TiVo 2007 Annual Report Download - page 22

Table of Contents
Many of these products or services have established markets, broad user bases, and proven consumer acceptance. In addition, many of the
manufacturers and distributors of these competing devices and services have substantially greater brand recognition, market presence, distribution channels,
advertising and marketing budgets and promotional activities, and other strategic partners. Faced with this competition, we may be unable to effectively
differentiate our DVRs and the TiVo service from other consumer electronics devices or entertainment services.
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.
We are currently only able to offer a high definition DVR that has access to digital cable signals. Only the cable industry in the United States is
currently required to provide access to digital high definition television signals through CableCARD technology. Without separate agreements with satellite
operators, such as our agreement with DIRECTV, or other telecommunication providers, such as Verizon or AT&T, who offer television service that would
give us access to digital and high definition television, our ability to attract their subscribers to the TiVo service is limited and our business, financial
condition and results of operations could be harmed.
Consumers may not be willing to pay for our products and services. Many of our customers already pay monthly fees for cable or satellite television.
We must convince these consumers to pay an additional subscription fee to receive the TiVo service. Consumers may perceive the TiVo service and related
DVR as too expensive. In order to continue to grow our subscription base, we may need to reduce our costs and lower the price of our DVR or service fees.
The availability of competing services that do not require subscription fees or that are enabled by low or no cost DVRs will harm our ability to effectively
attract and retain subscriptions.
Growth in our TiVo-Owned subscriptions and related revenues could be harmed by competitive offerings by Comcast and Cox who also would be able
to offer the TiVo service in the future. Our ability to grow our TiVo-Owned subscriptions and related revenues could be harmed by competition from our
licensing partners, such as Comcast and Cox, who may be able to offer TiVo-branded DVR solutions to their customers at more attractive pricing than we
may be able to offer the TiVo service to our TiVo-Owned customers. Furthermore, if we are unable to differentiate the TiVo service from the TiVo-branded
DVR solutions offered by our licensing partners, customers who would have otherwise chosen the TiVo service may instead choose to purchase the TiVo-
branded DVR solution from our licensing partners. Additionally, to the extent that potential customers defer subscribing to the TiVo service in order to wait
for announced, but not yet deployed in their geographic area, TiVo-branded DVR solutions from our licensing partners, such as Comcast and Cox, the growth
of our TiVo-Owned subscriptions could be reduced. If the growth in our TiVo-Owned subscriptions is reduced, our business 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 service providers to market and distribute our products and services. In addition to our own efforts, our retail
customers 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. Additionally, we now depend on service providers, such as Comcast to market and promote 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.
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