TiVo 2006 Annual Report Download - page 5

Table of Contents
PART I
ITEM 1. BUSINESS
General Development of Business
TiVo is a leading provider of technology and services for digital video recorders ("DVR"). The subscription-based TiVo® service redefines home
entertainment by providing consumers with an easy way to record, watch, and control television and receive videos, pictures, and movies from cable,
broadcast, and broadband sources. TiVo offers such features as Season Pass recordings, WishList® searches, TiVoToGo transfers, TiVoCast content (which
includes premium content delivered from Amazon Unbox), TiVo KidZone, TiVo Online Scheduling, and TiVo Product Watch. As of January 31, 2007, there
were approximately 4.4 million subscriptions to the TiVo service. We distribute the TiVo service through consumer electronics retailers and through our on-
line store at TiVo.com. Additionally, we provide the TiVo service through agreements with leading television service providers such as satellite television
providers, including currently DIRECTV, and in the future cable television operators, such as Comcast and Cox, and digital subscriber line, DSL, providers
such as BellSouth and Earthlink. We also provide innovative marketing solutions for the television industry, including a unique platform for advertisers and
audience research measurement.
We currently derive revenues from three sources:
• Consumers. Our primary source of revenues is from consumers, who subscribe directly to the TiVo service and pay us monthly fees of up
to $19.95 per month. We also offer consumers the option to prepay for one to three years of TiVo service at prices ranging from $179 to
$399. We reach consumers in part through distribution relationships with major retailers, through our on-line store at TiVo.com, and in
the future, through marketing relationships with other third parties such as DSL providers like Earthlink and BellSouth.
• Television service providers. We also work with DIRECTV, a satellite television provider, who pays us recurring monthly fees in order
to offer the TiVo service to its existing TiVo subscribers. We receive fees for licensing and professional services from this and other
customers. Additionally, we expect to receive recurring monthly fees from cable television providers, Comcast and Cox in the future.
• Advertisers. We work directly with television advertisers and agencies to offer a variety of solutions for the television advertising market.
These include short- and long-form video advertising, audience research measurement, lead generation, and commerce. Some of our key
clients include Toyota Motors, General Motors, BMW, GE, CBS, Showtime, Warner Brothers, Sony, E-Trade, Sprint, Intel, Information
Resources, Inc., also known as IRI, and Nielsen.
We continue to be subject to a number of risks, including delays in product and service developments; competitive service offerings; lack of market
acceptance; and uncertainty of future profitability; dependence on third parties for manufacturing, marketing, and sales support; access to television
programming; intellectual property claims against us; and our ability to sustain and grow our subscription base. We conduct our operations through one
reportable segment. We anticipate that our business will continue to be seasonal and expect to generate a significant number of our annual new TiVo
subscriptions during and immediately after the holiday shopping season. To date, we have incurred significant losses and have had substantial negative cash
flow. During the fiscal year ended January 31, 2007, our cash used to fund our operations was $33.5 million and we had a net loss of $47.8 million. As of
January 31, 2007, we had an accumulated deficit of $741.8 million.
Industry Background
Consumer Demand is Driving Widespread Adoption of DVR Technology. We believe DVRs offer a compelling value proposition to consumers by
providing the means to effectively sort through, select from, and organize the growing volume of broadcast, cable, and broadband video
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