TiVo 2013 Annual Report Download - page 33

Table of Contents
imposed on us as a credit card merchant, our business would be harmed because we could be prevented in the future from transacting
customer subscription payments by means of a credit card.


Uncertainty in the marketplace regarding the use of data from our subscribers could reduce demand for the TiVo service and
result in increased expenses. Consumers may be concerned about the use of viewing information gathered by the TiVo service and the
DVR. Currently, we gather anonymous information about our customers' viewing choices while using the TiVo service, unless a customer
affirmatively consents to the collection of personally identifiable viewing information. This anonymous viewing information does not identify
the individual customer. Privacy concerns, however, could create uncertainty in the marketplace for digital video recording and for our
products and services. Changes in our privacy policy could reduce demand for the TiVo service, increase the cost of doing business as a
result of privacy related litigation costs or increased service delivery costs, or otherwise harm our reputation and business.
The DVR collects and stores viewer preferences and other data that many of our customers consider confidential. If our
technological security measures are compromised, our customers may curtail or stop use of our products and services. The
TiVo service and TiVo products such as DVRs may contain the private information of our customers, and security breaches could expose us
to a risk of loss of this information, which could result in potential liability and litigation. Like all services that connect with the Internet, our
service, including our website, is vulnerable to break-ins, attacks, attempts to overload our servers with denial-of-service or other attacks and
similar disruptions from unauthorized use of our computer systems, any of which could lead to interruptions, delays, or shutdowns of our
service, causing loss of critical data or the unauthorized disclosure or use of personally identifiable or other confidential information. If we
experience compromises to our security that result in service and website performance or availability problems, the complete shutdown of
our service or website, or the loss or unauthorized disclosure of confidential information, our customers may lose trust and confidence in us,
and decrease or discontinue their use of our service. Further, outside parties may attempt to fraudulently induce employees to disclose
sensitive information in order to gain access to our information or our customers' information. It is also possible that one of our employees
who has access to our information or our customer's information as part of his or her employment or who could attempt to gain unauthorized
access to our information or our customer's information and use it in violation of our internal policies and procedures. Because the
techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently, often are not recognized
until launched against a target, we may be unable to proactively address these techniques or to implement adequate preventative measures
from either external or internal threats. We may be required to make significant expenditures to protect against security breaches or to remedy
problems caused by any breaches. Additionally, the laws governing such data are constantly changing and evolving and we must comply
with these laws or our business, including our reputation, brand and financial results will be harmed. Failure to protect our information and
our customer's information from external or internal threats could negatively impact our ability to attract new customers, cause existing
customers to cancel their subscriptions, cause commercial partners to cease doing business with us, subject us to third-party lawsuits,
regulatory fines or other actions or liabilities, thereby harming our business and operating results.


It is possible that future proposed environmental regulations on consumer electronic devices, such as DVRs and set-top boxes, may
regulate and increase the production, manufacture, use, and disposal costs incurred by us and our customers. For example, the Energy
Independence and Security Act of 2007 directs the Department of Energy to prescribe labeling or other disclosure requirements for the energy
use of standalone digital video recorder boxes. This and future energy regulations could potentially make it more costly for us to design,
manufacture, and sell our DVRs to our customers thus harming the growth of our business.
Additionally, as our business grows and we expand our employed and contracted work force, employment laws and regulations will have
an increasing impact on our ability to manage and grow our work-force. Regulations and laws relating to the status of contractors,
classification and related benefits for exempt and non-exempt employees all may adversely impact our business if we are unable to properly
manage and comply with federal, state, and local laws.
Furthermore, as part of our regular business activities now, and in the past, we engage in the issuance of gift subscriptions and the
marketing of rebate offers related to the sale of our products and services. It is possible that
31