43
Annual Report -
2013
-
Vivendi
Group Profile | Businesses | Litigation |
Risk Factors
1
Risks Associated with the Group’s Operations
Risks Associated with Piracy and Counterfeiting
The development of computer and electronic equipment and the decline
in its cost, as well as technological advances, facilitate the unauthorized
reproduction of music and audiovisual works. At the same time,
increased access to high-speed Internet connections has enabled, and
continues to enable, computer, smartphone and tablet users to share
such works more easily (and in greater number), without the copyright
holder’s authorization and without paying royalties.
Vivendi is dependent on the decisions of public or administrative
authorities and their determination to find effective means to combat
piracy. Persistent difficulties in passing and applying suitable legislation
or in enforcing court rulings, particularly in certain regions of the world
where piracy is endemic, constitute a threat to Vivendi’s businesses,
which depend heavily on the intellectual property rights owned by or
licensed to the Group.
Section 2 of this chapter contains a detailed analysis of piracy issues
and measures taken by each of the Group’s business units to combat it.
Risks Associated with Infrastructure, Service Platforms
and Data Protection
The infrastructure of some of the Group’s operating units may be
affected by damage or interruption to the service provided to customers
or subscribers as a result of hardware or software failure, human error,
service provider failure, equipment sabotage or hacking (physical or
electronic) into operating systems or critical software, and this may
have an impact on their business activities.
The security of infrastructures, information systems and service
platforms is an ongoing concern at Vivendi, as is the safeguarding of
access to, privacy, and protection of transmitted personal data.
Risks Associated with Intensified Commercial and Technical
Competition
Vivendi’s businesses face strong competition, which may intensify in
the near future due to the trend towards industry concentration among
existing companies, or the entry of new competitors in the relevant
markets. Growing competition exerts considerable pressure on Vivendi,
which may lead to a loss in market share if Vivendi is no longer able
to supply quality products and services and innovative offerings at
competitive prices.
In particular, Vivendi’s development depends on its ability to adapt its
offerings, products and services to the requirements of increasingly
demanding customers, in increasingly innovative markets, and
in industries distinguished by rapid technological developments.
The need for Vivendi to respond to such requirements and advances, or
even in some cases to anticipate them, may lead to the Group making
substantial investment without any assurance that the new products,
offerings and services it has developed will not become obsolete within
a short period of time.
Risks Associated with the Lack of Commercial Success
of Recorded Music, Films and Content Produced, Published
or Distributed by the Group
The production and distribution of content represent a substantial
proportion of Vivendi’s revenues. Their commercial success is dependent
upon the public’s response, which may not always be predicted, and on
the existence and success of competing offers and general economic
circumstances.
Finally, when these operations are based on content provided by third
parties, no assurance can be given that such third parties will always
agree to transfer their rights for various communication media under
financial and commercial terms acceptable to Vivendi.
Risks Associated with Operations Conducted in Various
Countries
Vivendi conducts its business in various markets in over 70 countries.
The main risks associated with conducting its business internationally
are as follows:
the local economic and political situation;
exchange rate fluctuations;
restrictions on capital repatriation;
unexpected changes in the regulatory environment;
the various tax systems, which may have an adverse effect on
Vivendi’s operating results or cash flow, and in particular regulations
relating to transfer costs and the withholding tax on the repatriation
of funds; and
tariff barriers, customs duties, export controls and other trade
barriers.
Vivendi may not be able to protect itself against such risks.
Potential Health Risks Posed by Networks, Mobile Phones
or Wi-Fi Terminals
Over the past few years, concerns have been expressed on an
international level as to the potential risks posed to human health by
electromagnetic radiation from mobile phones and mobile transmission
sites. Vivendi is in compliance with current regulations and is closely
following the results of scientific studies concerning the health
consequences of electromagnetic waves.
Vivendi is not currently aware of any tangible evidence that
demonstrates the existence of health risks.
Nevertheless, the perception of such risks by the public may have a
material negative impact on Vivendi’s results or financial position.
