TiVo 2008 Annual Report Download - page 21

Table of Contents
We face risks in connection with our amended development and services agreements with DIRECTV for the development and deployment of a
new HD DIRECTV DVR featuring the TiVo service.
We may encounter delays in development under our new agreement with DIRECTV . Under the terms of our non-exclusive arrangement, we are
working with DIRECTV and its suppliers to develop a version of the TiVo service for DIRECTV's broadband-enabled HD DVR platform to deliver the new
HD DIRECTV DVR with TiVo Service to DIRECTV for a launch to consumers as soon as possible in calendar year 2010. We may face significant
technological, third party supplier and other challenges in our development of the TiVo service for DIRECTV's broadband-enabled HD DVR platform, any of
which could delay or prevent us from delivering the new product. If we are unable to successfully develop this new broadband-enabled HD DVR with TiVo
service for deployment by DIRECTV, we would not be able to acquire new subscribers from DIRECTV under these new agreements and our business could
be harmed.
It may be difficult for us or investors to evaluate trends and other factors that affect our business due to the rapidly evolving and highly
competitive nature of the DVR services product category.
DVR services are a rapidly evolving and highly competitive product category and it may be difficult to predict the future growth rate, if any, or size of
the market, for our products and services. We may be unable to accurately forecast customer behavior and recognize or respond to emerging trends, changing
preferences or competitive factors facing us. As a result, we may be unable to make accurate financial forecasts and adjust our spending in a timely manner to
compensate for any unexpected revenue shortfall. Such inability could cause our net losses in a given quarter to be greater than expected, which could cause
the price of our stock to decline. It may be difficult to predict accurately our future revenues, costs of revenues, expenses, or results of operations. In addition,
any evaluation of our business must be made in light of the risks and difficulties encountered by companies offering products or services in new, rapidly
evolving, and highly competitive markets.
We face a number of competitive challenges in the sale and marketing of the TiVo service and products that enable the TiVo service.
Our success depends upon the successful retail marketing of the TiVo service and related DVRs, which began in the third quarter of calendar year 1999.
We compete with other consumer electronics products and home entertainment services for consumer spending. DVRs and the TiVo service compete in
markets that are crowded with other consumer electronics products and home entertainment services. The competition for consumer spending is intense, and
many consumers on limited budgets may choose other products and services over ours. DVRs compete for consumer spending with products such as DVD
players, satellite television systems, personal computers, and video game consoles. The TiVo service competes with home entertainment services such as
cable and satellite television, movie rentals, pay-per-view, Video on Demand, and mail-order DVD services. See also "We face intense competition from a
number of sources, which may impair our revenues, increase our subscription acquisition cost, and hinder our ability to generate new subscriptions."
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.
In the future, we may also compete with digital cable, satellite, and telecommunications services that provide consumers with DVR services via a
network connection on an on-demand basis. We are aware of at least one U.S. cable operator, Cablevision, Inc., which has stated a desire to test server-based
DVR technology, in the future if legally permissible. To the extent that cable, satellite, or telecommunication operators offer regular television programming
with DVR services as part of their server-based VOD offerings, consumers would have an alternate means of watching time-shifted shows besides physical
DVRs. In such an event, competitors would be able to deploy competing DVR services without the expense of deploying DVR hardware in consumer homes.
Such an event would impair our ability to compete in a cost-effective manner with these television providers as well as attract and retain customers, in which
case, 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.
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