TiVo 2013 Annual Report Download - page 27

Table of Contents
the future. Additionally, if we are required to repair or replace any of our products, we could incur significant costs, which would harm our
business, including our financial condition and results of operations.
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
Our long-term success will depend on securing additional revenue from such areas as:
•licensing;
•advertising;
•hardware sales
•audience research measurement; 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 would seriously harm our ability to support new services and develop new
revenue streams.
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To attract and retain subscriptions and generate revenues, we must continue to maintain and add to our functionality and content and
introduce products and services which embody new technologies and, in some instances, new industry standards. This challenge will
require hardware and software improvements, as well as maintaining and adding new collaborations with programmers, advertisers,
network operators, hardware manufacturers, and other strategic partners. These activities require significant time and resources and may
require us to develop and promote new ways of generating revenue with established companies in the television industry. These companies
include television advertisers, cable and satellite network operators, electronic commerce companies, and consumer electronics
manufacturers. In each of these examples, a small number of large companies dominate a major portion of the market and may be reluctant
to work with us to develop new products and services for digital video recorders as well as maintain our current functionality. If we are unable
to maintain and further develop and improve the TiVo service or maintain and expand our operations in a cost-effective or timely manner, our
ability to attract and retain customers and generate revenue will suffer.
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The introduction of a new product or product line is a complex task, involving significant expenditures in research and development,
training, promotion and sales channel development, and management of existing product inventories to reduce the cost associated with
returns and slow moving inventory. As new products are introduced, we intend to monitor closely the inventory of products to be replaced,
and to phase out their manufacture in a controlled manner. However, we cannot assure you that we will be able to execute product transitions
in this manner or that product transitions will be executed without harming our operating results. Failure to develop products with required
features and performance levels or any delay in bringing a new product to market could significantly reduce our revenues and harm our
competitive position.
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Developing TiVo products and integrating acquired technology into existing platforms is expensive, and these investments often require
substantial time to generate returns. Our strategy involves significant investments in research and development and related product
opportunities. We believe that we must continue to dedicate a significant amount of resources to our research and development efforts to
maintain and improve our competitive position. However, we cannot ensure that we will receive significant, if any, revenue from these
investments.
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