TiVo 2009 Annual Report Download - page 27

Table of Contents
We face risks associated with various cable operators making their own transition to digital transmission of cable signals.
We face increased risks in addition to the 2009 digital transition as cable operators are currently only required to carry analog signals for customers
through February 2012 where cable operators transmit in both analog and digital formats. Cable operators who transmit entirely in digital format to their
customers and make set top boxes available to such customers are exempted from the dual carriage mandate. Our business faces increased risks as cable
operators convert their systems to transmit in all digital format because our dual tuner standard definition Series2 DVR is reduced to a single tuner experience
when used exclusively with a cable set top box and no analog cable transmission is available. The lack of an analog signal being transmitted by the cable
operator means that the DVR would only be able to use one tuner to record television although we do currently offer to our customers high definition digital
video recorders, the TiVo Premiere box and the TiVo Premiere XL box, which are CableCARD capable and not subject to this risk. In the event that the
features and functionality of our Series2 DVRs currently deployed with customers or which are otherwise for sale to customers are impacted, such an impact
may cause such customers to cancel their subscriptions. The migration of cable systems to all digital transmissions could result in increased customer churn or
deter new customers from subscribing to the TiVo service, and in such an event our business would be harmed.
If we are unable to create or maintain multiple revenue streams, we may not be able to cover our expenses and this could cause our revenues to
suffer.
Our long-term success will depend on securing additional revenue streams such as:
• licensing;
• advertising;
• audience research measurement;
• revenues from programmers; and
• electronic commerce.
In order to derive substantial revenues from these activities, we will need to attract and retain a large and growing base of subscriptions to the TiVo
service. We also will need to work closely with television advertisers, cable, satellite, and telecommunications network operators, electronic commerce
companies, and consumer electronics manufacturers to develop products and services in these areas. We may not be able to work effectively with these parties
to develop products that generate revenues that are sufficient to justify their costs. We also may be unable to work with, or to continue working with, these
parties to distribute video and collect and distribute data or other information to provide these product or services. In addition, we are currently obligated to
share a portion of these revenues with several of our strategic partners. Any inability to attract and retain a large and growing group of subscriptions or
inability to attract new strategic partners or maintain and extend our relationships with our current strategic partners could seriously harm our ability to
support new services and develop new revenue streams.
We face risks in connection with our licensing and marketing agreements with Comcast and Cox for the development and deployment of a
TiVo-branded DVR software solution and advertising management system to Comcast and Cox customers.
We face significant technological challenges in our development of the TiVo service software solution and the TiVo advertising management system
for Comcast and Cox. If we are unable to successfully develop these products in a timely and efficient manner and enable mass deployment of them by
Comcast and Cox, we may not be successful in our relationships with them and our business could be harmed. Our ability to benefit from our agreements with
Comcast and Cox are dependent upon the mass-deployment and adoption of the TiVo service software solution by Comcast and Cox customers. Additionally,
our ability to benefit from our agreements with Comcast and Cox are dependent upon our ability to successfully sell advertising to third parties. Furthermore,
Comcast and Cox each have the right to receive certain most favored terms from us such that if we were to license similar products and services to other
parties at more attractive terms than what Comcast or Cox receive under their respective agreements with us, they may be entitled to receive the new more
favorable terms. Additionally, Comcast and Cox each have the right to terminate its agreement with us in the event we are subject to certain specified change
of control transactions involving companies specified in their respective agreements. In the event any of these events occurred, we would have difficulty
generating revenues under these agreements and our business could be harmed.
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