TiVo 2013 Annual Report Download - page 44

Table of Contents
For the fiscal year ended January 31, 2013 our MSO installed subscription base increased by 950,000 subscriptions to approximately 2.1
million subscriptions. This increase in subscriptions is due to subscription growth from partners such as Virgin, RCN, Suddenlink, ONO,
Grande, and others.
TiVo-Owned Churn Rate per Month. Management reviews this metric, and believes it may be useful to investors, in order to evaluate
our ability to retain existing TiVo-Owned subscriptions (including both monthly and product lifetime subscriptions) by providing services that
are competitive in the market. Management believes factors such as service enhancements, service commitments, higher customer
satisfaction, and improved customer support may improve this metric. Conversely, management believes factors such as increased
competition, lack of competitive service features such as high definition television recording capabilities in our older model DVRs or access to
certain digital television channels or MSO Video On Demand services, as well as increased price sensitivity and installation and
CableCARDTM technology limitations, may cause our TiVo-Owned Churn Rate per month to increase.
We define the TiVo-Owned Churn Rate per month as the total TiVo-Owned subscription cancellations in the period divided by the
Average TiVo-Owned subscriptions for the period (including both monthly and product lifetime subscriptions), which then is divided by the
number of months in the period. We calculate Average TiVo-Owned subscriptions for the period by adding the average TiVo-Owned
subscriptions for each month and dividing by the number of months in the period. We calculate the average TiVo-Owned subscriptions for
each month by adding the beginning and ending subscriptions for the month and dividing by two. We are not aware of any uniform standards
for calculating churn and caution that our presentation may not be consistent with that of other companies.
The following table presents our TiVo-Owned Churn Rate per month information:

  

TiVo-Owned subscription cancellations (189)(197)(271)
Average TiVo-Owned subscriptions 987 1,062 1,174
Annual Churn Rate (19)% (19)% (23)%
Number of Months 12 12 12
TiVo-Owned Churn Rate per month (1.6)% (1.5)% (1.9)%
TiVo-Owned Churn Rate per month remained relatively flat at (1.6)% for the fiscal year ended January 31, 2014 as High Definition (HD)
box subscriptions, which have a lower churn rate as compared to Standard Definition (SD) box subscriptions, become a larger part of the
TiVo-Owned subscription base. Churn Rate per month was (1.6)%, (1.5)%, and (1.9)% for the fiscal years ended January 31, 2014, 2013,
and 2012, respectively. Included in our TiVo-Owned Churn Rate per month are those product lifetime subscriptions that have both reached
the end of the revenue recognition period and whose TiVo-enabled devices have not contacted the TiVo service within the prior six months.
Additionally, we do not count as churn product lifetime subscriptions that have not reached the end of the revenue recognition period,
regardless of whether such subscriptions continue to contact the TiVo service.
Subscription Acquisition Cost or SAC. Management reviews this metric, and believes it may be useful to investors, in order to evaluate
trends in the efficiency of our marketing programs and subscription acquisition strategies. We define SAC as our total TiVo-Owned
acquisition costs for a given period divided by TiVo-Owned subscription gross additions for the same period. We define total acquisition costs
as sales and marketing, subscription acquisition costs less net TiVo-Owned related hardware revenues (defined as TiVo-Owned related
gross hardware revenues less rebates, revenue share and market development funds paid to retailers) plus TiVo-Owned related cost of
hardware revenues. The sales and marketing, subscription acquisition costs line item includes advertising expenses and promotion-related
expenses directly related to subscription acquisition activities, but does not include expenses related to advertising sales. We do not include
third-parties’ subscription gross additions, such as MSOs gross additions with TiVo subscriptions, in our calculation of SAC because we
typically incur limited or no acquisition costs for these new subscriptions, and so we also do not include MSOs sales and marketing,
subscription acquisition costs, hardware revenues, or cost of hardware revenues in our calculation of TiVo-Owned SAC. We are not aware of
any uniform standards for calculating total acquisition costs
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