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Table of Contents
The increase in TiVo-Owned ARPU per month for the fiscal years ended January 31, 2008 was largely due to our sales programs which yielded a
higher service plan rates for new TiVo-Owned subscriptions. This increase was partially offset by an increase of 10,000 TiVo-Owned product lifetime
subscriptions that reached the end of the period we use to recognized lifetime subscription revenue. These subscriptions are currently included in the Average
TiVo-Owned per month subscriptions, however there is no longer any corresponding revenues included in the TiVo-Owned-related service revenues.
Effective November 1, 2007, we have extended the period we use to recognize product lifetime subscription revenues from 48 months to 54 months for
product lifetime subscriptions acquired on or before October 31, 2007. Additionally, we also increased the amortization period to 60 months for new product
lifetime subscriptions acquired on or after November 1, 2007 which are offered on a limited basis and primarily related to the TiVo HD DVR. Refer to
Critical Accounting Estimates "Recognition Period for Product Lifetime Subscriptions Revenues". Due to this extended revenue recognition period and the
reduction in our subscription rates in November 2007, we expect fiscal year 2009 TiVo-Owned ARPU per month to be lower.
The decrease in TiVo-Owned ARPU for the fiscal year ended January 31, 2007 was due to an increase of 65,000 TiVo-Owned product lifetime
subscriptions that reached the end of the four-year period we used to recognize lifetime subscription revenue, as compared to the same prior year period.
However, this decrease in TiVo-Owned ARPU per month was partially offset by our sales program which yielded a higher monthly subscription rate for new
TiVo-Owned subscriptions.
We calculate ARPU per month for MSOs/Broadcasters' 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 MSOs/Broadcasters'-related service revenues by the average MSOs/Broadcasters' subscriptions for the period. The following table
shows this calculation:
Fiscal Year Ended January 31,
MSOs/Broadcasters' Average Revenue per Subscription 2008 2007 2006
(In thousands, except ARPU)
Total Service revenues $ 211,496 $ 198,924 $ 167,194
Less: TiVo-Owned-related service revenues (184,056) (166,667) (134,406)
MSOs/Broadcasters'-related service revenues 27,440 32,257 32,788
Average MSOs/Broadcasters' revenues per month 2,287 2,688 2,732
Average MSOs/Broadcasters' per month subscriptions 2,481 2,836 2,376
MSOs/Broadcasters' ARPU per month $ 0.92 $ 0.95 $ 1.15
Beginning in February 2006, pursuant to the most recent amendment of our agreement with DIRECTV, TiVo began deferring a portion of the
DIRECTV subscription fees equal to the fair value of the undelivered development services. Additionally, beginning in February 2007, DIRECTV began
paying us a monthly fee for all DIRECTV households with DIRECTV receivers with TiVo service 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.
Included in the MSOs/Broadcasters'-related service revenues for the fiscal year ended January 31, 2008 is $1.1 million of DIRECTV revenue that was
deferred in fiscal year 2007 for DIRECTV's use on development work during fiscal year 2008. DIRECTV's right to use these deferred fees expired on
January 31, 2008, consequently we recognized these deferred fees as service revenue for the fiscal year ended January 31, 2008. The slight decrease in ARPU
per month for fiscal year ended January 31, 2008 was largely a result of a change in fee structure for MSO/Broadcasters' subscriptions, as compared to the
same prior year period. The $.20 decrease in ARPU per month for fiscal year ended January 31, 2007 from January 31, 2006 was largely a result of the
deferred DIRECTV revenues described above.
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 base our estimates on historical experience and on other assumptions
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