Take-Two Interactive Software Inc

Market and investment · Market volatility and economic cycles

We are particularly susceptible to market conditions and risks associated with the entertainment industry, which, in addition to general macroeconomic downturns, also include the popularity, price, and timing of our products; changes in consumer demographics; the availability and popularity of other forms of entertainment and leisure.

Market position and competition · Disruptive competitors and new market entrants

As there are relatively low barriers to entry to develop a mobile or online game, we expect new game competitors to enter the market and existing competitors to allocate more resources to develop and market competing games and applications. We also compete or will compete with a vast number of small companies and individuals who are able to create and launch games and other content for devices and platforms using relatively limited resources.

Market position and competition · Competitive pressure and market share loss

We compete for both licenses to properties and the sale of interactive entertainment software with Sony and Microsoft, each of which is a large developer and marketer of software for its own platforms. We also compete with game publishers, such as Electronic Arts, Embracer Group, Epic Games, Microsoft, Nintendo, Playrix, Playtika, Roblox, Savvy Games, Sony, Tencent, and Ubisoft... Some of our competitors have greater financial, technical, personnel, and other resources than we do and are able to finance larger budgets for development and marketing.

Customer and revenue · Changing customer preferences and behavior

The inability of our products to achieve significant market acceptance, the failure to retain existing players, delays in product releases or disruptions following the commercial release of our products may have a material adverse effect on our business, financial condition and operating results... New products may not achieve significant market acceptance, generate sufficient sales, or be introduced in a timely manner.

Innovation and product development · Product development and randd investment risks

We are subject to product development risks which could result in delays and additional costs, and we must adapt to changes in software technologies. We depend on our internal development studios and third-party software developers to develop new interactive entertainment software within anticipated release schedules and cost projections.

Market position and competition · Market cyclicality and demand volatility

Our quarterly and annual operating results are dependent on the release of hit titles and therefore dependent on the timing of our product releases, which may cause our quarterly operating results to fluctuate significantly. The release of a hit title typically leads to a high level of sales during the first few months after introduction followed by a rapid decline in sales.

Customer and revenue · Revenue concentration in specific products or segments

We are dependent on the future success of our Grand Theft Auto products and other hit titles... Grand Theft Auto products contributed 12.4% of our net revenue for the fiscal year ended March 31, 2026, and the five best-selling franchises (including Grand Theft Auto), which may change year over year, in the aggregate accounted for 54.3% of our net revenue.

Customer and revenue · Customer concentration and key customer dependence

A limited number of customers account for a significant portion of our sales. The loss of a principal customer or other significant business relationship could seriously hurt our business. A substantial portion of our product sales are made to a limited number of customers. Sales to our five largest customers during the fiscal year ended March 31, 2026 accounted for 80.6% of our net revenue, with Apple, Sony, Google, and Microsoft each accounting for more than 10.0%.

Digital transformation and innovation · Technology obsolescence and evolution

In order to stay competitive, our internal development studios must anticipate and adapt to rapid technological changes affecting software development, such as cloud-based game streaming and AI technologies, and evolving business models, such as free-to-play and subscription-based access to a portfolio of interactive content.

Digital transformation and innovation · Artificial intelligence and automation

The development, use, and incorporation of artificial intelligence ('AI') into our products and within our industry may present operational, reputational, financial, and competition risks. The growth of AI technologies in our industry has influenced game production for developers and gaming experience for players... Any integration of any AI technologies into our products or services may result in new or enhanced governmental or regulatory scrutiny, litigation, confidentiality or security risks, ethical concerns, negative user perceptions as to automation and AI.

Technology infrastructure · Technology systems and infrastructure failure

Our business is subject to our ability to develop commercially successful products for the current video game platforms. We derive a significant portion of our revenue from the sale of products made for video game platforms manufactured by third parties, such as Sony's PlayStation consoles and Microsoft's Xbox consoles, which comprised 39.0% of our net revenue by product platform for the fiscal year ended March 31, 2026.

Cybersecurity and data protection · Data breaches and cyber attacks

We rely on complex information technology systems and networks to operate our business. Any significant system or network disruption or cyberattack could have a negative impact on our business... We have faced, and in the future could face, sophisticated attacks, including attacks referred to as advanced persistent threats-i.e., cyberattacks aimed at compromising our intellectual property and other commercially sensitive information, such as the source code and game assets for our software.

Digital transformation and innovation · Digital transformation and modernization

The increasing importance of digital sales and free-to-play games to our business exposes us to the risks of that business model, including greater competition. The proportion of our revenues derived from digital content delivery, as compared to traditional retail sales, has increased significantly in recent years.

Industry regulation · Licensing and permits

We cannot publish our titles without the approval of hardware licensors that are also our competitors, and we rely on a limited number of channel partners, some of whom influence the fee structures for online distribution of our games on their platforms. We are required to obtain licenses from certain of our competitors, including Sony and Microsoft, to develop and publish titles for their respective hardware platforms.

Data and privacy · Data protection and privacy laws

Our business could be adversely affected if our consumer data protection measures are not seen as adequate or there are breaches of our security measures or unintended disclosures of consumer data. We collect and store consumer information, including personal information. We implement and maintain measures designed to comply with applicable law to protect the consumer information we hold from unauthorized access or disclosure.

Human capital and workforce · Key personnel dependence and succession

We depend on our key management and product development personnel. Our continued success will depend to a significant extent on our senior management team and our relationship with ZMC Advisors, L.P. ('ZMC'). We are also highly dependent on the expertise, skills and knowledge of our key creative personnel responsible for content creation and development, such as of our Grand Theft Auto and other hit titles.

Human capital and workforce · Talent acquisition and retention

Attracting, managing and retaining our talent is critical to our success. Our business depends on our ability to attract, train, motivate, and retain executive, technical, creative, marketing, and other personnel that are essential to the development, marketing, and support of our products and services. The market for highly-skilled workers and leaders in our industry is extremely competitive.

Supply chain and procurement · Supplier operation and dependance

Our business is partly dependent on our ability to enter into successful software development arrangements with third parties. Our success depends on our ability to continually identify and develop new titles timely. We rely on third-party software developers for the development of some of our titles.

Reputation and brand · Brand damage and negative publicity

Our results of operations or reputation may be harmed as a result of offensive or potentially dangerous consumer-created content. We are subject to risks associated with the collaborative online features in our games which allow consumers to post narrative comments, in real time, that are visible to other consumers. From time to time, objectionable and offensive or potentially dangerous consumer content may be posted.

Stakeholder relations · Supplier and vendor relationships

Our business may be harmed if our distributors, retailers, development, and licensing partners, or other third parties with whom we do business are unable to honor their commitments or act in ways that put our brand at risk. In many cases, our business partners are given access to sensitive and proprietary information or control over our intellectual property to provide services and support to our team.