Take Two Interactive Software (TTWO) risk factors, FY2026 10-K

Risks relating to our business and industry

1. 01The interactive entertainment software industry is highly competitive
2. 02The 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
3. 03We are subject to product development risks which could result in delays and additional costs, and we must adapt to changes in software technologies
4. 04Our 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
5. 05We are dependent on the future success of our Grand Theft Auto products and other hit titles, and we must continue to publish hit titles or sequels to such hit titles in order to compete successfully in our industry
6. 06The development, use, and incorporation of artificial intelligence (“AI”) into our products and within our industry may present operational, reputational, financial, and competition risks72% rewritten
7. 07Our business is subject to our ability to develop commercially successful products for the current video game platforms
8. 08We 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
9. 09We 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 business63% rewritten
10. 10Our vendors, service providers, business partners, and software supply chain may also experience disruptions, be subject to attacks, or have compromised security, which may result in future security incidents and breaches, and otherwise adversely impact our ability to provide our products and servicesNew
11. 11Our 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 data26% rewritten
12. 12We depend on our key management and product development personnel
13. 13Attracting, managing and retaining our talent is critical to our success
14. 14Our results of operations or reputation may be harmed as a result of offensive or potentially dangerous consumer-created content
15. 15Our business is partly dependent on our ability to enter into successful software development arrangements with third parties
16. 16Our 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
17. 17The 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
18. 18If we acquire or invest in other businesses, intellectual properties, or other assets, we may be unable to integrate them with our business, our financial performance may be impaired and/or we may not realize the anticipated financial and strategic goals for such transactions33% rewritten
19. 19personnel skills acquired do not prove to be those needed for our future success, and the risk that our strategic objectives, cost savings or other anticipated benefits are otherwise not achievedNew
20. 20We face risks from our international operations64% rewritten
21. 21services and could result in a loss of sales for games and related services. An extended interruption of service could materially adversely affect our business, financial condition and operating resultsNew
22. 22We use open-source software in connection with certain of our games and services, which may pose particular risks to our proprietary software, products, and services in a manner that could have a negative impact on our business
23. 23Our software is susceptible to errors, which can harm our financial results and reputation
24. 24Our ability to acquire and maintain licenses to intellectual property, especially for sports titles, affects our revenue and profitability. Competition for these licenses may make them more expensive and increase our costs
25. 25We may experience declines or fluctuations in the recurring portion of our business
26. 26Price protection granted to our customers and returns of our published titles by our customers may adversely affect our operating results
27. 27Increased competition for limited promotional support from retailers could affect the success of our business and require us to incur greater expenses to market our titles56% rewritten
28. 28A 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
29. 29Content policies adopted by retailers, consumer opposition and litigation could negatively affect sales of our products76% rewritten
30. 30If we are unable to protect the intellectual property relating to our software, the commercial value of our products will be adversely affected, and our competitive position could be harmed
31. 31The value of our virtual items is highly dependent on how we manage the economies in our games. If we fail to manage our game economies properly, our business may suffer
32. 32Some of our players may make sales or purchases of virtual items used in our games through unauthorized or fraudulent third-party websites, which may reduce our revenue

Risks related to legal or regulatory compliance

1. 33Companies and governmental agencies may restrict access to platforms, our website, mobile applications or the Internet generally, which could have a negative impact on our business
2. 34Our business and products are subject to a variety of existing U.S. and foreign laws and regulations, many of which are unsettled and still developing, as well as potential new legislation, all of which could subject us to claims or otherwise harm our business64% rewritten
3. 35monitoring program and pay a fine of $20 million. Also, we may be subject to civil claims and regulatory actions alleging our games, including social casino games, violate certain state laws concerning unfair or deceptive acts or practices in conduct of any trade or commerce or certain state gambling lawsNew
4. 36The laws and regulations concerning data privacy, consumer protection, and certain other aspects of our business are continually evolving. Failure to comply with these laws and regulations could harm our business47% rewritten
5. 37or when. Any such new or amended privacy laws may add complexity to our compliance efforts and require us to expend additional financial or other resources as a resultNew
6. 38Further, and most notably in the mobile ecosystem, companies that provide the platforms on which our games are played are changing the terms on which publishers can collect and use personal data obtained from users on those platforms
7. 39If we infringe on or are alleged to infringe on the intellectual property rights of third parties, our business could be adversely affected

Risks related to financial and economic condition

1. 40We have a significant amount of outstanding indebtedness, and may incur other indebtedness in the future, all of which may adversely affect our financial condition and future financial results
2. 41Delaware law, our charter documents, and provisions of our debt agreements may impede or discourage a takeover, which could cause the market price of our shares to decline
3. 42Changes in our tax rates or exposure to additional tax liabilities could adversely affect our earnings and financial condition54% rewritten
4. 43not yet enacted Pillar Two legislation, it is possible that Pillar Two could have an adverse impact effective tax rate, tax payments, and financial condition in future periodsNew
5. 44Our ability to use net operating loss and tax credit carryforwards to reduce future years' taxes could be substantially limited under Internal Revenue Code Sections 382 and 383 if we experience an ownership change as defined in the Internal Revenue Code Section 382New
6. 45We are subject to risks and uncertainties of international trade, including fluctuations in the values of local foreign currencies against the dollar21% rewritten
7. 46Our reported financial results could be adversely affected by the application of existing or future accounting standards to our business as it evolves
8. 47Declines in consumer spending and other adverse changes in the economy could have a material adverse effect on our business, financial condition and operating results
9. 48Additional issuances or sales of equity securities by us would dilute the ownership of our existing stockholders and could adversely affect the market price of our common stock22% rewritten
10. 49We are subject to risks related to corporate and social responsibility and reputation
11. 50Catastrophic events and climate change may have a long-term impact on our business
12. 51We may be adversely affected by the effects of inflation
13. 52We are and may become involved in legal proceedings that may result in adverse outcomes