TiVo 2005 Annual Report Download - page 25

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Table of Contents
We may not be successful in our agreement with Comcast. Our ability to benefit from our agreement with Comcast is dependent upon the mass-
deployment and adoption of the TiVo service software solution by Comcast customers. Additionally, our ability to benefit from our agreement with Comcast
is dependent upon our ability to successfully sell advertising to third parties. Furthermore, Comcast has the right to receive certain most favored terms from us
such that if we were to license similar products and services to other parties at more attractive terms than what Comcast receives, Comcast would be entitled
to receive the new more favorable terms. Additionally, Comcast has the right to terminate its agreement with us in the event we are subject to certain specified
change of control transactions involving specified companies. In the event any of these events occurred, we would have difficulty generating revenues under
the agreement and our business could be harmed.
If we are unable to introduce new products or services, or if our new products and services are unsuccessful, the growth in our subscription
base and revenues may suffer.
To attract and retain subscriptions and generate revenues, we must continue to maintain and add to our functionality and content and introduce products
and services which embody new technologies and, in some instances, new industry standards. This challenge will require hardware and software
improvements, as well as maintaining and adding new collaborations with programmers, advertisers, network operators, hardware manufacturers, and other
strategic partners. These activities require significant time and resources and may require us to develop and promote new ways of generating revenue with
established companies in the television industry. These companies include television advertisers, cable and satellite network operators, electronic commerce
companies, and consumer electronics manufacturers. In each of these examples, a small number of large companies dominate a major portion of the market
and may be reluctant to work with us to develop new products and services for digital video recorders as well as maintain our current functionality. If we are
unable to maintain and further develop and improve the TiVo service or maintain and expand our operations in a cost-effective or timely manner, our ability
to attract and retain customers and generate revenue will suffer.
We face risks in the development of an entertainment offering involving the distribution of digital content.
We previously announced on September 30, 2004 a joint development agreement with Netflix, Inc. involving the development of a joint entertainment
offering for the distribution of digital content. Our joint development agreement with Netflix involves no long-term commitments nor significant economic
benefits for either company nor is it being actively pursued at this time. In the future, we may be unable to develop a joint entertainment offering with Netflix
or may develop an entertainment offering involving the distribution of digital content separately or with other third parties. We face competitive,
technological, and financial risks in the development of an entertainment offering involving the distribution of digital content. If we are unable to develop a
competitive entertainment offering in the future with Netflix, on our own, or with a third party, our business could be adversely affected.
Our ability to retain our current customers may decrease in the future which could increase our TiVo-Owned subscription monthly churn rate
and could cause our revenues to suffer.
We believe factors such as increased competition in the DVR marketplace, increased price sensitivity in the consumer base, any deterioration in the
quality of our service, or product lifetime subscriptions no longer using our service may cause our TiVo-Owned subscription monthly churn rate to increase. If
we are unable to retain our subscriptions by limiting the factors that we believe increase subscription churn, our ability to grow our subscription base could
suffer and our revenues could be harmed.
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