TiVo 2009 Annual Report Download - page 56

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Table of Contents
We calculate ARPU per month for TiVo-Owned subscriptions by subtracting MSOs/Broadcaster-related service revenues (which includes MSOs/
Broadcasters' subscription service revenues and MSOs/Broadcasters'-related advertising revenues) from our total reported net service revenues and dividing
the result by the number of months in the period. We then divide by Average TiVo-Owned subscriptions for the period, calculated as described above for
churn rate. The following table shows this calculation:
Fiscal Year Ended January 31,
TiVo-Owned Average Revenue per Subscription 2010 2009 2008
(In thousands, except ARPU)
Total Service revenues $ 159,772 $ 188,408 $ 211,496
Less: MSOs/Broadcasters'-related service revenues (14,932) (22,412) (27,440)
TiVo-Owned-related service revenues 144,840 165,996 184,056
Average TiVo-Owned revenues per month 12,070 13,833 15,338
Average TiVo-Owned per month subscriptions 1,577 1,695 1,721
TiVo-Owned ARPU per month $ 7.65 $ 8.16 $ 8.91
The decrease in TiVo-Owned ARPU per month for the fiscal year ended January 31, 2010 was largely due to a higher number of product lifetime
subscriptions that are fully amortized, as compared to the same prior year period coupled with lower product lifetime revenues as the amortization period we
use to recognize product lifetime subscriptions is longer. Effective November 1, 2008, we extended the period we use to recognize product lifetime
subscription revenues from 54 months to 60 months for all new and not fully amortized product lifetime subscriptions. We now amortize all product lifetime
subscriptions over a 60 month period. Refer to Critical Accounting Estimates "Recognition Period for Product Lifetime Subscriptions Revenues." In the fiscal
year ending January 31, 2011, we expect TiVo-Owned ARPU per month to be relatively flat as compared to the fiscal year ended January 31, 2010.
We calculate ARPU per month for MSOs/Broadcasters' subscriptions by first subtracting TiVo-Owned-related service revenues (which includes TiVo-
Owned subscription service revenues and TiVo-Owned related advertising revenues) from our total reported service revenues. Then we divide average
revenues per month for MSOs/Broadcasters'-related service revenues by the average MSOs/Broadcasters' subscriptions for the period. The following table
shows this calculation:
Fiscal Year Ended January 31,
MSOs/Broadcasters' Average Revenue per Subscription 2010 2009 2008
(In thousands, except ARPU)
Total Service revenues $ 159,772 $ 188,408 $ 211,496
Less: TiVo-Owned-related service revenues (144,840) (165,996) (184,056)
MSOs/Broadcasters'-related service revenues 14,932 22,412 27,440
Average MSOs/Broadcasters' revenues per month 1,244 1,868 2,287
Average MSOs/Broadcasters' per month subscriptions 1,422 1,939 2,481
MSOs/Broadcasters' ARPU per month $ 0.88 $ 0.96 $ 0.92
The MSOs/Broadcasters' related service revenues for the fiscal year ended decreased $0.08 per subscription to $0.88 per subscription, as compared
$0.96 for the same prior year period. This fluctuation in average revenue per subscription is largely related to a one time reduction in service revenues
associated with a reporting error on the part of DIRECTV. During the quarter ended October 31, 2009, we were informed by DIRECTV that it had over-
reported TiVo subscriptions to us for approximately the past 18 months. In accordance with TiVo's accounting policies, TiVo recorded a one-time reduction
of $1.8 million in MSO Service Revenues, (predominately from prior quarters) and $200,000 reduction in deferred revenue during the third quarter ended
October 31, 2009 based on our agreed upon resolution of the discrepancy totaling $2.0 million, using updated reports provided by DIRECTV. Without the one
time adjustment in revenues and subscriptions, our MSOs/Broadcaster's ARPU would have remained flat, as compared to the prior fiscal year. In the fiscal
year ending January 31, 2011, we expect MSOs/Broadcasters' revenue to be higher, as compared to the fiscal year ended January 31, 2010 due to increased
minimum commitments associated with the DIRECTV deal.
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