TiVo 2008 Annual Report Download - page 10

Table of Contents
TiVo Service Client Software. The TiVo service client software runs on TiVo-enabled DVRs. It consists of operational software required for a TiVo-
enabled DVR to deliver the TiVo service. The software includes system components such as a media-oriented file system, a high-performance transactional
database, an integrated security system, and application components such as media management and user interface. We have enhanced the client software to
support multiple services and applications, such as receipt of broadband video content, digital music and photos. The TiVo client software manages
interaction with the TiVo service infrastructure. After the initial set-up of the TiVo service, the TiVo-enabled DVR will automatically connect to the TiVo
service infrastructure over a dial-up or broadband connection to download the program guide data, client software upgrades, Showcases, and other content.
We are currently extending the TiVo service client software to enable future deployment on certain commonly used integrated DVR set-top boxes.
Under the terms of our agreement with Comcast, for example, Comcast has made the TiVo service available as a software upgrade to its already installed base
of certain Motorola DVRs (in New England, currently, and additional regions in the future) and in the future on certain Cisco DVRs. We also intend to extend
the TiVo service to run on other DVR set-top boxes capable of supporting Comcast-deployed middleware and forthcoming Open Cable Application Platform
(OCAP) solutions.
TiVo Service Infrastructure. The TiVo service infrastructure enables the ongoing operation of the TiVo service, managing the distribution of
proprietary services, and specialized content such as program guide data, interactive advertising, and TiVo client software upgrades. It interfaces with our
billing and customer support systems for service authorization and bug tracking. In addition, the TiVo service infrastructure collects anonymous viewing
information uploaded from TiVo-enabled DVRs for use in our audience research measurement efforts. The infrastructure has also been designed to work with
the networks of service provider customers, for example, by utilizing DIRECTV's satellite bandwidth to deliver data to DIRECTV receivers with TiVo
service.
TiVo-Enabled DVR Hardware Design. The TiVo-enabled DVR hardware design is a specification developed by TiVo for set-top boxes containing a
hard disk drive, a CPU and memory, digital video chips, a modem, and other components. We provide this design to our contract manufacturer that produces
TiVo-branded DVRs. The DVR hardware design has been integrated into a variety of products including standalone TiVo service DVRs, DIRECTV
receivers, DVD players, and DVD recorders. The TiVo-enabled DVR hardware design includes a modular front-end that allows the basic platform to be used
for digital and analog broadcast, digital and analog cable, and satellite applications. In addition, certain designs include USB ports to allow connection to
broadband networks and external devices to enable existing and future services. A TiVo-enabled DVR without a subscription to the TiVo service has minimal
functionality.
Significant Relationships
Comcast. On March 15, 2005, we entered into a non-exclusive licensing and marketing agreement with entities affiliated with Comcast Corporation.
Pursuant to this agreement, we agreed to develop a TiVo-branded software solution for deployment on Comcast's DVR platforms, which would enable the
TiVo user interface and DVR application, which includes features, such as WishList® and Season Pass®. In addition, we agreed to develop an advertising
management system for deployment on Comcast platforms to enable the provision of local and national advertising to Comcast subscribers.
The initial term of this agreement expires on June 30, 2014. The agreement, as amended, provides Comcast with eight additional one-year renewal
terms beyond the initial term, with certain deployment thresholds moved from June 30, 2014 to the renewal term beginning after June 30, 2019. Comcast will
pay a recurring monthly fee per Comcast household which receives the TiVo service through Comcast. Comcast has also paid us fees for licensing the TiVo
technology, and will continue to pay us fees for engineering services for the development and integration of the TiVo service software solution (subject to
adjustment under certain circumstances) and will also pay us for the advertising management system. Under the initial and subsequent statements of work
with Comcast, subject to the attainment of specified deployment thresholds, Comcast is entitled to recoup over time certain development fees paid to us
through a mechanism effectively resulting in a reduction of certain subscription fees.
Additionally, Comcast has an option to purchase software maintenance and support. Comcast is entitled to a credit redeemable for ongoing
development work that is based on a percentage of certain fees received by TiVo under the arrangement. Comcast will pay for any ongoing development work
that exceeds the amount of the credit. TiVo will have the continuing right to sell certain types of advertising on the TiVo service offered through Comcast.
TiVo will also have a limited right to sell certain types of advertising on other Comcast platforms enabled with the TiVo advertising management system,
when such advertising features are developed, subject to Comcast's option to terminate such right in exchange for certain advertising-related payments.
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