TiVo 2007 Annual Report Download - page 21

Table of Contents
sell and/or selling digital video recording devices, digital video recording device software, and/or personal television services in the United States. On
April 13, 2006, the jury rendered a verdict in our favor for the amount of approximately $74.0 million dollars. On January 31, 2008, the U.S. Court of Appeals
for the Federal Circuit in Washington, D.C. unanimously ruled in favor of TiVo Inc. in connection with EchoStar's appeal of the district court judgment of
patent infringement against EchoStar with respect to several claims (so called software claims) of the patent, upholding the full award of damages from the
district court, and ordering that the stay of the district court's injunction against EchoStar's infringing digital video recorders that was issued pending appeal
will dissolve when the appeal becomes final. On April 11, 2008, the Federal Circuit denied EchoStar's combined petition for a panel rehearing and en banc
rehearing of the Federal Circuit's denial of their appeal of the district court's judgment. EchoStar has stated it intends to appeal the Federal Circuit's ruling to
the Supreme Court. We could be forced to incur material expenses in connection with this lawsuit. For a complete description of this lawsuit, please see our
discussion under Item 3. "Legal Proceedings."
Digital video recorders could be the subject of future regulation relating to copyright law or evolving industry standards and practices that
could adversely impact our business.
In the future, copyright statutes or case law could be changed to adversely impact our business by restricting the ability of consumers to temporally or
spatially shift copyrighted materials for their own personal use. Our business could be harmed as a result. In addition, we are aware that some media
companies may attempt to form organizations to develop standards and practices in the digital video recorder industry. These organizations or individual
media companies may attempt to require companies in the digital video recorder industry to obtain copyright or other licenses. Lawsuits or other actions taken
by these types of organizations or companies could make it more difficult for us to introduce new services, delay widespread consumer acceptance of our
products and services, restrict our use of some television content, increase our costs, and adversely affect our business.
A significant part of our installed subscription base results from our relationship with DIRECTV which we expect to decrease in the future
due to DIRECTV's support of a competing DVR by NDS.
DIRECTV no longer has the right to manufacture and distribute TiVo DVRs to DIRECTV subscribers. As a result of this and DIRECTV's support of a
competing DVR by NDS we expect the number of our DIRECTV with TiVo subscriptions to continue to decrease in the future. As a consequence of the loss
of these future revenues from these DIRECTV subscribers with TiVo service subscriptions, our business may be harmed.
It may be difficult for us or investors to evaluate trends and other factors that affect our business due to the relatively new and highly
competitive nature of the DVR services product category.
DVR services are a relatively new and highly competitive product category and it may be difficult to predict the future growth rate, if any, or size of the
market, for our products and services. We may be unable to accurately forecast customer behavior and recognize or respond to emerging trends, changing
preferences or competitive factors facing us. As a result, we may be unable to make accurate financial forecasts and adjust our spending in a timely manner to
compensate for any unexpected revenue shortfall. Such inability could cause our net losses in a given quarter to be greater than expected, which could cause
the price of our stock to decline. It may be difficult to predict accurately our future revenues, costs of revenues, expenses, or results of operations. In addition,
any evaluation of our business must be made in light of the risks and difficulties encountered by companies offering products or services in new, rapidly
evolving, and highly competitive markets.
We face a number of challenges in the sale and marketing of the TiVo service and products that enable the TiVo service.
Our success depends upon the successful retail marketing of the TiVo service and related DVRs, which began in the third quarter of calendar year 1999.
We compete with other consumer electronics products and home entertainment services for consumer spending. DVRs and the TiVo service compete in
markets that are crowded with other consumer electronics products and home entertainment services. The competition for consumer spending is intense, and
many consumers on limited budgets may choose other products and services over ours. DVRs compete for consumer spending with products such as DVD
players, satellite television systems, personal computers, and video game consoles. The TiVo service competes with home entertainment services such as
cable and satellite television, movie rentals, pay-per-view, Video on Demand, and mail-order DVD services. See also "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."
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