TiVo 2006 Annual Report Download - page 51

Table of Contents
We calculate ARPU per month for DIRECTV subscriptions by first subtracting TiVo-Owned-related service revenues (which includes TiVo-Owned
subscription service revenues and TiVo-Owned related advertising revenues) from our total reported service revenues. Then we divide average revenues per
month for DIRECTV-related service revenues by average subscriptions for the period. The following table shows this calculation and reconciles ARPU for
DIRECTV subscriptions to service and technology revenues:
Fiscal Year Ended January 31,
DIRECTV Average Revenue per Subscription 2007 2006 2005
(In thousands, except ARPU)
Service and Technology revenues $ 217,985 $ 170,859 $ 115,476
Less: Technology revenues (19,061) (3,665) (8,310)
Total Service revenues 198,924 167,194 107,166
Less: TiVo-Owned-related service revenues (166,858) (134,406) (86,095)
DIRECTV-related service revenues 32,066 32,788 21,071
Average DIRECTV revenues per month 2,672 2,732 1,756
Average DIRECTV per month subscriptions 2,606 2,376 1,154
DIRECTV ARPU per month $ 1.03 $ 1.15 $ 1.52
For fiscal year 2007, pursuant to the recently amended DIRECTV agreement, TiVo deferred a portion of the DIRECTV subscription fees equal to the
fair value of the undelivered development services. Otherwise the recurring subscriptions fees in this agreement are similar to the recurring monthly per
household fees for the households with DIRECTV receivers with TiVo service activated since 2002.
ARPU per month for DIRECTV subscriptions for the fiscal year ended January 31, 2007 decreased from the same-year prior periods to $1.03 from
$1.15 and $1.52, respectively. The decrease for fiscal year ended January 31, 2007 was largely a result of the deferred DIRECTV revenues described above,
which impacted ARPU by a decrease of $.08. The decrease in ARPU for fiscal year ended January 31, 2006 as compared to the same prior year period was a
result of acquiring subscriptions at lower recurring revenues than subscriptions added during earlier phases of our DIRECTV relationship.
In fiscal 2008, we expect ARPU per month for DIRECTV subscriptions to decrease further as the term of our Seventh Amendment of our Development
Agreement continues. Under the Seventh Amendment, after February 15, 2007, DIRECTV will pay us a monthly fee for all DIRECTV households with TiVo
receivers similar to the lower amount paid by DIRECTV for households with DIRECTV receivers with TiVo service deployed since March 15, 2002, subject
to a monthly minimum payment by DIRECTV. We will continue to defer a portion of these fees as a non-refundable credit to fund mutually agreed
development, maintenance, and support services, which may potentially be offset by increased advertising revenues in the future.
Critical Accounting Estimates
Critical accounting estimates are those that reflect significant judgments and uncertainties, and may potentially result in materially different results
under different assumptions and conditions. We base our discussion and analysis on our consolidated financial statements, which have been prepared in
accordance with U.S. generally accepted accounting principles as described in Item 8. Note 2. "Summary of Significant Accounting Policies" in the notes to
our consolidated financial statements. The preparation of these financial statements requires us to make estimates and judgments that affect our reported
amounts of assets, liabilities, revenue, and expenses and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates.
We
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