TiVo 2007 Annual Report Download - page 88

Table of Contents
most favored customer terms as compared with other multi-channel video distributors who license certain TiVo technology. Pursuant to the terms of this
agreement, Comcast has the right to terminate the agreement in the event the Company is the subject of certain change of control transactions involving any of
certain specified companies. Acceptance of the delivery of the TiVo service software solution Comcast occurred on June 27, 2007 and has launched in its
initial market. Comcast accepted the TiVo advertising management system on March 31, 2008.
During the fiscal years ended January 31, 2008 and 2007, the Company recognized $12.2 million and $16.2 million, respectively in technology
revenues and $13.0 million and $16.2 million, respectively in cost of technology revenues, related to the initial development under the original agreement and
related to additional engineering work under a Statement of Work (SOW) entered into on August 27, 2007 for the development of additional releases of the
TiVo-branded, TiVo-service enabling software for the Comcast DVR platforms and to enable such software on other Comcast DVR platforms, including
Cisco (Scientific Atlanta) DVRs. Of the $16.2 million recognized in the in the fiscal year ended January 31, 2007, $4.6 million was related to work performed
during fiscal year ended January 31, 2006, but revenue and costs were deferred until the first quarter of fiscal year 2007, when TiVo and Comcast agreed upon
the engineering services to be delivered. Currently, it is not possible to separate the various elements within the original arrangement due to a lack of fair
value for certain undelivered elements in the agreement. Consequently, the Company recognizes revenues and costs for the initial development of TiVo
service software and TiVo Interactive Advertising Management System based on a zero profit model, which results in the recognition of equal amounts of
revenues and costs. The engineering work performed under the August 2007 SOW is considered a separate arrangement and revenue from this engineering
work is recognized using the percentage-of-completion method subsequent to signing the agreement on August 27, 2007.
20. DEVELOPMENT AGREEMENT AND SERVICES AGREEMENT WITH DIRECTV, INC.
On April 7, 2006, the Company entered into the Seventh Amendment of the Development Agreement, dated as of February 15, 2002, with DIRECTV,
Inc. Under this amendment, which amends the expiration date of the Development Agreement from February 15, 2007, to February 15, 2010, TiVo will
continue to provide support for DIRECTV receivers with TiVo service through the extended expiration date of the Development Agreement, and will provide
mutually agreed upon development services for no additional fee up to a defined maximum from February 2007 to February 2010. In addition, DIRECTV had
the right to continue to distribute DIRECTV receivers with TiVo service through February 15, 2007, and a related grace period as set forth in the
Development Agreement. Further, TiVo and DIRECTV agreed that neither party would assert its patents against the other party with respect to each
company's products and services deployed prior to the expiration of the agreement, subject to limited exceptions. DIRECTV will continue to pay a monthly
fee for each household using DIRECTV receivers with TiVo service similar to the amount paid by DIRECTV for households with DIRECTV receivers with
TiVo service deployed since February 15, 2002, subject to a monthly minimum payment by DIRECTV. The Company defers a portion of these fees equal to
the fair value of the undelivered development services. These deferred fees are classified on the Company's consolidated balance sheets under deferred
revenue, current. During the fiscal year ended January 31, 2008 DIRECTV had available $2.8 million in deferred fees, related to the period of February 1,
2006 through January 31, 2007. These fees were available to DIRECTV to use for development work during the fiscal year ended January 31, 2008. As
specified in connection with our Eighth Amendment of our Development Agreement entered into as of July 25, 2007, DIRECTV utilized $1.7 million for
development work, to enhance their subscriber's TiVo user experience, the remaining $1.1 million which remained unused on January 31, 2008 was
recognized as service revenues.
On April 7, 2006, the Company also entered into the First Amendment of the Amended and Restated Services Agreement, dated as of March 31, 2005,
with DIRECTV. This amendment extends the terms of the current advertising arrangement between TiVo and DIRECTV, the Services Agreement until
February 15, 2010, and additionally provides DIRECTV with the ability to obtain additional technical support and training for its use of advertising-related
software tools with DIRECTV receivers with TiVo service.
21. COX AGREEMENT
On August 22, 2006, TiVo entered into a non-exclusive licensing and distribution agreement with Cox Communications (Cox). Pursuant to the
agreement, the Company has agreed to develop a TiVo-branded software solution for deployment on Cox's DVR platforms, which would enable Cox to offer
TiVo DVR and advertising software to its customers and advertising clients respectively. In addition, the Company has agreed to develop an advertising
management system for deployment on Cox platforms to enable the provision of local and national advertising to Cox subscribers.
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