TiVo 2003 Annual Report Download - page 6

Table of Contents
Extend and Protect Our Intellectual Property. The value of the TiVo service is derived largely from the technology we have developed. Our
intellectual property has allowed us to become a leading service provider in the category and is the fundamental reason that many of our customers and
consumer electronics manufacturers choose us. We intend to continue to design, develop, and implement innovative technology solutions that leverage and
enhance the TiVo service offering. We have adopted a proactive patent and trademark strategy designed to protect and extend our technology and intellectual
property.
Promote and Leverage the TiVo Brand. We believe the strength of the TiVo brand is an advantage in attracting subscribers, consumer electronics
manufacturers, advertisers, and other customers. In the past, we have dedicated substantial resources to promoting our brand through multiple advertising and
marketing channels, participation in trade shows, sponsoring events, merchandising, and by leveraging strategic relationships. We believe the TiVo brand is
strongly established within the DVR category.
Invest in Subscription Growth. For the fiscal year ending January 31, 2005, we plan to increase significantly our investment in subscription acquisition
activities with a focus on growing TiVo Service subscriptions. We anticipate the majority of this investment will be in connection with the 2004 holiday
shopping season. We believe this investment can create incremental revenue, profits, and cash flow and put us on a long-term growth trajectory towards
creating sustainable profitability.
Our Technology
The TiVo service relies on three key components: the TiVo client software platform, the TiVo service infrastructure, and the TiVo-enabled DVR
hardware design. Each of these components serves a vital function in the TiVo service.
TiVo Client Software. The TiVo client software runs on TiVo-enabled DVRs. It consists of all operational software required for a TiVo-enabled DVR
to deliver the TiVo service properly and reliably. TiVo client software is based on the open-source Linux operating system, but the bulk of the software is
proprietary to TiVo. The software includes system components such as a media-oriented file system, a high-performance transactional database, an integrated
security system, and application components such as media management, and user interface. We have enhanced the client software to support multiple
services and applications, such as digital music and photos. The TiVo client software manages interaction with the TiVo service infrastructure. After the
initial set-up of the TiVo service, the TiVo-enabled DVR will automatically connect to the TiVo service infrastructure over a dial-up or broadband connection
to download the program guide data, client software upgrades, Showcases, and other content.
TiVo Service Infrastructure. The TiVo service infrastructure enables the ongoing operation of the TiVo service, managing the distribution of
proprietary services and specialized content such as program guide data, Showcases, and TiVo client software upgrades. It interfaces with our billing and
customer support systems for service authorization and bug tracking. In addition, the TiVo service infrastructure collects anonymous viewing behavior data
uploaded from TiVo-enabled DVRs for use in our audience measurement efforts. We believe the TiVo service infrastructure technology is scalable, robust,
and reliable. The infrastructure has also been designed to take advantage of the networks of service provider customers, for example, by utilizing DIRECTV's
satellite bandwidth to deliver data to DIRECTV receivers with TiVo service. The TiVo service infrastructure is extensible to support future initiatives such as
e-commerce and lead generation, and authorization and billing for premium services.
DVR Hardware Design. The TiVo-enabled DVR hardware design is a specification developed by us for set-top boxes containing a hard disk drive, a
CPU and memory, MPEG-2 digital video chips, a modem, and other components. We license this technology to consumer electronics manufacturers for them
to modify and use in the production of DVRs that enable the TiVo service. We also provide the design to the contract manufacturer that produces TiVo-
branded DVRs. The DVR hardware design has been integrated into a variety of products including DVD players, DVD recorders, DIRECTV receivers, and
TiVo service DVRs. The DVR hardware design includes a modular front-end that allows the basic platform to be used for digital and analog broadcast, digital
and analog cable, and satellite applications. In addition, the design includes USB ports to allow connection to broadband networks and external devices to
enable future services.
Significant Relationships
DIRECTV. DIRECTV is the largest provider of satellite television in the U.S. We have had a longstanding relationship with DIRECTV in which
DIRECTV assists us in marketing and delivering the TiVo service to its customer base. This relationship began in 1999 and was expanded in September of
2000 with the release of the first integrated DIRECTV DVR with TiVo. As of January 31, 2004, we had acquired approximately 676,000 subscriptions
through this relationship. Currently, one of DIRECTV's officers is a member of our Board of Directors.
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