TiVo 2006 Annual Report Download - page 14

Table of Contents
AT&T's HomeZone and Dish Network service, or on their own, such as Verizon FIOS service. These products integrate DVR functionality with
other advanced features such as Video-On-Demand and the remote scheduling of recordings.
U.S. cable operators are currently deploying server-based Video on Demand (VOD) technology from SeaChange, Concurrent, and others, which could
potentially evolve into competition. Additionally, we are aware of at least one U.S. cable operator, Cablevision, Inc., which has announced plans to test
server-based DVR technology. Server-based VOD and DVR technology rely on content servers located within the cable operator's central head-end that
stream video across the network to a digital cable set-top box within the consumer's home. Cable operators can use server-based VOD and DVR technology to
deliver movies, television shows, and other content to consumers. Consumers can watch this programming on demand, with VCR-like pausing and rewinding
capabilities. Operators can charge consumers for access to VOD content on a per-transaction or monthly subscription basis, or can offer content without
charge. To the extent that cable operators offer regular television programming as part of their server-based VOD offerings and DVR technology, consumers
have an alternate means of watching time-shifted shows besides DVRs.
Consumer Electronics Competitors. We compete against several types of products with basic time-slot based recordings or enhanced electronic
program guide (EPG) based DVR functionality offered by consumer electronics companies. These products record an analog television signal output from a
cable or satellite set-top box, analog cable feed, or antenna.
• Standalone DVRs and hard drive-equipped DVD recorders, TVs and game consoles: Several consumer electronics companies, including
Panasonic and Sony, produce DVD recorders with hard drives. In addition, several consumer electronics companies, including RCA and Toshiba,
offer TVs that can connect to external hard drives to allow for recording of television programming. Some of these TVs offer CableCARD
functionality, allowing the receipt of encrypted digital cable programming without the need for a digital cable set-top box. In general, these hard-
drive equipped DVD recorders and TVs do not require DVR service fees and offer basic DVR functionality. In the future, companies such as
Sony and Microsoft could incorporate DVR technology into their video game consoles, and Microsoft has now enabled the digital delivery of
video programming over the internet to its game console.
• Personal computers with DVR software: Microsoft's Windows XP Media Center and Vista Editions contain expanded digital media features
including enhanced DVR functionality. PC manufacturers including Dell and Hewlett Packard offer PCs running this Microsoft software and
other PC manufacturers such as Apple Computer may offer similar functionality in the future. Replay TV now offers its DVR service as a
software program which can be loaded onto a personal computer similar to products such as MythTV and SnapStream.
Licensing Competitors. Our licensing revenues depend upon both our ability to successfully negotiate licensing agreements with our consumer
electronics and service provider customers and, in turn, upon our customers' successful commercialization of their underlying products. In addition, we face
competition from companies such as Microsoft, Gemstar, OpenTV, NDS, D&M Holdings, Digeo, Gotuit, and 2Wire, which have created competing digital
video recording technologies. Such companies may offer more economically attractive licensing agreements to service providers and manufacturers of DVRs.
Established Competition for Advertising Budgets. Digital video recorder services, in general, and TiVo, specifically, compete with other advertising
media such as print, radio, television, Video on Demand, internet, and other emerging advertising platforms for a share of advertisers' total advertising
budgets. If advertisers do not perceive digital video recording services, in general, and TiVo specifically, as an effective advertising medium, they may be
reluctant to advertise on the TiVo service. In addition, advertisers may not
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