TiVo 2003 Annual Report Download - page 32

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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 consumer electronics companies, and DVRs offered by cable and
satellite operators.
Within each of these two categories, the competition can be further segmented into those offering what we define as basic DVR functionality, and those
offering enhanced DVR functionality. Basic DVR functionality includes no or limited program guide data and "VCR-like" controls with manual timeslot-
based recordings, usually with no DVR service fee after the consumer purchases the enabling hardware. The TiVo Basic service is an example of basic DVR
functionality. Enhanced DVR functionality includes rich program guide data and enhanced scheduling and personalization features, and may or may not
require a DVR service fee. The TiVo service is an example of enhanced DVR functionality.
Consumer Electronics Competitors. We compete against several types of products with basic or enhanced DVR functionality offered by consumer
electronics companies. These products record an analog television signal output from a cable or satellite set-top box, analog cable feed, or antenna.
• DVRs: ReplayTV has been our primary competitor in the standalone DVR market, offering products with some enhanced DVR functionality.
ReplayTV was acquired by D&M Holdings in 2003. D&M Holdings is the parent company of Denon and Marantz, manufacturers of premium
audio and video consumer electronics products. In addition, a number of companies have introduced or announced plans for DVRs that can record
HD content, including RCA and Lucky Goldstar.
• DVD devices with integrated DVRs: Several consumer electronics companies, including Thomson Multimedia and Panasonic, are producing DVRs
integrated with DVD players or DVD recorders. In general, these products do not require DVR service fees, and offer basic DVR functionality.
• Personal computers with DVR software: Several companies are developing DVR software for PC and PC-related platforms. For example,
Microsoft's Windows XP Media Center Edition contains expanded digital media features including some enhanced DVR functionality.
Satellite and Cable DVR Competitors. The DIRECTV satellite receiver with TiVo service competes against other cable and satellite set-top boxes that
integrate basic or enhanced DVR functionality into multi-channel receivers.
• Satellite: EchoStar released the DishPVR 501 in 2001, which combined EchoStar Dish Network satellite reception with basic DVR functionality,
including repeating timer-based recordings. In July 2002, EchoStar released the DishPVR 721, which offers a limited DVR feature set. EchoStar
has also released the DishPVR 921, system for High Definition signals. Additionally, it is possible that NDS will begin working with DIRECTV to
provide additional DVR technology to DIRECTV customers.
• Cable: Scientific-Atlanta sells Explorer 8000 integrated digital cable DVR set-top box to cable operators. This product combines digital and analog
cable reception with dual-tuner DVR functionality. Motorola has announced its own plans for integrated cable DVRs. In addition, Motorola has
announced plans to build integrated cable DVRs for cable operator Charter Communications using Moxi Media Center software from Digeo. Other
DVR technology providers targeting the integrated DVR space include set-top box manufacturers Pioneer and Pace, and software providers NDS
and Canal+ Technologies.
• Video on Demand: U.S. cable operators are currently deploying server-based Video on Demand (VOD) technology from SeaChange, Concurrent,
nCube, and others, which could potentially evolve into competition. Server-based VOD relies on content servers located within the cable operator's
central head-end that stream video across the network to a digital cable set-top box within the consumer's home. Cable operators can use VOD to
deliver movies, television shows, and other content to consumers. Consumers can watch this programming on demand, with VCR-like pausing and
rewinding capabilities. Operators can charge consumers for access to VOD content on a per-transaction or monthly subscription basis, or can offer
content without charge. To the extent that cable operators begin to offer regular television programming as part of their VOD offerings, consumers
will have an alternate means of watching time-shifted shows other than using DVRs.
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