TiVo 2013 Annual Report Download - page 18

Table of Contents
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The delivery of television programming, access to television signals by consumer electronics devices, and the collection of viewing
information from subscriptions via the TiVo service and a DVR represent a relatively new category in the television and home entertainment
industries. As such, it is difficult to predict what laws or regulations will govern our business. Changes in the regulatory climate, the
enactment of new legislation, or the expansion, contraction, enforcement or interpretation of existing laws or regulations could expose us to
additional costs and expenses and could adversely impact or require changes to our business. For example, legislation regarding customer
privacy or copyright could be enacted or expanded to apply to the TiVo service, which could adversely affect our business. Laws or regulations
could be interpreted to prevent or limit access to some or all television signals by certain consumer electronics devices, or impose limits on
the number of copies, the ability to transfer or move copies, or the length of time a consumer may retain copies of some or all types of
television programming. New or existing copyright laws could be applied to restrict the capture of television programming, which would
adversely affect our business. It is unknown whether existing laws and regulations will apply to the digital video recorder market. Therefore, it
is difficult to anticipate the impact of current or future laws and regulations on our business. We may have significant expenses associated
with staying appraised of local, state, federal, and international legislation and regulation of our business and in presenting TiVo's positions
on proposed laws and regulations.
The FCC has broad jurisdiction over the telecommunications and cable industries. The FCC could promulgate new regulations, or
interpret existing regulations in a manner that would cause us to incur significant compliance costs or force us to alter or eliminate certain
features or functionality of the TiVo products or services which may adversely affect our business. For example, the FCC could determine
that certain of our products fail to comply with regulations concerning matters such as electrical interference, copy protection, digital tuners, or
display of television programming based on rating systems. The FCC could also impose limits on the number of copies, the ability to
transfer or move copies, the length of time a consumer may retain copies, or the ability to access some or all types of television
programming. Each of which could reduce the desirability of our products and services or increase our compliance costs.
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We face significant technological challenges in our development of the TiVo service for our marketing partners and distributors as well as
challenges related to our dependence on certain third-party technology providers upon whom we depend to provide technology to us to allow
us to meet the agreed upon feature and technology requirements requested by our television service providers. For example, we rely on
access to and receipt of certain technologies from third-parties to enable Video on Demand and other content and search features on our
products. Additionally, we have engaged in intellectual property infringement suits with parties that we may otherwise rely on for the delivery
of necessary technologies for the enablement of key features of our products and as required by our contractual arrangements with our
television service provider customers. For example, we previously engaged in patent infringement litigation with Motorola and Microsoft, who
also license technology to us for use in our products to enable certain features. If we were unable to gain access to such technologies on
reasonable commercial terms, we may be unable to provide certain features and functionalities in our products. In such an event, our
products may not be competitive with similar products in the market and further we may not be able to comply with the contractual
arrangements with certain of our television service providers, and in either case our business would be harmed as a result. Our ability to
benefit from these agreements is dependent upon the mass deployment and adoption of our TiVo-branded advanced television solutions,
which may include TiVo-branded DVRs, third-party set-top boxes which run TiVo software, and DVR and non-DVR set-top boxes, among
other solutions, by the subscribers of our distribution customers and marketing partners. If we are unable to complete development of these
products in a timely and efficient manner to the satisfaction of our distribution customers, which includes hiring and retaining the necessary
number of engineers and software developers to develop each partner's customized solution, correctly estimating the amount of time and
resources that are necessary to develop each such solution, licensing necessary third-party technology (such as, for example, technology
which enables the display of VOD content from our partners), and enabling full-scale deployment of our TiVo-branded advanced television
solutions and services with these marketing partners and distributors, we may not be able to acquire new subscribers from them under
these agreements and our business would be harmed.
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