TiVo 2013 Annual Report Download - page 21

Table of Contents
We believe that the principal competitive factors in the DVR and advanced television solutions market are brand recognition and
awareness, functionality, ease of use, content availability, and pricing. We currently see two primary categories of DVR competitors and
advanced television solutions competitors: DVRs and advanced television solutions (e.g. VOD and OTT capabilities) offered by
telecommunications, cable and satellite operators and DVRs and other advanced television solutions (e.g. VOD based services on set-top
boxes or other consumer electronic devices (TV, BluRay player, etc.) which stream content remotely) offered by consumer electronics and
software companies.
Our revenues depend both upon our ability to successfully negotiate agreements with service provider customers and, in turn, upon our
customers' successful commercialization of our licensed products and technology. We face competition from companies such as Ericsson
(Mediaroom), Pace, Motorola (whose set-top box division was acquired by Arris), Cisco/NDS, and Rovi. Such companies may offer more
economically attractive agreements to service providers and manufacturers of DVRs. We also face competition from solutions that MSOs
may internally develop such as Comcast X1 and DIRECTV Genie, each of which have created competing technologies.
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Our success depends upon the successful retail marketing of the TiVo service and related DVRs.
We compete with other consumer electronics products and home entertainment services for consumer spending. DVRs and
the TiVo service compete in markets that are crowded with other consumer electronics products and home entertainment services. The
competition for consumer spending is intense, and many consumers may choose other products and services over ours. DVRs compete for
consumer spending with products such as DVD players, satellite television systems, personal computers, video game consoles, and other
dedicated over-the-top video streaming devices (such as Roku and AppleTV). The TiVo service competes with home entertainment services
such as cable and satellite television, movie rentals, pay-per-view, Video on Demand, and mail-order DVD services. Such competition could
harm our business, financial condition, and results of operations.
Many of these products or services have established markets, broad user bases, and proven consumer acceptance. In
addition, many of the manufacturers and distributors of these competing devices and services have substantially greater brand recognition,
market presence, distribution channels, advertising and marketing budgets and promotional activities, and more strategic partners. Faced
with this competition, we may be unable to effectively differentiate our DVRs and the TiVo service from other consumer electronics devices or
entertainment services and our business, financial condition, and results of operations would be harmed.
Consumers may not be willing to pay for our products and services, we may be forced to discount our products and services,
and we may introduce products and services at lower price points which could impact our revenues. Many of our customers
already pay monthly fees for cable or satellite television. We must convince these consumers to pay an additional subscription fee to receive
the TiVo service. Consumers may perceive the TiVo service and related DVR and non-DVR products as too expensive. In order to continue to
grow our subscription base, we have lowered the price of our DVRs in the past and raised our subscription pricing and alternatively we may
choose to raise our DVR pricing and lower our subscription pricing in the future. As a result of lower hardware pricing and higher subscription
pricing, the profitability of such newly acquired customers was shifted outward in time as we need to first recoup the expenses incurred in
connection with the sale of a heavily subsidized DVR. For competitive and financial reasons, we may need to change the pricing of our DVRs
and our service fees again in the future. Furthermore, we have introduced non-DVR products such as TiVo Mini meant to expand the TiVo
experience throughout the home, but such a product has a lower hardware cost and lower associated service fees and it may impact our total
revenues as well as our ARPU per subscription to the extent these products are offered at lower subscription price points. The availability of
competing services that do not require subscription fees or that are enabled by low or no cost DVRs will harm our ability to effectively attract
and retain subscriptions, and in such an event our business would be harmed.
Growth in our TiVo-Owned subscriptions and related revenues could be harmed by offerings by our television distribution
partners who also would be able to offer the TiVo service in the future. Our ability to grow our TiVo-Owned subscriptions and related
revenues could be harmed by competition from our television distribution partners, such as DIRECTV, RCN, Suddenlink, and others, who
may be able to offer TiVo-branded DVR and non-DVR solutions to their customers at more attractive pricing than we may be able to offer the
TiVo service to our TiVo-Owned customers. Furthermore, if we are unable to sufficiently differentiate the TiVo service offered direct to
consumers by TiVo from the TiVo-branded DVR solutions offered by our licensing partners,
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