TiVo 2008 Annual Report Download - page 18

Table of Contents
We believe that the principal competitive factors in the DVR market are brand recognition and awareness, functionality, ease of use, availability, and
pricing. We currently see two primary categories of DVR competitors: DVRs offered by telecommunications, cable and satellite operators and DVRs offered
by consumer electronics and software companies. For more information on our competitors, see our discussion on competition in Item 1. "Business."
Licensing Competitors. Our licensing revenues depend both upon 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. We face competition
from companies such as Microsoft, Gemstar, OpenTV, NDS, DIRECTV, EchoStar, Pace, Digeo, Motorola, Cisco, 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, internet, Video on Demand, 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 support or embrace the TiVo technology due to a belief that our technology's
ability to fast-forward through commercials will reduce the effectiveness of general television advertising.
We depend on a limited number of third parties to manufacture, distribute, and supply critical components, assemblies, and services for the
DVRs that enable the TiVo service. We may be unable to operate our business if these parties do not perform their obligations.
The TiVo service is enabled through the use of a DVR manufactured for us by a third-party contract manufacturer. In addition, we rely on sole suppliers
for a number of key components for the DVRs. We also rely on third parties with whom we outsource supply-chain activities related to inventory
warehousing, order fulfillment, distribution, and other direct sales logistics. We cannot be sure that these parties will perform their obligations as expected or
that any revenue, cost savings, or other benefits will be derived from the efforts of these parties. If any of these parties breaches or terminates their agreement
with us or otherwise fails to perform their obligations in a timely manner, we may be delayed or prevented from commercializing our products and services.
Because our relationships with these parties are non-exclusive, they may also support products and services that compete directly with us, or offer similar or
greater support to our competitors. Any of these events could require us to undertake unforeseen additional responsibilities or devote additional resources to
commercialize our products and services. This outcome would harm our ability to compete effectively and achieve increased market acceptance and brand
recognition.
In addition, we face the following risks in relying on these third parties:
If our manufacturing relationships are not successful, we may be unable to satisfy demand for our products and services. We manufacture DVRs that
enable the TiVo service through a third-party contract manufacturer. Delays, product shortages, and other problems could impair our retail distribution and
brand image and make it difficult for us to attract subscriptions. In addition, the loss of a manufacturer would require us to identify and contract with
alternative sources of manufacturing, which we may be unable to do or which could prove time-consuming and expensive.
We are dependent on sole suppliers for several key components and services. If these suppliers fail to perform their obligations, we may be unable to
find alternative suppliers or deliver our products and services to our customers on time. We currently rely on sole suppliers for a number of the key
components used in the TiVo-enabled DVRs and the TiVo service. For example, Broadcom is the sole supplier of the system controller for our DVR.
We do not currently have a long-term written supply agreement with Broadcom. Therefore, Broadcom may not be contractually obligated to supply us
with these key components on a long-term basis or at all. In addition to the above, we have several sole suppliers for key components of our products
currently under development, although it is currently anticipated that those will be provided under signed supply agreements.
Tribune is the sole supplier of the program guide data for the TiVo service. Tribune Media Services, Inc., or Tribune, is the current sole supplier of
program guide data for the TiVo service. Our current Television Listings Data Agreement with Tribune became effective on May 14, 2007 and has an initial
term of five years and with TiVo having the right to renew the agreement for four additional years. The agreement provides each party with a termination
right if the other party becomes controlled by certain third parties. Tribune Media Services, along with their parent company, Tribune Co., filed Chapter 11
bankruptcy on December 8, 2008. As a result, Tribune or Tribune Media Services, Inc. could reject the Television Listing Data Agreement and we would be
left will an unsecured claim in Tribune's bankruptcy. If Tribune
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