TiVo 2009 Annual Report Download - page 11

Table of Contents
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® searches, and Season Pass® recordings. 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.
As part of this agreement, Comcast received a non-exclusive, non-transferable license to our intellectual property in order to deploy the TiVo service
software solution and advertising management system, including certain trademark branding rights and a covenant not to assert under TiVo's patents, which
rights extend only to Comcast Corporation, its affiliates, and certain of its vendors and suppliers with respect to Comcast products and services. Such non-
exclusive, non-transferable license to the Company's intellectual property will, under certain circumstances, continue after the termination of this agreement.
In addition, Comcast is entitled to certain 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. The TiVo service software solution has launched in its initial market, the New
England Region. We expect Comcast to launch the TiVo service in additional markets. Deployment of the advertising management system is expected in the
future. Our statement of works with Comcast provides for continued funding for engineering services in fiscal year 2011 to support these activities.
DIRECTV. DIRECTV is the largest provider of satellite television in the U.S. We have had a longstanding relationship with DIRECTV from 1999 to
the present to provide the TiVo service to its customer base. As of January 31, 2010, DIRECTV represents a significant portion of our 1.1 million MSO/
Broadcaster subscriptions.
DIRECTV currently pays us a recurring monthly per-household fee for access to the technology needed to provide its customers the TiVo service
subject to a minimum monthly amount. We incur limited recurring expenses. We also recognize revenue from DIRECTV for engineering services work on
integrated DIRECTV satellite receivers with TiVo service and the related service infrastructure. We are continuing to provide DIRECTV with engineering
services related to currently installed hardware and updates and feature enhancements for existing platforms and customers.
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