TiVo 2007 Annual Report Download - page 43

Table of Contents
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion and analysis in conjunction with the consolidated financial statements and the notes included elsewhere in
this annual report and the section "Risk Factors" in Item 1A, as well as other cautionary statements and risks described elsewhere in this report, before
deciding to purchase, sell or hold our common stock.
Executive Overview and Outlook of Financial Results
During the fiscal year ended January 31, 2008, our service revenues increased by 6% over the prior fiscal year due to increased TiVo-Owned
subscriptions, which were added during fiscal years ended January 31, 2007 and 2008 at higher service plan rates. Additionally, we recognized $1.1 million of
DIRECTV revenues deferred from the prior fiscal year as our obligation to provide services to DIRECTV in connection with those revenues expired on
January 31, 2008. These increases were partially offset by our decision to extend the amortization period of our product lifetime subscriptions. We continue to
experience loss of our MSOs/Broadcaster installed subscription base resulting in a decrease to our total cumulative subscription base. The loss of MSOs/
Broadcaster subscriptions is a result of DIRECTV no longer deploying new TiVo boxes and our mass distribution deals with Comcast and Cox being still in
the early phases of development and/or deployment. The loss in MSOs/Broadcaster subscriptions was partially offset by growth in our TiVo-Owned
subscription base. During the fiscal year ended January 31, 2008, we continued to grow our TiVo-Owned subscription base while managing our total
acquisition costs.
For the fiscal year ending January 31, 2009, we plan to continue to strengthen our relationships with our MSOs/Broadcasters, expand our international
distribution channels, maintain our current product offerings, grow our advertising and research relationships, and maintain our lower consumer hardware
rebate offerings. In fiscal year 2009, we expect to continue to focus on adding TiVo-Owned subscriptions; however, we will continue to see reductions in
DIRECTV subscriptions, as DIRECTV no longer markets the TiVo service to its customers, creating challenges to the growth of our MSOs/Broadcaster
subscription installed base.
Key Business Metrics
Management periodically reviews certain key business metrics in order to evaluate our operations, allocate resources, and drive financial performance
in our business. Management monitors these metrics together and not individually as it does not make business decisions based upon any single metric.
Subscriptions. Management reviews this metric, and believes it may be useful to investors, in order to evaluate our relative position in the marketplace
and to forecast future potential service revenues. Below is a table that details the change in our subscription base during the last three fiscal years. The TiVo-
Owned lines refer to subscriptions sold directly or indirectly by TiVo to consumers who have TiVo-enabled DVRs and for which TiVo incurs acquisition
costs. The MSOs/Broadcasters lines refer to subscriptions sold to consumers by MSOs/Broadcasters such as DIRECTV, Cablevision Mexico, and Comcast
and for which TiVo expects to incur little or no acquisition costs. Additionally, we provide a breakdown of the percent of TiVo-Owned subscriptions for
which consumers pay recurring fees, including on a monthly and a prepaid one, two, or three year basis, as opposed to a one-time prepaid product lifetime fee.
Fiscal Year Ended January 31,
(Subscriptions in thousands) 2008 2007 2006
TiVo-Owned Subscription Gross Additions: 276 429 494
Subscription Net Additions/(Losses):
TiVo-Owned 19 235 350
MSOs/Broadcasters (518) (155) 1,013
Total Subscription Net Additions/(Losses) (499) 80 1,363
Cumulative Subscriptions:
TiVo-Owned 1,745 1,726 1,491
MSOs/Broadcasters 2,201 2,718 2,873
Total Cumulative Subscriptions 3,946 4,444 4,364
Fully Amortized Active Lifetime Subscriptions 175 165 100
% of TiVo-Owned Cumulative 61% 58% 51%
Subscriptions paying recurring fees
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