TiVo 2006 Annual Report Download - page 19

Table of Contents
(the "Securities Exchange Act"). These include our annual reports on Form 10-K, our quarterly reports on Form 10-Q, and our current reports on Form 8-K.
We make this information available on or through our website free of charge as soon as reasonably practicable after we electronically file the information
with, or furnish it to, the SEC.
ITEM 1A. RISK FACTORS
The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties not presently known to us or that we
currently deem immaterial may also affect our business.
We have incurred significant net losses and may never achieve sustained profitability.
We have incurred significant net losses and have had substantial negative cash flows. During the fiscal years ended January 31, 2007, 2006, and 2005,
our net losses were $(47.8) million, $(37.0) million, and $(79.8) million, respectively. As of January 31, 2007, we had an accumulated deficit of $(741.8)
million. The size of future net losses will depend in part on our subscription revenues and on our expenses. We will need to generate significant additional
revenues to achieve profitability.
We face intense competition from a number of sources, which may impair our revenues, increase our subscription acquisition cost, and hinder
our ability to generate new subscriptions.
The DVR market is rapidly evolving, and we face significant competition. Moreover, the market for in-home entertainment is intensely competitive and
subject to rapid technological change. As a result of this intense competition, we could incur increased subscription acquisition costs that could adversely
affect our ability to reach or sustain profitability in the future. If new technologies render the DVR market obsolete, we may be unable to generate sufficient
revenue to cover our expenses and obligations.
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 telecommunications, cable and satellite operators and DVRs offered
by consumer electronics and software companies. For more information on our competitors, see our discussion on competition in Item 1. "Business."
Licensing Competitors. Our licensing revenues depend both upon our ability to successfully negotiate licensing agreements with our consumer
electronics and service provider customers and, in turn, upon our customers' successful commercialization of their underlying products. In addition, we face
competition from companies such as Microsoft, Gemstar, OpenTV, NDS, D&M Holdings, Digeo, Ucentric, Gotuit, and 2Wire, which have created competing
digital video recording technologies. Such companies may offer more economically attractive licensing agreements to service providers and manufacturers of
DVRs.
Established Competition for Advertising Budgets. Digital video recorder services, in general, and TiVo, specifically, compete with other advertising
media such as print, radio, television, internet, Video on Demand, and other emerging advertising platforms for a share of advertisers' total advertising
budgets. If advertisers do not perceive digital video recording services, in general, and TiVo specifically, as an effective advertising medium, they may be
reluctant to advertise on the TiVo service. In addition, advertisers may not support or embrace the TiVo technology due to a belief that our technology's
ability to fast-forward through commercials will reduce the effectiveness of general television advertising.
We depend on a limited number of third parties to manufacture, distribute, and supply critical components, assemblies, and services for the
DVRs that enable the TiVo service. We may be unable to operate our business if these parties do not perform their obligations.
The TiVo service is enabled through the use of a DVR manufactured for us by a third-party contract manufacturer and a limited number of other third
parties. In addition, we rely on sole suppliers for a number of key components for the DVRs. We also rely on third parties with whom we outsource supply-
chain activities related to inventory warehousing, order fulfillment, distribution, and
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