TiVo 2007 Annual Report Download - page 18

Table of Contents
We maintain an Internet website at the following address: www.tivo.com. The information on our website is not incorporated by reference in this
annual report on Form 10-K or in any other filings we make with the Securities and Exchange Commission (SEC).
We make available on or through our website certain reports and amendments to those reports that we file with or furnish to the SEC in accordance
with the Securities Exchange Act of 1934 (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
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, 2008, 2007, and 2006,
our net losses were $(31.5) million, $(47.8) million, and $(37.0) million, respectively. As of January 31, 2008, we had an accumulated deficit of $(773.3)
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 sustained 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. We face competition
from companies such as Microsoft, Gemstar, OpenTV, NDS, DIRECTV, NDS, Echostar, Pace, Digeo, Motorola, Scientific Atlanta, 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. 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 other direct sales logistics. We cannot be sure that these parties will perform their obligations as expected or
that any revenue, cost savings, or other benefits will be derived from the efforts of these parties. If any of these parties breaches or terminates their agreement
with us or otherwise fails to perform their obligations in a timely manner, we may be delayed or prevented from commercializing our products and services.
Because our relationships with these parties are non-exclusive, they may also support products and services that compete directly with us, or offer similar or
greater support to our competitors. Any of these events could require us to undertake unforeseen additional responsibilities or devote additional resources to
commercialize our products and services. This outcome would harm our ability to compete effectively and achieve increased market acceptance and brand
recognition.
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