Evelyn Rubin submits: In TiVo's (TIVO) quarterly conference call, Acting CFO Stuart West explained why subscriber acquisition costs at the company were up this quarter:

Our acquisition spending per gross add, or SAC, was $320 in the second quarter, compared to $216 last year... This increase in year-over-year quarterly SAC can be attributed to three factors. First, as we have previously discussed, our new bundled pricing plan drives a higher per sub acquisition cost while delivering higher ARPU and subscriber net present values. Second, the expansion of our retail channel to include over 3,000 RadioShack stores drove an increase in hardware sales and the associated rebate expense, as RadioShack built up its baseline inventory of our products. Third and finally, during Q2 of last year, we did not consistently offer a rebate, which resulted in lower SAC last year...

Going forward, we expect there will be year-over-year SAC increases, but anticipate they will be at lower levels than we saw in Q2.

CEO Thomas Rogers added:

There is a tradeoff with SAC. The tradeoff is that we are raising our service pricing and our revenue per sub, and the net present value of a subscriber as we spend more cash by making a pricing plan available that does not drive, that does not have any up-front costs.

We tested this a long time ago. Now that we have had some pure looks with some of the year-over-year, quarter-over-quarter fuzziness taken out, it looks like those pricing elements in terms of online subs where it has been available truly does drive incremental volume, incremental subs with healthy improvements to ARPU and net present value that we want to drive.

Now, there are different types of offerings, as we mentioned, where a high-end box would not have that kind of subsidy. We also talked about prepaid bundles, which we have now bound, as we said, with a three-year plan, a way to really boost the increase of those where up-front subsidy is not the issue because you are getting a prepaid bundle of a significant amount of cash up-front.

How those all meld as we approach retail with that is one of the significant questions that we are grappling with in terms of what the overall marketing spend is as we grow our sub base. I will say that overall, we do expect SAC for the year to be on a 12-month period, which is the way we look at it, to be above last year’s levels. It is clearly going to be well below where it came in for this quarter, and the mix of the various variables I just pointed to in the end of the day will determine what that trend actually looks like.