribers due to
inadequate development of network infrastructure and enabling technologies that address consumer concerns
about:
• network performance;
• security;
• reliability;
• speed of access;
• Ease of use; and
• bandwidth availability.
The Internet has experienced a variety of outages and delays as a result of damage to portions of its
infrastructure, and it could face outages and delays in the future. These outages and delays could frustrate public
use of the Internet, including use of our Web site. In addition, the Internet could lose its viability due to delays in
the development or adoption of new standards and protocols to handle increased levels of activity or due to
governmental regulation.
If we become subject to liability for the Internet content that we publish or upload from our users, our
results of operations would be affected adversely.
As a publisher of online content, we face potential liability for negligence, copyright, patent or trademark
infringement or other claims based on the nature and content of materials that we publish or distribute.
We also may face potential liability for content uploaded from our users in connection with our community-
related content or movie reviews. If we become liable, then our business may suffer. Litigation to defend these
claims could be costly and harm our results of operations. We cannot assure you that we are adequately insured
to cover claims of these types or to indemnify us for all liability that may be imposed on us.
If government regulation of the Internet or other areas of our business changes or if consumer attitudes
toward use of the Internet change, we may need to change the manner in which we conduct our business,
or incur greater operating expenses.
The adoption or modification of laws or regulations relating to the Internet or other areas of our business
could limit or otherwise adversely affect the manner in which we currently conduct our business. In addition, the
growth and development of the market for online commerce may lead to more stringent consumer protection
laws, which may impose additional burdens on us. If we are required to comply with new regulations or
legislation or new interpretations of existing regulations or legislation, this compliance could cause us to incur
additional expenses or alter our business model.
The manner in which Internet and other legislation may be interpreted and enforced cannot be precisely
determined and may subject either us or our customers to potential liability, which in turn could have an adverse
effect on our business, results of operations and financial condition. The adoption of any laws or regulations that
adversely affect the popularity or growth in use of the Internet could decrease the demand for our subscription
service and increase our cost of doing business.
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