About Take-Two Interactive Software

Take-Two Interactive Software, Inc. is a leading developer, publisher, and marketer of interactive entertainment for consumers around the globe. The company develops, operates, and publishes products principally through Rockstar Games, 2K, Private Division, and Zynga. The company’s products are designed for console gaming systems, PC, and mobile, including smartphones and tablets. The company delivers its products through physical retail, digital download, online platforms, and cloud streaming services. Strategy The company’s strategy is to be the most creative, innovative, and efficient company in the evolving interactive entertainment industry. With its diverse portfolio that spans all key platforms and numerous genres, the company strives to create the highest quality, most engaging interactive entertainment franchises and captivate its global audience. Most of the company’s intellectual property is internally owned and developed, which best positions it financially and competitively. The company has established a portfolio of proprietary software content for the major hardware and mobile platforms in a wide range of genres, including action, adventure, family/casual, hyper-casual, role-playing, shooter, social casino, sports, and strategy, which it distributes worldwide. The company has created, acquired, or licensed a group of highly recognizable brands to match the broad consumer demographics that it serves, ranging from adults to children and game enthusiasts to casual gamers. Another cornerstone of the company’s strategy is to support the success of its products in the marketplace through innovative marketing programs and global distribution on platforms and through channels that are relevant to its target audience. The key elements of the company’s strategy are to support world-class creative teams; focus on core strength of producing high quality titles; leverage emerging technologies, platforms, and distribution channels, including digitally-delivered content; and expand international business. Businesses The company derives substantially all of its revenue from the sale of its interactive entertainment content, which includes the sale of internally developed software titles and software titles developed by third parties, the sale of in-game virtual items and advertising, and live services on console, PC, and mobile. Operating margins are dependent in part upon the company’s ability to release new, commercially successful software products and to manage effectively their development and marketing costs. The company has internal development studios located in Australia, Canada, China, the Czech Republic, Finland, Germany, Hungary, India, Serbia, South Korea, Spain, Turkey, the United Kingdom (U.K.), and the United States (U.S.). Agreements with third-party developers generally give the company exclusive publishing and marketing rights and require it to make development payments, pay royalties based on product sales, and satisfy other conditions. Development payments for software titles are typically recoupable against royalties otherwise due to developers based on software sales. The company’s agreements with third-party developers generally provide it with the right to monitor development efforts and to cease making development payments if specified development milestones are not satisfied. The company also regularly monitors the level of development payments in light of the expected sales for the related titles. The company continues to engage in evolving business models such as online gaming, virtual currency, add-on content, and in-game purchases, and it expects to continue to generate incremental revenue from these opportunities. The company also generate revenue from advertising within its software products. Rockstar Games: Rockstar Games' strategy is to develop a limited number of titles that are known for their quality and longevity in the market for which they can create sequels and incremental revenue opportunities through virtual currency, add-on content, and in-game purchases. Software titles published by the company’s Rockstar Games label are primarily internally-developed. The company expects Rockstar Games, its wholly-owned publisher of the Grand Theft Auto, LA Noire, Max Payne, Midnight Club, Red Dead Redemption, and other popular franchises, to continue to be a leader in the action/adventure product category and to create groundbreaking entertainment. The company’s most recent installment, Grand Theft Auto V, which was released in 2013, has sold-in over 180 million units worldwide and includes access to Grand Theft Auto Online. Red Dead Redemption 2, which has been a critical and commercial success that set numerous entertainment industry records, has sold-in more than 50 million units worldwide to date. Rockstar Games confirmed that active development for the next entry in the Grand Theft Auto franchise is well underway with more details to be shared over time. Rockstar Games continues to expand on its established series by developing sequels, offering downloadable episodes, and additional content. Rockstar Games' titles are published across all key platforms, including mobile. 2K: The company’s 2K label has published a variety of popular entertainment properties across all key platforms and across a range of genres including shooter, action, role-playing, strategy, sports, and family/casual entertainment. In recent years, 2K has expanded its offerings to include several new franchises that are expected to diversify its slate of games and provide opportunities for sequels and post-launch monetization. The company expects 2K to continue to develop new, successful franchises in the future. 2K's internally owned and developed franchises include the critically acclaimed, multi-million unit selling BioShock, Mafia, Sid Meier's Civilization, and XCOM franchises. 2K also publishes externally developed franchises, such as Borderlands and Tiny Tina's Wonderlands. 2K's realistic sports simulation titles include the company’s flagship NBA 2K series, which continues to be the top-ranked NBA basketball video game, the WWE 2K professional wrestling series, and PGA TOUR 2K. In March 2020, 2K announced a multi-year partnership with the National Football League encompassing multiple future video games that will be non-simulation football game experiences. 2K also publishes mobile titles, including WWE SuperCard. The company has expanded its relationship with the NBA through the NBA 2K League, a groundbreaking competitive gaming league jointly owned by it and the NBA. Private Division: The company’s Private Division label is dedicated to bringing titles from the industry's leading creative talent to market and is the publisher, developer, and owner of Kerbal Space Program and OlliOlli World. Kerbal Space Program 2 was released for early access in fiscal year 2023. Private Division also previously released The Outer Worlds and Ancestors: The Humankind Odyssey. Zynga: The company’s Zynga label, which includes its former T2 Mobile Games label publishes popular free-to-play mobile games that deliver high quality, deeply engaging entertainment experiences and generates revenue from in-game sales and in-game advertising. Zynga's strategy is to have numerous games in concept development and to determine which titles are best suited for soft launch and worldwide launch based on the achievement of various milestones and KPI thresholds. Zynga's diverse portfolio of popular game franchises has been downloaded more than 6 billion times, including CSR Racing, Dragon City, Empires & Puzzles, FarmVille, Golf Rival, Harry Potter: Puzzles & Spells, Merge Dragons, Merge Magic, Monster Legends, Toon Blast, Top Eleven, Toy Blast, Two Dots, Words With Friends, Zynga Poker, and a high volume of hyper-casual mobile titles, including Fill the Fridge!, Parking Jam 3D, Pressure Washing Run, and Pull the Pin. Zynga is also an industry-leading next-generation platform with the ability to acquire new users, cross-promote games, apply live services content updates, and optimize programmatic advertising and yields at scale through Chartboost, its leading mobile advertising and monetization platform. Manufacturing Platform manufacturers, such as Sony, Microsoft, and Nintendo, either manufacture or control the selection of approved manufacturers of physical copies of software products sold for use on their respective hardware platforms. Arrangements with Platform Manufacturers The company has entered into license agreements with Sony and Microsoft to develop and publish software in Asia, Australia, Europe, North America, and certain Latin American, Middle Eastern, and African countries. Sony: Effective March 23, 2017, the company entered into a PlayStation Global Developer and Publisher Agreement with Sony Computer Entertainment, Inc. and certain of its affiliates, pursuant to which Sony granted the company the right and license to develop, publish, have manufactured, market, advertise, distribute and sell PlayStation compatible products for all PlayStation systems.The term of the agreement, as amended, expires on March 31, 2024, with automatic one-year renewal terms thereafter (unless one party gives the other notice of termination). Microsoft: Under the terms of the license agreements that the company has entered into with Microsoft Corporation and its affiliates, Microsoft granted it the right and license to develop, publish, have manufactured, market, advertise, distribute and sell Xbox compatible products. The agreements require the company to submit products to Microsoft for approval and to make royalty payments to Microsoft based on the number of units manufactured or revenue from digitally downloaded content. In addition, products for the Xbox consoles are required to be manufactured by Microsoft-approved manufacturers. Effective as of November 17, 2005, the company entered into an Xbox 360 Publisher License Agreement with Microsoft for the Xbox 360 console (the Xbox 360 Agreement). Effective as of July 1, 2020, the company entered into an Xbox Console Publisher License Agreement with Microsoft for the Xbox Series X|S and Xbox One consoles (the Xbox Next Gen Agreement and together with Xbox 360 Agreement, the Xbox Agreements). The term of Xbox 360 Agreement expires on March 31, 2024, and the term of the Xbox Next Gen Agreement expires on March 31, 2024, each with automatic one-year renewal terms thereafter (unless one party gives the other advance notice of non-renewal). Sales The company sells software titles both digitally and physically through direct relationships with digital storefronts and platform partners, large retail customers, and third-party distributors. The company sells its products globally and have sales operations in Australia, Canada, France, Germany, Japan, the Netherlands, Singapore, South Korea, Spain, Taiwan, the United Kingdom, and the United States. The company is dependent on a limited number of customers that account for a significant portion of is sales. Sales to the company’s five largest customers during the fiscal year ended March 31, 2023, accounted for 79.6% of its net revenue, with Sony, Google, Apple, and Microsoft each accounting for more than 10.0% of its net revenue. The company also distributes its titles, add-on content, and in-game purchases through direct digital download to consoles, PCs, and mobile devices. The company also sells advertising within a number of its games. The company’s advertising offerings provide creative ways for marketers and advertisers to reach and engage with its players and are generally essential for its free-to-play titles. The company’s advertising offerings include banner and interstitial advertisements, engagement advertisements and offers in which players can participate in watch-to-earn engagements or other offer engagements, branded virtual items and sponsorships that integrate relevant advertising and messaging within game play, and advertising networks through which it offers a unified advertising platform that includes a demand side platform and supply side platform, as well as mediation capabilities. Marketing The company’s marketing and promotional efforts are intended to acquire new users, maximize consumer interest in its titles, promote brand name recognition of its franchises, assist retailers and to properly position, package and merchandise its titles. Marketing is particularly important for the company’s mobile titles to build a large community of players. The company markets titles by: Implementing public relations campaigns, using social, digital, online, television, outdoor, and print marketing, including certain performance marketing programs. Stimulating continued sales by reducing the wholesale prices of the company’s products to retailers, digital storefronts, and platform providers at various times during the life of a product. Employing various other marketing methods designed to promote consumer awareness, including social media, in-store promotions and point-of-purchase displays, direct mail, cooperative advertising, attendance at trade shows as well as product sampling through demonstration software distributed via the Internet or the digital online services. The company has been able to build a large community of players, particularly for mobile titles, through players discovering of its games in platform storefronts, the viral and social features built into the network effects of its games, as well as the cross-promotion of its games to its existing audience. The company advertises its mobile games primarily within other mobile applications and on social networks, often through in-app and other advertising partners, such as Facebook and Google. International Operations The company is continuing to execute on its growth initiatives in Asia, where its strategy is to broaden the distribution of its existing products and expand its online gaming presence, especially in China and South Korea. Competition In the company’s business, it competes with Activision Blizzard, Inc.; Electronic Arts Inc.; Embracer Group AB; Playrix; Playtika; Roblox; Scopely; Tencent; and Ubisoft Entertainment S.A. In the company’s business, it competes with Sony, Microsoft, and Nintendo. The company also faces competition from online game developers and distributors who have primarily focused on specific international markets and with high-profile companies with significant online presences with new and expanded mobile gaming offerings, such as Apple, Google, and Microsoft. History Take-Two Interactive Software, Inc. was incorporated under the laws of the state of Delaware in 1993.