TiVo 2011 Annual Report Download - page 21

Table of Contents
Growth in our TiVo-Owned subscriptions and related revenues could be harmed by offerings by our television distribution partners who also would
be able to offer the TiVo service in the future. Our ability to grow our TiVo-Owned subscriptions and related revenues could be harmed by competition from
our television distribution partners, such as DIRECTV, RCN, Suddenlink, Charter (in the future) and others, who may be able to offer TiVo-branded DVR
and non-DVR solutions to their customers at more attractive pricing than we may be able to offer the TiVo service to our TiVo-Owned customers.
Furthermore, if we are unable to sufficiently differentiate the TiVo service offered direct to consumers by TiVo from the TiVo-branded DVR solutions
offered by our licensing partners, customers who would have otherwise chosen the TiVo service offered direct to consumers by us may instead choose to
purchase the TiVo-branded DVR solution from our licensing partners. Additionally, to the extent that potential customers defer subscribing to the TiVo
service in order to wait for announced, but not yet deployed in their geographic area, TiVo-branded DVR solutions from our licensing partners, the growth of
our TiVo-Owned subscriptions could be reduced. If our TiVo-Owned subscriptions continue to decrease, our business will be harmed.
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.
We also expect to compete with digital cable, satellite, and telecommunications services that provide consumers with DVR and VOD-based 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 deployed server-based DVR
technology. To the extent that cable, satellite, or telecommunication operators offer regular television programming with DVR services as part of their server-
based VOD offerings or offer linear television programming in other VOD-based broadband delivered services, 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 or equivalent VOD-
based viewing services (such as the TV Everywhere service from Comcast) 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, who offer television service, such as AT&T, 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.
It is expensive to establish a strong brand. We believe that establishing and strengthening the TiVo brand is critical to achieving widespread acceptance
of our products and services and to establishing key strategic relationships. The importance of brand recognition will increase as current and potential
competitors enter the DVR market with competing products and services. Our ability to promote and position our brand depends largely on the success of our
marketing efforts and our ability to provide high quality services and customer support. These activities are expensive and we may not generate a
corresponding increase in subscriptions or revenues to justify these costs. If we fail to establish and maintain our brand, or if our brand value is damaged or
diluted, we may be unable to attract subscriptions and effectively compete in the DVR market.
We rely on our retail customers and service providers to market and distribute our products and services. In addition to our own efforts, our retail
customers distribute DVRs that enable the TiVo service. We rely on their sales forces, marketing budgets, and brand images to promote and support DVRs
and the TiVo service. Additionally, we now have arrangements with certain service providers, such as Comcast, to market and promote the TiVo service. We
expect to continue to rely on our relationships with these companies to promote and support DVRs and other devices that enable the TiVo service. The loss of
one or more of these companies could require us to undertake more of these activities on our own. As a result, we would spend significant resources to
support the TiVo service and DVRs and other devices that enable the TiVo service. The failure of one or more of these companies to provide anticipated
marketing support will require us to divert more of our limited resources to marketing the TiVo service. If we are unable to provide adequate marketing
support for DVRs and the TiVo service, our ability to attract subscriptions to the TiVo service will be limited.
Many consumers are not aware of the full range of benefits of our products and services. DVR products
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