TiVo 2006 Annual Report Download - page 24

Table of Contents
We compete with digital cable, satellite, and telecommunications DVRs. Cable, satellite, and telecommunications service providers are accelerating
deployment of integrated cable and satellite receivers with DVRs that bundle DVR services with other digital services and do not require their customers to
purchase hardware. If we are not able to enter into agreements with these service providers to embed the TiVo service into their offerings, our ability to attract
their subscribers to the TiVo service would be limited and our business, financial condition and results of operations could be harmed.
It is expensive to establish a strong brand. We believe that establishing and strengthening the TiVo brand is critical to achieving widespread acceptance
of our products and services and to establishing key strategic relationships. The importance of brand recognition will increase as current and potential
competitors enter the digital video recorder market with competing products and services. Our ability to promote and position our brand depends largely on
the success of our marketing efforts and our ability to provide high quality services and customer support. These activities are expensive and we may not
generate a corresponding increase in subscriptions or revenues to justify these costs. If we fail to establish and maintain our brand, or if our brand value is
damaged or diluted, we may be unable to attract subscriptions and effectively compete in the digital video recorder market.
We rely on our retail customers and consumer electronics manufacturers to market and distribute our products and services. In addition to our own
efforts, our retail customers and consumer electronics manufacturers distribute DVRs that enable the TiVo service. We rely on their sales forces, marketing
budgets and brand images to promote and support DVRs and the TiVo service. We expect to continue to rely on our relationships with these companies to
promote and support DVRs and other devices that enable the TiVo service. The loss of one or more of these companies could require us to undertake more of
these activities on our own. As a result, we would spend significant resources to support the TiVo service and DVRs and other devices that enable the TiVo
service. The failure of one or more of these companies to provide anticipated marketing support will require us to divert more of our limited resources to
marketing the TiVo service. If we are unable to provide adequate marketing support for DVRs and the TiVo service, our ability to attract subscriptions to the
TiVo service will be limited.
If we are unable to create or maintain multiple revenue streams, we may not be able to cover our expenses and this could cause our revenues to
suffer.
Our long-term success depends on our ability to generate revenues from multiple revenue streams. Our long-term success will depend on securing
additional revenue streams such as:
• licensing;
• advertising;
• audience research measurement;
• revenues from programmers; and
• electronic commerce.
In order to derive substantial revenues from these activities, we will need to attract and retain a large and growing base of subscriptions to the TiVo
service. We also will need to work closely with television advertisers, cable, satellite, and telecommunications network operators, electronic commerce
companies, and consumer electronics manufacturers to develop products and services in these areas. We may not be able to work effectively with these parties
to develop products that generate revenues that are sufficient to justify their costs. We also may be unable to work with, or to continue working with, these
parties to distribute video and collect and distribute data or other information to provide these product or services. In addition, we are currently obligated to
share a portion of these revenues with several of our strategic partners. Any inability to attract and retain a large and growing group of subscriptions or
inability to attract new strategic partners or maintain and extend our relationships with our current strategic partners could seriously harm our ability to
support new services and develop new revenue streams.
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