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Table of Contents
PART I
ITEM 1. BUSINESS
General Development of Business
TiVo is a leading provider of technology and services for digital video recorders (DVRs). The subscription-based TiVo® service redefines home
entertainment by providing consumers with an easy way to record, watch, and control live television and receive thousands of movies and television shows
from cable, broadcast, and broadband sources, as well as other forms of content from broadband sources, such as YouTubeTM videos, and a vast collection of
music videos and songs, and internet radio. TiVo offers such features as Season Pass® recordings, WishList® searches, TiVoToGo transfers, TiVoCast content
(which includes premium content delivered from Amazon Video on Demand, Netflix, and others and in the future Blockbuster), TiVo KidZone, TiVo Online
Scheduling, and TiVo Search. As of January 31, 2009, there were approximately 3.3 million subscriptions to the TiVo service. We distribute the TiVo DVR
through consumer electronics retailers and through our on-line store at TiVo.com. Additionally, we provide the TiVo service through agreements with leading
television service providers such as cable television operators, such as Comcast, and in the future Cox, and satellite television providers, including DIRECTV,
as well as international cable and broadcasting companies such as Seven Networks (Australia and in the future New Zealand) and Cablevision Mexico. We
also provide innovative advertising solutions for the television industry, including a unique platform for advertisers and audience research measurement.
We currently receive revenues from three main sources:
• Consumers. Our primary source of revenues is from consumers, who subscribe directly to the TiVo service and typically pay us monthly fees of
up to $12.95 per month. We also offer consumers the option to prepay for one or three years of TiVo service at prices ranging from $129 to $299,
or purchase a product lifetime subscription for $399 ($299 for existing customers who have at least one other qualifying subscription). We sell to
consumers in part through distribution relationships with major retailers, and direct through our on-line store at TiVo.com.
• Television service providers. We also work with satellite and cable television providers, including DIRECTV, Comcast, Cablevision Mexico, and
in the future Cox, who pay us recurring monthly fees in order to provide the TiVo service to their subscribers. We receive fees for licensing and
professional services from these and other customers as well.
• Advertisers. We work directly with television advertisers, agencies, and networks to offer a variety of solutions for the television advertising
market. These include short- and long-form interactive video advertising, audience research measurement, lead generation, and commerce. Some
of our key clients include advertisers and advertising agencies such as Grey SF, Toyota Motors, Warner Brothers, Universal McCann, OMD,
MediaEdge, Mediastorm, IdeaCity, Fox Corp, and the Procter & Gamble Company.
We continue to be subject to a number of risks, including delays in product and service developments; competitive service offerings; lack of market
acceptance; uncertainty of future profitability; dependence on third parties for manufacturing, marketing, and sales support, rollout schedules, software
development issues; access to television programming; intellectual property claims against us; and our ability to sustain and grow our subscription base. We
conduct our operations through one reportable segment. We anticipate that our business will continue to be seasonal and expect to generate a significant
number of our annual new TiVo-Owned subscriptions during and immediately after the holiday shopping season. Prior to the fiscal year ended January 31,
2009, we incurred significant losses and had substantial negative operating cash flow. During the fiscal year ended January 31, 2009, our cash provided by our
operations was $105.7 million and we had a net income of $103.6 million primarily due to receipts of damages and associated interest from our litigation
against EchoStar. As of January 31, 2009, we had an accumulated deficit of ($672.2) million.
Industry Trends
Consumer Demand is Driving Widespread Adoption of DVR Technology. We believe DVRs offer a compelling value proposition to consumers by
providing the means to effectively sort through, select from, and organize the growing volume of broadcast, cable, and broadband video content choices
including television shows, movies, videos, songs, and photos. DVR technology also gives consumers the ability to easily fast forward, pause, and rewind
recorded video content. Today, approximately 29 million households have DVRs, up from approximately 22 million a year earlier and this is expected to
increase to over 57 million by 2012 according to SNL Kagan and higher by other accounts.
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