10-KPeriod: FY2010

TAKE TWO INTERACTIVE SOFTWARE INC Annual Report, Year Ended Mar 31, 2010

Filed December 20, 2010For Securities:TTWO

Summary

Take-Two Interactive Software, Inc. (TTWO) filed a Transition Report on Form 10-KT for the five-month period ending March 31, 2010, covering a transition in their fiscal year end. The company operates as a global publisher and developer of interactive entertainment software, with key labels Rockstar Games and 2K. During this period, TTWO faced a challenging economic environment impacting consumer spending, although net revenue saw an increase compared to the prior year's comparable period, driven by strong performances from titles like BioShock 2 and Borderlands, partially offset by decreased sales of the Grand Theft Auto franchise. The company is strategically focused on developing premium quality games and successful franchises, emphasizing internally owned intellectual property. They are also leveraging emerging technologies like downloadable content and expanding into international markets, particularly Asia. Despite revenue growth in this transition period, TTWO reported a net loss, reflecting ongoing investments in development and marketing, as well as the impact of a discontinued distribution business. Investors should note the company's reliance on 'hit' titles, the competitive nature of the industry, and risks associated with product development cycles and platform dependence.

Financial Statements
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Key Highlights

  • 1The company has shifted its fiscal year end to March 31, making this filing a Transition Report for the period November 1, 2009, to March 31, 2010.
  • 2Net revenue for the transition period increased by 20.8% compared to the prior year's comparable period, reaching $359.2 million, driven by new releases and franchise performance.
  • 3Despite revenue growth, the company reported a net loss of $28.8 million for the transition period, an improvement from the $46.3 million loss in the prior year's comparable period.
  • 4Key franchises like Grand Theft Auto continued to be significant revenue drivers, though sales decreased year-over-year, while new titles like BioShock 2 and Borderlands showed strong performance.
  • 5TTWO continues to focus on developing internally owned intellectual property and leveraging emerging technologies such as downloadable content and expanding its presence in international markets, especially in Asia.
  • 6The company sold its Jack of all Games third-party distribution business in February 2010, with results classified as discontinued operations.
  • 7The company faces significant risks including dependence on 'hit' titles, industry competition, product development cycles, and reliance on major hardware platforms and a limited number of key customers.

Frequently Asked Questions

Take-Two Interactive Software, Inc. is a global publisher and developer of interactive entertainment software. They operate through their wholly-owned labels Rockstar Games and 2K (which includes 2K Games, 2K Sports, and 2K Play), developing, publishing, marketing, and selling software titles for various gaming hardware platforms.

During this five-month transition period, Take-Two reported an increase in net revenue to $359.2 million, a 20.8% rise compared to the same period in the previous year. However, the company also incurred a net loss of $28.8 million. This loss was an improvement from the $46.3 million net loss reported in the prior year's comparable period. The company benefited from strong sales of titles like BioShock 2 and Borderlands, but saw a decrease in Grand Theft Auto franchise sales.

Take-Two's strategies include focusing on creating premium quality games and successful franchises with internally owned intellectual property. They are also actively pursuing revenue streams from emerging technologies like downloadable content and in-game advertising. Furthermore, the company aims to expand its international business, particularly in the Asia-Pacific markets, and to diversify its product offerings across different genres and target demographics.

Key risks include a heavy reliance on the success of 'hit' titles, particularly the Grand Theft Auto franchise, which can lead to significant revenue fluctuations. The company also faces intense competition in the interactive entertainment industry, risks associated with product development cycles and costs, dependence on third-party hardware platform manufacturers (Sony, Microsoft, Nintendo), and a significant portion of sales coming from a limited number of major customers.