TiVo 2005 Annual Report Download - page 8

Table of Contents
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 information
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 work with the networks of service provider customers, for example, by utilizing DIRECTV's
satellite bandwidth to deliver data to DIRECTV receivers with TiVo service.
TiVo-Enabled DVR Hardware Design. The TiVo-enabled DVR hardware design is a specification developed by TiVo for set-top boxes containing a
hard disk drive, a CPU and memory, digital video chips, a modem, and other components. We provide this design to our contract manufacturer that produces
TiVo-branded DVRs. The DVR hardware design has been integrated into a variety of products including standalone TiVo service DVRs, DIRECTV
receivers, DVD players, and DVD recorders. The TiVo-enabled 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, certain designs include USB ports to allow connection to
broadband networks and external devices to enable existing and future services. A TiVo-enabled DVR without a subscription to the TiVo service has minimal
functionality.
Significant Relationships
Comcast. On March 15, 2005, we entered into a non-exclusive licensing and marketing agreement with entities affiliated with Comcast Corporation.
Pursuant to this agreement, we agreed to develop a TiVo-branded software solution for deployment on Comcast's DVR platforms, which would enable the
TiVo user interface and DVR application, which includes features, such as WishList®, and Season Pass. In addition, we agreed to develop an advertising
management system for deployment on Comcast platforms to enable the provision of local and national advertising to Comcast subscribers. Comcast will pay
a recurring monthly fee per Comcast subscriber who receives the TiVo service through Comcast. Comcast has also paid us fees for licensing the TiVo
technology, and will continue to pay us fees for engineering services for the development and integration of the TiVo service software solution (subject to
adjustment under certain circumstances) and will also pay us for the advertising management system.
The initial term of this agreement is for seven years from completion of the TiVo service software solution, with Comcast permitted to renew for
additional 1-year terms for up to a total of 8 additional years as long as certain deployment thresholds have been achieved. During the term of the agreement,
TiVo will provide Comcast with certain customer and maintenance support and will provide certain additional development work. TiVo will have the
continuing right to sell certain types of advertising in connection with the TiVo service offered through Comcast. TiVo will also have a limited right to sell
certain types of advertising on other Comcast DVR set-top boxes enabled with the TiVo advertising management system, subject to Comcast's option to
terminate such right in exchange for certain advertising-related payments.
Development and deployment of the TiVo service software solution is targeted to occur within two years from the date of the agreement. Development
and deployment of the TiVo advertising management system is targeted to begin after the second anniversary of this agreement, but by no later than
February 15, 2008. In the event development of the TiVo service software solution and the TiVo advertising management system have not been completed by
the relevant deadlines, we could be subject to certain consequences, including, but not limited to, termination of the agreement. As part of this agreement,
Comcast received a non-exclusive, non-transferable license to our intellectual property in order to deploy the TiVo service software solution and advertising
management system, including certain trademark branding rights and a covenant not to assert under TiVo's patents, which rights extend only to Comcast
Corporation, its affiliates, and certain of its vendors and suppliers with respect to Comcast products and services. Such non-exclusive, non-transferable license
to the Company's intellectual property will, under certain circumstances, continue after the termination of this agreement. In addition, Comcast is entitled to
certain most favored customer terms as compared with other multi-channel video distributors who license certain TiVo technology. Pursuant to the terms of
this agreement, Comcast has the right to terminate the agreement in the event the Company is the subject of certain change of control transactions involving
any of certain specified companies.
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