TiVo 2013 Annual Report Download - page 24

Table of Contents
not support or embrace the TiVo technology due to a belief that our technology's ability to fast-forward through commercials will reduce the
effectiveness of general television advertising. Due to the slower than anticipated adoption of TRA's services for the anonymous matching of
ad exposure data with purchase data, we recognized a non-cash impairment charge of $4.8 million in the three and twelve months ended
January 31 2014 related to intangible assets acquired as part of the TRA acquisition.
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From time to time, we have engaged and may engage in the future in discussions with other parties concerning business relationships,
which have and may in the future include equity investments by such parties in us or may include exclusivity provisions (such as
geographic or product specific limitations), most favored customer limitations, and patent licensing arrangements. While we believe that such
business relationships have historically enhanced our ability to finance and develop our business model or otherwise were justified by the
terms of the particular relationship, the terms and conditions of such business relationships may place some restrictions on the operation of
our business, including where we operate, who we work with, and what kinds of activities we may engage in, in the future.
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The TiVo service is enabled through the use of a DVR manufactured for us by a third-party contract manufacturer. In addition, we rely on
sole suppliers for a number of key components for these DVRs and other devices we manufacture. We also rely on third-parties with whom
we outsource supply-chain activities related to inventory warehousing, order fulfillment, distribution, and other direct sales logistics. We
cannot be sure that these parties will perform their obligations as expected or that any revenue, cost savings, or other benefits will be derived
from the efforts of these parties. If any of these parties breaches or terminates its agreement with us or otherwise fails to perform its
obligations in a timely manner, we may be delayed or prevented from commercializing our products and services. Because our relationships
with these parties are non-exclusive, they may also support products and services that compete directly with us, or offer similar or greater
support to our competitors. Any of these events could require us to undertake unforeseen additional responsibilities or devote additional
resources to commercialize our products and services. This outcome would harm our ability to compete effectively and achieve increased
market acceptance and brand recognition.
In addition, we face the following risks in relying on these third-parties:
If our manufacturing relationships are not successful, we may be unable to satisfy demand for our products and services. We
manufacture DVRs that enable the TiVo service through a third-party contract manufacturer. Delays, product shortages, and other problems
could impair our retail distribution and brand image and make it difficult for us to attract subscriptions. In addition, the loss of a manufacturer
would require us to identify and contract with alternative sources of manufacturing, which we may be unable to do or which could prove time-
consuming and expensive.
We are dependent on sole suppliers for key components and services. If these suppliers fail to perform their obligations, we
may be unable to find alternative suppliers or deliver our products and services to our customers on time. We currently rely on
sole suppliers for a number of the key components used in the TiVo-enabled DVRs and the TiVo service, of which we may not have written
supply agreements with certain sole suppliers for key components or services for our products. For example, Broadcom is the sole supplier of
the system controller for our DVR. We do not currently have a long-term written supply agreement with Broadcom although we do have
limited rights to continue to purchase from Broadcom in the event Broadcom notifies us a product is being discontinued. Therefore,
Broadcom is not contractually obligated to supply us with these key components on a long-term basis or at all. In addition, because we are
dependent on sole suppliers for key components and services, our ability to manufacture our DVRs and other devices is subject to increased
risks of supply shortages (without immediately available alternatives), exposure to unexpected cost increases in such sole supplied
components, as well as other risks to our business if we were to fail to comply with conflict mineral requirements due to our reliance on
these suppliers.
Tribune is the sole supplier of the program guide data for the TiVo service. Tribune Media Services, Inc., (Tribune), is the current
sole supplier of program guide data for the TiVo service. Our current Television Listings Data Agreement with Tribune originally became
effective on May 14, 2007 and had an initial term of five years which TiVo has renewed for four additional years. The agreement provides
each party with a termination right if the other party becomes controlled by certain third parties. If Tribune breaches its obligation to provide us
with data, rejects the agreement or otherwise fails to perform its obligations under our agreement, we would be unable to
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