1 unchanged sentence
Because of the risks and uncertainties described below, as well as other factors affecting our operating results and financial condition, past financial performance should not be considered to be a reliable indicator of future performance and our business and financial performance could be harmed and the market value of our securities could decline.
−Removed: Risks relating to our business
−Removed: We are dependent on the future success of our Grand Theft Auto products and we must continue to publish "hit" titles or sequels to such "hit" titles in order to compete successfully in our industry.
−Removed: Grand Theft Auto and certain of our other titles, such as Red Dead Redemption or NBA 2K , are "hit" products and have historically accounted for a substantial portion of our revenue.
−Removed: Grand Theft Auto products contributed 23.0% of our net revenue for the fiscal year ended March 31, 2020, and the five best-selling franchises (including Grand Theft Auto ), which may change year over year, in the aggregate accounted for 87.4% of our net revenue for the fiscal year ended March 31, 2020.
−Removed: If we fail to continue to develop and sell new commercially successful "hit" titles or sequels to such "hit" titles or experience any delays in product releases or disruptions following the commercial release of our "hit" titles or their sequels, our revenue and profits may decrease substantially and we may incur losses.
−Removed: In addition, competition in our industry is intense and a relatively small number of hit titles account for a large portion of total revenue in our industry.
−Removed: Hit products offered by our competitors may take a larger share of consumer spending than we anticipate, which could cause revenue generated from our products to fall below our expectations.
−Removed: If our competitors develop more successful products or services at lower price points or based on payment models perceived as offering better value, or if we do not continue to develop consistently high quality and well-received products and services, our revenue and profitability may decline.
−Removed: In addition, both the online and mobile games marketplaces are characterized by frequent product introductions, relatively low barriers to entry, and new and evolving business methods, technologies and platforms for development.
−Removed: Widespread consumer adoption of these new platforms for games and other technological advances in and/or new business or payment models in online or mobile game offerings could negatively affect our sales of console and traditional PC products before we have an opportunity to develop profitable businesses in such markets.
+Added: Risks relating to our business and industry
Our results of operations may be materially adversely impacted by the coronavirus pandemic (COVID-19).
1 unchanged sentence
The global spread of COVID-19 has created significant uncertainty, resulting in volatility and economic disruption.
−Removed: The extent to which COVID-19 has an impact on our business, operations and financial results will depend on numerous evolving factors that we may not be able to accurately predict, including the duration and scope of the pandemic;
+Added: The extent to which COVID-19 has an impact on our business, operations, or financial results will depend on numerous evolving factors that we may not be able to accurately predict, including the duration and scope of the pandemic;
governmental, business, and individuals’ actions that have been and continue to be taken in response to the pandemic;
1 unchanged sentence
the effect on consumer demand for our products and the discretionary spending patterns of our customers, including the ability of our customers to pay for our products;
−Removed: our ability to develop, market, and sell our products, including as a result of
−Removed: travel restrictions and people working from home;
+Added: our ability to develop, market, and sell our products, including as a result of travel restrictions and people working from home;
the impact on the operations of our counterparties, including the physical retail, digital download online platforms, and cloud streaming services we rely on for the distribution of our products, the suppliers who manufacture our physical products, and other third parties with which we partner (e.g.
6 unchanged sentences
In such situations, if employees or third-party developers who cannot optimally perform their responsibilities from home are not able to or are unwilling to report to work, we may experience material interruptions in product development and delays in bringing products to market.
−Removed: Such circumstances may also impact the effectiveness of the Company's quality controls and game testing measures.
+Added: Such circumstances may also impact the effectiveness of our quality controls and game testing measures.
An increase in the number of employees working remotely also increases the potential adverse impact of risk associated with information technology systems and networks, including cyber-attacks, computer viruses, malicious software, security breach, and telecommunication failures, both for systems and networks we control directly and for those that employees and third-party developers rely on to work remotely.
2 unchanged sentences
Further, key personnel could contract COVID-19, hindering their availability and productivity.
−Removed: Additionally, sports organizations' operations and seasons may be altered or even canceled based on the response to COVID-19.
+Added: Additionally, sports organizations' operations and seasons have and may be altered based on the response to COVID-19.
Such events could affect the demand for our sports titles.
−Removed: While we have developed and continue to develop plans to help mitigate the negative impact of the outbreak on our business, these efforts may not be effective, and a protracted economic downturn may limit the effectiveness of our mitigation efforts.
+Added: While we have developed and continue to develop plans to help mitigate the negative impact of the pandemic on our business, these efforts may not be effective, and a protracted economic downturn may limit the effectiveness of our mitigation efforts.
Any of these considerations described above could cause or contribute to the risks described elsewhere herein and could materially adversely affect our business, financial condition, results of operations or stock price.
+Added: Additionally, while we have seen increased demand for our products due to stay-at-home orders, the curtailment of certain other forms of entertainment, and other pandemic-related factors that make consumers more inclined to spend time at home, benefiting our financial results and operating metrics, the trends in fiscal year 2021 with respect to our revenues, net income, and other financial results and operating metrics may not be indicative of results for future periods, particularly if these pandemic-related factors become less significant.
+Added: We are dependent on the future success of our Grand Theft Auto products, and we must continue to publish "hit" titles or sequels to such "hit" titles in order to compete successfully in our industry.
+Added: Grand Theft Auto and certain of our other titles, such as Red Dead Redemption or NBA 2K , are "hit" products and have historically accounted for a substantial portion of our revenue.
+Added: Grand Theft Auto products contributed 29.2% of our net revenue for the fiscal year ended March 31, 2021, and the five best-selling franchises (including Grand Theft Auto ), which may change year over year, in the aggregate accounted for 84.1% of our net revenue for the fiscal year ended March 31, 2021.
+Added: If we fail to continue to develop and sell new commercially successful "hit" titles or sequels to such "hit" titles or experience any delays in product releases or disruptions following the commercial release of our "hit" titles or their sequels, our revenue and profits may decrease substantially and we may incur losses.
+Added: In addition, competition in our industry is intense and a relatively small number of hit titles account for a large portion of total revenue in our industry.
+Added: Hit products offered by our competitors may take a larger share of consumer spending than we anticipate, which could cause revenue generated from our products to fall below our expectations.
+Added: If our competitors develop more successful products or services at lower price points or based on payment models perceived as offering better value, or if we do not continue to develop consistently high quality and well-received products and services, our revenue and profitability may decline.
+Added: In addition, both the online and mobile games marketplaces are characterized by frequent product introductions, relatively low barriers to entry, and new and evolving business methods, technologies and platforms for development.
+Added: Widespread consumer adoption of these new platforms for games and other technological advances in and/or new business or payment models in online or mobile game offerings could negatively affect our sales of console and traditional PC products before we have an opportunity to develop profitable businesses in such markets.
+Added: The interactive entertainment software industry is highly competitive.
+Added: 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.
+Added: We also compete with game publishers, such as Activision Blizzard, Inc., Electronic Arts Inc., and Ubisoft Entertainment S.A.
+Added: As our business is dependent upon our ability to develop hit titles, which require increasing budgets for development and marketing, the availability of significant financial resources has become a major competitive factor in developing and marketing software games.
+Added: 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 and make higher offers to licensors and developers for commercially desirable properties.
+Added: Our titles also compete with other forms of entertainment, such as social media and casual games, in addition to motion pictures, television and audio and video products featuring similar themes, online computer programs and other entertainment, which may be less expensive or provide other advantages to consumers.
+Added: A number of software publishers who compete with us have developed and commercialized or are currently developing online games.
+Added: As technological advances significantly increase the availability of online games and as consumer acceptance of online gaming grows substantially, it could result in a decline in our platform-based software sales and negatively affect sales of such products.
+Added: Additionally, we compete with other forms of entertainment and leisure activities.
+Added: While we monitor general market conditions, significant shifts in consumer demand that could materially alter public preferences for different forms of entertainment and leisure activities are difficult to predict.
+Added: Failure to adequately identify and adapt to these competitive pressures could have a negative impact on our business.
We are subject to product development risks which could result in delays and additional costs, and we must adapt to changes in software technologies.
2 unchanged sentences
Therefore, our development costs can be substantial.
−Removed: If we or our third-party developers experience unanticipated development delays, financial difficulties, or additional costs, for example as a result of the coronavirus pandemic (COVID-19), we may not be able to release titles according to our schedule and at budgeted costs.
+Added: If we or our third-party developers experience unanticipated development delays, financial difficulties, or additional costs, for example, as a result of COVID-19, we may not be able to release titles according to our schedule and at budgeted costs.
There can be no assurance that our products will be sufficiently successful so that we can recoup these costs or make a profit on these products.
7 unchanged sentences
Our business is subject to our ability to develop commercially successful products for the current video game platforms.
−Removed: We derive most of our revenue from the sale of products made for video game platforms manufactured by third parties, such as Sony's PS4 and Microsoft's Xbox One, which comprised 74.7% of our net revenue by product platform for the fiscal year ended March 31, 2020.
+Added: We derive most of our revenue from the sale of products made for video game platforms manufactured by third parties, such as Sony's PS4 and PS5 and Microsoft's Xbox One and Xbox Series X|S, which comprised 74.6% of our net revenue by product platform for the fiscal year ended March 31, 2021.
The success of our business is subject to the continued popularity of these platforms and our ability to develop commercially successful products for these platforms.
−Removed: In 2020, we expect Sony and Microsoft to launch their respective next generation consoles, although COVID-19 or other events may impact the timing of release and availability of these new consoles.
−Removed: When next generation consoles are announced or introduced into the market, consumers have typically reduced their purchases of products for prior-generation consoles in anticipation of purchasing a next-generation console and products for that console.
+Added: In 2020, Sony and Microsoft each launched their respective next generation consoles.
+Added: Historically, when next generation consoles are announced or introduced into the market, consumers have typically reduced their purchases of products for prior-generation consoles in anticipation of purchasing a next-generation console and products for that console.
During these periods, sales of the products we publish may decline until new platforms achieve wide consumer acceptance.
4 unchanged sentences
As a result, our business and operating results may be more volatile and difficult to predict during console transitions than during other times.
+Added: Connectivity issues could affect our profitability and our ability to sell and provide online services for our products.
+Added: We rely upon third-party digital delivery platforms, such as Microsoft's Xbox Live, PlayStation Network, Steam, Epic, and other third-party service providers, to provide connectivity from the consumer to our digital products and our online services.
+Added: Connectivity issues could prevent customers from accessing this content and our ability to successfully market and sell our products could be adversely affected.
+Added: Given the increasing global usage of online platforms, in part as a result of the COVID-19 pandemic, the risks of connectivity issues may be heightened.
+Added: In addition, we could experience similar issues related to services we host on our internal servers.
+Added: Such issues also could affect our ability to provide game-related services and could have a material adverse effect on our business, financial condition, and operating results.
We may experience declines or fluctuations in the recurring portion of our business.
4 unchanged sentences
Any decline or fluctuation in this portion of our business may have a negative impact on our financial and operating results.
−Removed: Connectivity issues could affect our ability to sell and provide online services for our products and could affect our profitability.
−Removed: We rely upon third-party digital delivery platforms, such as Microsoft's Xbox Live, PlayStation Network, Steam, Epic, and other third-party service providers, to provide connectivity from the consumer to our digital products and our online services.
−Removed: Connectivity issues could prevent customers from accessing this content and our ability to successfully market and sell our products could be adversely affected.
−Removed: Given the increasing global usage of online platforms as a result of the COVID-19 pandemic, the risks of connectivity issues may be heightened.
−Removed: In addition, we could experience similar issues related to services we host on our internal servers.
−Removed: Such issues also could affect our ability to provide game-related services and could have a material adverse effect on our business, financial condition and operating results.
We rely on complex information technology systems and networks to operate our business.
Any significant system or network disruption could have a negative impact on our business.
−Removed: We rely on the efficient and uninterrupted operation of complex information technology systems and networks, some of which are within Take-Two and some of which are managed and/or hosted by third-party providers.
−Removed: All information technology systems and networks are potentially vulnerable to damage or interruption from a variety of sources, including but not limited to cyber-attacks, computer viruses, malicious software, security breach, energy blackouts, natural disasters, terrorism, war and telecommunication failures.
+Added: We rely on the efficient and uninterrupted operation of complex information technology systems and networks, some of which are within Take-Two and some of which are managed or hosted by third-party providers.
+Added: All information technology systems and networks are potentially vulnerable to damage or interruption from a variety of sources, including but not limited to cyber-attacks, computer viruses, malicious software, security breaches, energy blackouts, natural disasters, terrorism, war, and telecommunication failures.
We may also face sophisticated attacks, referred to as advanced persistent threats, which are cyber-attacks aimed at compromising our intellectual property and other commercially sensitive information, such as the source code and game assets for our software or confidential customer or employee information, which remain undetected for prolonged periods of time.
−Removed: Information technology system, network failures, or security breaches could negatively affect our business continuity, operations and financial results.
+Added: Information technology system disruptions, network failures, or security breaches could negatively affect our business continuity, operations and financial results.
These risks extend to the networks and e-commerce sites of console platform providers and other partners who sell or host our content online.
1 unchanged sentence
Along with our partners, we have expended, and expect to continue to expend, financial and operational resources to implement certain systems, processes and technologies to guard against cyber risks and to help protect our data and systems.
−Removed: However, the techniques used to exploit, disable, damage, disrupt or gain access to our networks, our products and services, supporting technological infrastructure,
−Removed: intellectual property and other assets change frequently, continue to evolve in sophistication and volume, and often are not detected for long periods of time.
+Added: However, the techniques used to exploit, disable, damage, disrupt or gain access to our networks, our products and services, supporting technological infrastructure, intellectual property and other assets change frequently, continue to evolve in sophistication and volume, and often are not detected for long periods of time.
Our systems, processes and technologies, and the systems, processes and technologies of our business partners or our third-party service providers, may not be adequate against all eventualities.
−Removed: In addition, the costs to respond to, mitigate, and/or notify affected parties of cyber-attacks and other security vulnerabilities are significant.
−Removed: Any failure to prevent or mitigate security breaches or cyber risks, or detect or respond adequately to a security breach or cyber risk, could result in a loss of anticipated revenue, interruptions to our products and services, cause us to incur significant remediation and notification costs, degrade the user experience, cause consumers to lose confidence in our products and services and significant legal and financial costs.
−Removed: Additionally, applicable insurance policies may be insufficient to reimburse the company for all such losses, and it is uncertain whether we will be able to maintain the current level of insurance coverage in the future on reasonable terms or at all.
+Added: In addition, the costs to respond to, mitigate, or notify affected parties of cyber-attacks and other security vulnerabilities are significant.
+Added: Any failure to prevent or mitigate security breaches or cyber risks, or detect or respond adequately to a security breach or cyber risk, could result in a loss of anticipated revenue, interruptions to our products and services, our having to incur significant remediation and notification costs, degrade the user experience, cause consumers to lose confidence in our products and services, and significant legal and financial costs.
+Added: Additionally, applicable insurance policies may be insufficient to reimburse us for all such losses, and it is uncertain whether we will be able to maintain the current level of insurance coverage in the future on reasonable terms or at all.
Successful exploitation of our systems can have other negative effects upon the products, services and user experience we offer.
In particular, the virtual economies that we have established in many of our games are subject to abuse, exploitation and other forms of fraudulent activity that can negatively affect our business.
−Removed: Virtual economies involve the use of virtual currency and/or virtual assets that can be used or redeemed by a player within a particular game or service.
+Added: Virtual economies involve the use of virtual currency or virtual assets that can be used or redeemed by a player within a particular game or service.
Although we have implemented and continue to develop programs reasonably designed to prevent such negative impacts, the abuse or exploitation of our virtual economies can include the illegitimate generation and sale of virtual items in black markets.
13 unchanged sentences
If an actual or perceived breach of our safeguards occurs, we may lose business, suffer irreparable damage to our reputation, and/or incur significant costs and expenses relating to the investigation and possible litigation of claims relating to such event.
−Removed: The laws and regulations concerning data privacy and certain other aspects of our business are continually evolving.
−Removed: Failure to comply with these laws and regulations could harm our business.
−Removed: We are subject to certain privacy and data protection laws, including those in the United States ("U.S.").
−Removed: Certain activities related to processing the personal data of individuals in the European Union ("E.U.") are conducted by our United Kingdom ("U.K.")-based data controller or our local entities in the E.U.
−Removed: Children's Online Privacy Protection Act also regulates the collection, use, and disclosure of personal information from children under 13 years of age.
−Removed: Failure to comply with privacy and data protection laws or age restrictions may increase our costs, subject us to expensive and distracting government investigations, and result in substantial fines, or result in lawsuits and claims against us to the extent these laws include a private right of action.
−Removed: Privacy and data protection laws are rapidly changing and likely will continue to do so for the foreseeable future, which could have an impact on our approach to operating and marketing our games.
−Removed: For example, the E.U.
−Removed: General Data Protection Regulation ("GDPR") became effective on May 25, 2018, replacing Data Protection Directive 95/46/EC.
−Removed: applies to us because we receive and process the personal information of individuals in the E.U., and we maintain certain local entities in the E.U.
−Removed: responsible for processing personal information.
−Removed: GDPR contains significant penalties for non-compliance.
−Removed: Countries in the E.U.
−Removed: are still enacting national laws that correspond to certain portions of the GDPR.
−Removed: In the U.S., the California Consumer Privacy Act ("CCPA") became effective on January 1, 2020 and applies to processing of personal information of California residents.
−Removed: Other states, including Nevada, have enacted or are considering similar privacy or data protection laws that may apply to us.
−Removed: government, including the Federal Trade Commission and the Department of Commerce, also continue to review the need for greater or different regulation over the collection of personal information and information about consumer behavior on the Internet and on mobile devices, and the U.S.
−Removed: Congress is considering a number of legislative proposals to regulate in this area.
−Removed: Various government and consumer agencies worldwide have also called for new regulation and changes in industry practices.
−Removed: Player use of our games is subject to our privacy policy, end user license agreements ("EULA"), and terms of service.
−Removed: If we fail to comply with our posted privacy policy, EULA, or terms of service, or if we fail to comply with existing privacy or data protection laws and regulations, it could result in proceedings or litigation against us by governmental authorities or others, which could result in fines or judgments against us, damage our reputation, affect our financial condition, and harm our business.
−Removed: If regulators, the media, or consumers raise any concerns about our privacy and data protection or consumer protection practices, even if unfounded, this could also result in fines or judgments against us, damage our reputation, negatively affect our financial condition, and damage our business.
−Removed: It is possible that a number of laws and regulations may be adopted or construed to apply to us in the U.S.
−Removed: and elsewhere that could restrict the interactive entertainment industry, including player privacy, advertising, taxation, content suitability, copyright, distribution, and antitrust.
−Removed: Furthermore, the growth and development of electronic commerce and virtual goods may prompt calls for more stringent consumer protection laws that may impose additional burdens on companies such as ours conducting business through digital sales.
−Removed: Any such changes would require us to devote legal and other resources to address such regulation.
−Removed: For example, existing laws or new laws regarding the regulation of currency, banking institutions, and unclaimed property may be interpreted to cover virtual currency or virtual goods.
−Removed: If that were to occur we may be required to seek licenses, authorizations, or approvals from relevant regulators, the granting of which may be dependent on us meeting certain capital and other requirements and we may be subject to additional regulation and oversight, all of which could significantly increase our operating costs.
−Removed: Changes in current laws or regulations or the imposition of new laws and regulations in the U.S.
−Removed: or elsewhere regarding these activities may lessen the growth of the interactive entertainment industry and impair our business, financial condition, and operating results.
−Removed: Although we have structured and operate our skill tournaments with applicable laws in mind, including any applicable laws relating to gambling, and believe that playing these games does not constitute gambling, our skill tournaments could in the future become subject to gambling-related rules and regulations and expose us to civil and criminal penalties.
−Removed: We also sometimes offer consumers of our online and casual games various types of contests and promotional opportunities.
−Removed: We are subject to laws in a number of jurisdictions concerning the operation and offering of such activities and games, many of which are still evolving and could be interpreted in ways that could harm our business.
−Removed: Further, some of our online games and other services include random digital item mechanics, which may become subject to regulations in various jurisdictions.
−Removed: If these were to occur, we might be required to seek licenses, authorizations, or approvals from relevant regulators, the granting of which may be dependent on us meeting certain capital and other requirements, and we may be subject to additional regulation and oversight, such as reporting to regulators, all of which could significantly increase our operating costs.
−Removed: Changes in current laws or regulations or the imposition of new laws and regulations in the U.S., the E.U., or elsewhere regarding these activities may lessen the growth of online or casual game services and impair our business.
−Removed: Also, existing laws or new laws regarding the marketing of in-game or in-app purchases, regulation of currency, banking institutions, unclaimed property, or money laundering may be interpreted to cover virtual currency or goods.
Security breaches involving the source code for our products or other sensitive and proprietary information could adversely affect our business.
12 unchanged sentences
There is no assurance that we will be able to attract a sufficiently large number of customers or recover costs incurred for developing and marketing any of these new products or services.
−Removed: For example, we may offer games that do not attract sufficient purchases of virtual currency, which may cause our investments into this product space, such as through our acquisition of Social Point, to fail to realize the expected benefits.
+Added: For example, we may offer games that do not attract sufficient purchases of virtual currency, which may cause our investments into this product space, such as through our acquisitions of Social Point and Playdots, to fail to realize the expected benefits.
External factors, such as competitive alternatives and shifting market preferences, may also have an impact on the successful implementation of any new products or services.
3 unchanged sentences
Our Executive Chairman/Chief Executive Officer and President are partners of ZelnickMedia.
−Removed: We are also highly dependent on the expertise, skills and knowledge of our key creative personnel responsible for content creation and development of our Grand Theft Auto and other hit titles and titles based on other brands.
+Added: We are also highly dependent on the expertise, skills and knowledge of our key creative personnel responsible
+Added: for content creation and development of our Grand Theft Auto and other hit titles and titles based on other brands.
We may not be able to continue to retain these personnel at current compensation levels, or at all.
2 unchanged sentences
Failure to continue to attract and retain qualified management and creative personnel could adversely affect our business and prospects.
−Removed: Declines in consumer spending and other adverse changes in the economy could have a material adverse effect on our business, financial condition and operating results.
−Removed: Most of our products involve discretionary spending on the part of consumers.
−Removed: We believe that consumer spending is influenced by general economic conditions and the availability of discretionary income.
−Removed: This makes our products particularly sensitive to general economic conditions and economic cycles as consumers are generally more willing to make discretionary purchases, including purchases of products like ours, during periods in which favorable economic conditions prevail.
−Removed: Adverse economic conditions, such as a prolonged U.S.
−Removed: or international general economic downturn, such as those caused by COVID-19, including periods of increased inflation, unemployment levels, tax rates, interest rates, energy prices, or declining consumer confidence, could also reduce consumer spending.
−Removed: Reduced consumer spending has and may in the future continue to result in reduced demand for our products and may also require increased selling and promotional expenses, which has had and may continue to have an adverse effect on our business, financial condition and operating results.
−Removed: In addition, during periods of relative economic weakness, our consolidated credit risk, reflecting our counterparty dealings with distributors, customers, capital providers and others may increase, perhaps materially so.
−Removed: As a result of COVID-19, our counterparty credit risk may be particularly exacerbated, as certain of our counterparties may face financial difficulties in paying owed amounts on a timely basis or at all.
−Removed: Furthermore, uncertainty and adverse changes in the economy could also increase the risk of material losses on our investments, increase costs associated with developing and publishing our products, increase the cost and availability of sources of financing, and increase our exposure to material losses from bad debts, any of which could have a material adverse effect on our business, financial condition and operating results.
−Removed: If economic conditions worsen, our business, financial condition and operating results could be adversely affected.
−Removed: 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;
−Removed: changes in consumer demographics;
−Removed: the availability and popularity of other forms of entertainment and leisure;
−Removed: and critical reviews and public tastes and preferences, which may change rapidly and cannot necessarily be predicted.
−Removed: Changes in our tax rates or exposure to additional tax liabilities could adversely affect our earnings and financial condition.
−Removed: We are a multinational corporation with operations in the U.S.
−Removed: and various other jurisdictions around the world.
−Removed: Accordingly, we are subject to tax in the U.S.
−Removed: and in various other jurisdictions.
−Removed: Significant judgment is required in determining our worldwide provision for income taxes, and, in the ordinary course of business, there are many transactions and calculations where the ultimate tax determination is uncertain.
−Removed: We are required to estimate future taxes.
−Removed: Although we currently believe our
−Removed: tax estimates are reasonable, the estimation process is inherently uncertain, and such estimates are not binding on tax authorities.
−Removed: Further, our effective tax rate could be adversely affected by a variety of factors, including changes in the business, the mix of earnings between countries with differing statutory tax rates, changes in tax elections, and changes in applicable tax laws.
−Removed: Additionally, tax determinations are regularly subject to audit by tax authorities, and developments in those audits could adversely affect our income tax provision.
−Removed: Should the ultimate tax liability exceed estimates, our income tax provision and net income or loss could be materially affected.
−Removed: In addition, numerous countries are evaluating their existing tax laws due in part to recommendations made by the Organization for Economic Co-operation and Development’s (“OECD’s”) Base Erosion and Profit Shifting (“BEPS”) project.
−Removed: Although we cannot predict whether, or in what form, any legislation based on such proposals may be adopted by the countries in which we do business, future tax reform based on such proposals may increase the amount of taxes we pay and adversely affect our operating results and cash flows.
−Removed: In the fiscal year ended March 31, 2019, we released our valuation allowance on certain U.S.
−Removed: deferred tax assets as a result of a determination that it was more-likely-than-not that such deferred tax assets would be realized.
−Removed: We will continue to evaluate our ability to realize our U.S.
−Removed: deferred tax assets.
−Removed: If future evidence suggests that any changes are required to reflect the amount of our U.S.
−Removed: deferred tax asset that is more-likely-than-not to be realized, we will adjust our valuation allowance as needed in the appropriate period.
−Removed: On June 21, 2018, the U.S.
−Removed: Supreme Court issued its decision in South Dakota v.
−Removed: Wayfair, which overturned previous case law that precluded states from requiring retailers to collect and remit sales tax on sales made to in-state customers unless the retailer had a physical presence in the state.
−Removed: Although this case is limited to sales tax collection obligations, we continue to monitor the potential impact of this decision on our state income tax footprint.
−Removed: The ultimate amount of tax payable in a given financial statement period may be materially affected by sudden or unforeseen changes in tax laws, changes in the mix and level of earnings by taxing jurisdictions, or changes to existing accounting rules or regulations.
−Removed: For example, on July 27, 2015, the U.S.
−Removed: Tax Court issued an opinion in Altera Corp.
−Removed: Commissioner, which concluded that related parties in an intercompany cost-sharing arrangement are not required to share costs related to stock-based compensation.
−Removed: In February 2016, the U.S.
−Removed: Internal Revenue Service appealed the decision to the U.S Court of Appeals for the Ninth Circuit.
−Removed: On June 7, 2019, the Ninth Circuit reversed the 2015 decision of the U.S.
−Removed: As a result of this decision, we are no longer reflecting a net tax benefit within our financial statements related to the removal of stock-based compensation from our intercompany cost-sharing arrangement.
−Removed: The taxpayer in the case requested a rehearing before the full Ninth Circuit which was denied on November 12, 2019.
−Removed: The case remains potentially open for judicial review by the U.S.
−Removed: Supreme Court.
−Removed: As a result, the final outcome of the case is uncertain.
−Removed: In February 2020, the taxpayer petitioned the U.S.
−Removed: Supreme Court to review the Ninth Circuit’s decision and is awaiting the Supreme Court’s decision as to whether it will hear the case.
−Removed: We will continue to monitor ongoing developments and potential impacts to our financial statements.
−Removed: We earn a significant amount of our operating income and continue to hold a significant portion of our cash outside the U.S.
−Removed: Our current intention is to reinvest indefinitely earnings of our foreign subsidiaries, and therefore we have not recorded any tax liabilities associated with the repatriation of foreign earnings.
−Removed: The Tax Cuts and Jobs Act (the "Tax Act") subjects a U.S.
−Removed: shareholder to current tax on GILTI earned by foreign subsidiaries.
−Removed: The FASB Staff Q&A Topic No.
−Removed: 5, Accounting for Global Intangible Low-Taxed Income, states that an entity can make an accounting policy election either to recognize deferred taxes for temporary differences that are expected to reverse as GILTI in future years or provide for the tax expense related to GILTI resulting from those items in the year the tax is incurred.
−Removed: We have elected to recognize the resulting tax on GILTI as an expense in the period incurred.
−Removed: We are also required to pay taxes other than income taxes, such as payroll, sales, use, value-added, net worth, property, and goods and services taxes, in both the U.S.
−Removed: and foreign jurisdictions.
−Removed: We are regularly under examination by tax authorities with respect to these non-income taxes.
−Removed: There can be no assurance that the outcomes from these examinations, changes in our business or changes in applicable tax law or interpretations will not have an adverse effect on our net income or loss and financial condition.
−Removed: Our quarterly 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.
+Added: 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.
We have experienced and may continue to experience wide fluctuations in quarterly operating results.
2 unchanged sentences
Demand for and sales of titles in our NBA 2K series are also seasonal in that they are typically released just prior to the start of the NBA season.
−Removed: If a key event or sports season to which our product release schedule is tied were to be delayed or canceled, our sales might also suffer
−Removed: disproportionately.
−Removed: For example, the NBA season, along with several other professional sports leagues, have cancelled or delayed their seasons as a result of the COVID-19 outbreak.
+Added: If a key event or sports season to which our product release schedule is tied were to be delayed or interrupted, as has happened as a result of COVID-19, our sales might also suffer disproportionately.
Our failure or inability to produce "hit" titles or introduce products on a timely basis to meet seasonal fluctuations in demand could adversely affect our business, financial condition and operating results.
The uncertainties associated with software development, manufacturing lead times, production delays and the approval process for products by hardware manufacturers and other licensors make it difficult to predict the quarter in which our products will ship and therefore may cause us to fail to meet financial expectations.
−Removed: Price protection granted to our customers and returns of our published titles by our customers may adversely affect our operating results.
+Added: Price protection granted to our customers and returns of our published titles by our customers, or sales of used video games, may adversely affect our operating results.
We are exposed to the risk of price protection and product returns with respect to our customers.
3 unchanged sentences
While we believe that we can reliably estimate price protection and returns, if price protection and return rates for our products exceed our reserves, our revenue could decline, which could have a material adverse effect on our business, financial condition, and operating results.
−Removed: Increased sales of used video game products could lower our sales.
Certain of our larger customers sell used video games, which are generally priced lower than new video games.
−Removed: If our customers increase their sales of used video games, it could negatively affect our sales of new video games and have an adverse influence on our business, financial condition and operating results.
+Added: If our customers increase their sales of used video games, it could negatively affect our sales of new video games.
A limited number of customers account for a significant portion of our sales.
1 unchanged sentence
A substantial portion of our product sales are made to a limited number of customers.
−Removed: Sales to our five largest customers during the fiscal year ended March 31, 2020 accounted for 71.5% of our net revenue, with Sony and Microsoft each accounting for more than 10.0% of our net revenue during the fiscal year ended March 31, 2020.
+Added: Sales to our five largest customers during the fiscal year ended March 31, 2021 accounted for 78.4% of our net revenue, with Sony and Microsoft each accounting for more than 10.0%.
Our sales are made primarily without long-term agreements or other commitments, and our customers may terminate their relationship with us at any time.
1 unchanged sentence
The loss of our relationships with principal customers or a decline in sales to principal customers, including as a result of a product being rated "AO" (age 18 and over), could materially adversely affect our business, financial condition, and operating results.
−Removed: In addition, if our customers are subject to pricing pressures due to deteriorating demand for our products, competitive pressure, or otherwise, such customers may pass those pricing pressures through to us, which could materially adversely affect our business, financial condition and operating results.
+Added: In addition, if our customers are subject to pricing pressures due to deteriorating demand for our products, competition, or otherwise, such customers may pass those pricing pressures through to us, which could materially adversely affect our business, financial condition and operating results.
In addition, because some of our customers are also publishers of games for their own hardware platforms and may manufacture products for other licensees, such customers may give priority to their own products or those of our competitors.
Accordingly, console manufacturers like Sony or Microsoft could cause unanticipated delays in the release of our products, as well as increases to projected development, manufacturing, marketing, or distribution costs, any of which could negatively impact our business.
−Removed: Furthermore, our customers may also be placed into bankruptcy, become insolvent, or be liquidated due to economic downturns, global contractions of credit, or for other factors.
−Removed: This risk has been heightened by the COVID-19 pandemic.
−Removed: Bankruptcies or consolidations of certain large retail customers could seriously hurt our business, including as a result of uncollectible accounts receivable from such customers and the concentration of purchasing power among remaining large retailers.
−Removed: In addition, our results of operations may be adversely affected if certain of our customers who purchase on credit terms are no longer eligible to purchase on such terms due to their financial distress or lack of credit insurance, which may reduce the quantity of products they demand from us.
−Removed: If our marketing and advertising efforts fail to resonate with consumers, our business, financial condition and operating results could be adversely affected.
−Removed: Our products are marketed worldwide through a diverse spectrum of promotional programs, such as social media advertising, digital and online marketing, television advertising, print advertising, retail merchandising, website development, and event sponsorship.
−Removed: Our ability to sell our products and services is dependent in part on the success of these programs.
−Removed: If the marketing for our products and services fails to resonate with consumers, particularly during the holiday season or other key selling periods, or if advertising rates or other media placement costs increase, these factors could have a material adverse influence on our business, financial condition and operating results.
−Removed: The interactive entertainment software industry is highly competitive.
−Removed: 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.
−Removed: We also compete with game publishers, such as Activision Blizzard, Inc., Electronic Arts Inc., and Ubisoft Entertainment S.A.
−Removed: As our business is dependent upon our ability to develop hit titles, which require increasing budgets for development and marketing, the availability of significant financial resources has become a major competitive factor in developing and marketing software games.
−Removed: 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 and make higher offers to licensors and developers for commercially desirable properties.
−Removed: Our titles also compete with other forms of entertainment, such as social media and casual games, in addition to motion pictures, television and audio and video products featuring similar themes, online computer programs and other entertainment, which may be less expensive or provide other advantages to consumers.
−Removed: A number of software publishers who compete with us have developed and commercialized or are currently developing online games.
−Removed: If technological advances significantly increase the availability of online games and if consumer acceptance of online gaming grows substantially, it could result in a decline in our platform-based software sales and negatively affect sales of such products.
−Removed: Additionally, we compete with other forms of entertainment and leisure activities.
−Removed: While we monitor general market conditions, significant shifts in consumer demand that could materially alter public preferences for different forms of entertainment and leisure activities are difficult to predict.
−Removed: Failure to adequately identify and adapt to these competitive pressures could have a negative impact on our business.
+Added: Furthermore, our customers may also be placed into bankruptcy, become insolvent, or be liquidated due to economic downturns, global credit contractions, or other factors, for example, as a result of COVID-19.
+Added: Bankruptcies or consolidations of certain large retail customers could seriously hurt our business, including as a result of uncollectible accounts receivable from such customers and the concentration of purchasing power among large retailers.
+Added: In addition, our results of operations may be
+Added: adversely affected if certain of our customers who purchase on credit terms are no longer eligible to purchase on such terms due to their financial distress or lack of credit insurance, which may reduce the quantity of products they demand from us.
Increased competition for limited shelf space and promotional support from retailers could affect the success of our business and require us to incur greater expenses to market our titles.
7 unchanged sentences
Such placement is subject to many similar risks as physical shelf space discussed above.
−Removed: The increasing importance of digital sales to our business exposes us to the risks of that business model, including greater competition.
+Added: The increasing importance of digital sales 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, may continue to increase.
−Removed: The increased importance of digital content delivery in our industry, including through subscription-based access to a portfolio of interactive content, increases our potential competition, as the minimum capital needed to produce and publish a digitally delivered game is significantly less than that needed to produce and publish one that is purchased through retail distribution.
−Removed: This will also require us to dedicate capital to developing and implementing alternative marketing strategies, which we may not do successfully.
+Added: The increased importance of digital content delivery in our industry, including through subscription-based access to a portfolio of interactive content, increases our potential competition, as the minimum capital needed to produce and publish a digitally delivered game is significantly less than that needed to produce and publish one that is delivered through retail distribution.
+Added: This shift also requires us to dedicate capital to developing and implementing alternative marketing strategies, which may not be successful.
If either occurs, we may be unable to effectively market and distribute our products, which could materially adversely affect our business, financial condition, and operating results.
2 unchanged sentences
Our business is partly dependent on our ability to enter into successful software development arrangements with third parties.
−Removed: Our success depends on our ability to continually identify and develop new titles on a timely basis.
+Added: 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.
−Removed: Quality third-party developers are continually in high demand.
−Removed: Software developers who have developed titles for us in the past may not be available to develop software for us in the future.
+Added: Quality third-party developers are continually in high demand, and those who have developed titles for us in the past may not be available to develop software for us in the future.
Due to the limited availability of third-party software developers and the limited control that we exercise over them, these developers may not be able to complete titles for us on a timely basis or within acceptable quality standards, if at all.
1 unchanged sentence
These agreements typically require us to make development payments, pay royalties, and satisfy other conditions.
−Removed: Our development payments may not be sufficient to permit developers to
−Removed: develop new software successfully, which could result in material delays and significant increases in our costs to bring particular products to market.
+Added: Our development payments may not be sufficient to permit developers to develop new software successfully, which could result in material delays and significant increases in our costs to bring particular products to market.
Software development costs, promotion and marketing expenses and royalties payable to software developers and third-party licensors have continued to increase and reduce potential profits derived from sales of our software.
6 unchanged sentences
If a licensor chooses not to renew or extend our license agreement at the end of its current term, or if a licensor were to terminate our license for any reason or does not approve one or more of our titles, we may be unable to publish that title as well as additional titles for that licensor's platform.
−Removed: During a console transition, like the one that is expected to occur in 2020, hardware platform manufacturers may seek to change the terms governing our relationships with them.
+Added: During or following a console transition, like the one that occurred in 2020, hardware platform manufacturers may seek to change the terms governing our relationships with them.
Termination of any such agreements or disapproval of titles could seriously hurt our business and prospects.
−Removed: We may be unable to continue to enter into license agreements for certain current generation platforms on satisfactory terms or at all.
+Added: unable to continue to enter into license agreements for certain current generation platforms on satisfactory terms or at all.
Failure to enter into any such agreement could also seriously hurt our business.
4 unchanged sentences
Outside of fee arrangements, our agreements with our channel partners sometimes give them significant control over other aspects of the distribution of our products and services that we develop for their platform.
−Removed: If our channel partners establish terms that restrict our offerings through their channels, or significantly affect the financial terms on which these products or services are offered to our customers, we may be unable to distribute our product offerings through them or be forced to do so on a materially worse financial or business terms in negotiating such various aspects of distribution.
+Added: If our channel partners establish terms that restrict our offerings through their channels, or significantly affect the financial terms on which these products or services are offered to our customers, we may be unable to distribute our product offerings through them or be forced to do so on materially worse financial or business terms in negotiating such various aspects of distribution.
Increased competition for digital “shelf space” has put channel partners in more favorable bargaining positions in relation to such terms of distribution.
−Removed: We may not be able to adequately adjust our cost structure in a timely fashion in response to a sudden decrease in demand.
−Removed: In the event of a significant decline in revenue, we may not be able to dispose of facilities, reduce personnel, or make other changes to our cost structure without disruption to our operations or without significant termination and exit costs.
−Removed: Management may not be able to implement such actions in a timely manner, if at all, to offset an immediate shortfall in revenue and profit.
−Removed: Moreover, reducing costs may impair our ability to produce and develop software titles at sufficient levels in the future.
We 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.
8 unchanged sentences
An extended interruption of service could materially adversely affect our business, financial condition and operating results.
−Removed: We expect a significant portion of our games to be on-line enabled in the future, and therefore we must project our future server needs and make advance purchases of servers or server capacity to accommodate expected business demands.
−Removed: If we underestimate the amount of server capacity our business requires or if our business were to grow more quickly than expected or if internet bandwidth becomes limited as a result of COVID-19 related increased worldwide demand, our consumers may experience service problems, such as slow or interrupted gaming access.
+Added: We expect a significant portion of our games to be online enabled in the future, and therefore we must project our future server needs and make advance purchases of servers or server capacity to accommodate expected business demands.
+Added: If we underestimate the amount of server capacity our business requires or if our business were to grow more quickly than expected or if Internet bandwidth becomes limited, for example as a result of COVID-19-related increased worldwide demand, our consumers may experience service problems, such as slow or interrupted gaming access.
Insufficient server capacity may result in decreased sales, a loss of our consumer base and adverse consequences to our reputation.
Conversely, if we overestimate the amount of server capacity required by our business, we may incur additional operating costs.
−Removed: Because of the potential importance of our online business to our revenues and results of operations, our ability to access adequate Internet bandwidth and online computational resources to support our business is critical.
+Added: Because of the importance of our online business to our revenues and results of operations, our ability to access adequate Internet bandwidth and online computational resources to support our business is critical.
If the price of such resources increases, we may not be able to increase our prices or subscriber levels to compensate for such costs, which could materially adversely affect our business, financial condition, and operating results.
2 unchanged sentences
We voluntarily submit our game products to the ESRB, a U.S.-based non-profit and independent ratings organization.
−Removed: The ESRB system provides consumers with information about game content using a rating symbol that generally suggests the appropriate player age group and specific content descriptors, such as graphic violence, profanity or sexually explicit material.
+Added: The ESRB system provides consumers with information about game content using a rating symbol that generally suggests the
+Added: appropriate player age group and specific content descriptors, such as graphic violence, profanity or sexually explicit material.
The ESRB may impose significant penalties on game publishers for violations of its rules related to rating or marketing games, including revocation of a rating or monetary fines.
1 unchanged sentence
In some instances, we may have to modify our products in order to market them under the target rating, which could delay or disrupt the release of our products.
−Removed: In addition, some of our titles may not be sold at all or without extensive edits in certain countries, such as Germany.
+Added: In addition, some of our titles may not be sold at all or without extensive edits in certain countries.
In the U.S., if the ESRB rates a game as "AO" (age 18 and older), platform licensors may not certify the game and retailers may refuse to sell it.
5 unchanged sentences
Nonetheless, these processes are subject to human error, circumvention, overriding, and reasonable resource constraints.
−Removed: If a video game we published were found to contain undisclosed pertinent content, the ESRB could re-rate a game, retailers could refuse to sell it and demand that we accept the return of any unsold copies or returns from customers, and consumers could refuse to buy it or demand that we refund their money.
+Added: If a video game we publish were found to contain undisclosed pertinent content, the ESRB could re-rate a game, retailers could refuse to sell it and demand that we accept the return of any unsold copies or returns from customers, and consumers could refuse to buy it or demand that we refund their money.
This could have a material negative effect on our operating results and financial condition.
−Removed: In addition, we may be exposed to litigation, administrative fines, and penalties, and our reputation could be harmed, which could affect sales of other video games we sell.
−Removed: If any of these consequences were to occur, our business and financial performance could be significantly harmed.
+Added: In addition, we may be exposed to litigation, administrative fines, and penalties, and our reputation could be harmed, which could affect sales of our other video games.
+Added: If any of these were to occur, our business and financial performance could be significantly harmed.
Content policies adopted by retailers, consumer opposition and litigation could negatively affect sales of our products.
−Removed: Retailers, including digital storefronts and platform partners, may decline to sell interactive entertainment software containing what they judge to be graphic violence or sexually explicit material or other content that they deem inappropriate for their businesses.
−Removed: If retailers decline to sell our products based upon their opinion that they contain objectionable themes, graphic
−Removed: violence or sexually explicit material or other generally objectionable content, or if any of our previously "M" rated series products are rated "AO," we might be required to significantly change or discontinue particular titles or series, which in the case of our best-selling Grand Theft Auto titles could seriously affect our business.
−Removed: Consumer advocacy groups have opposed sales of interactive entertainment software containing objectionable themes, violence or sexual material or other objectionable content by pressing for legislation in these areas and by engaging in public demonstrations and media campaigns.
+Added: Retailers, including digital storefronts and platform partners, may decline to sell interactive entertainment software containing what they judge to be graphic violence, sexually explicit material, or other content that they deem inappropriate.
+Added: If retailers decline to sell our products based on their opinion that they contain objectionable themes, graphic violence, sexually explicit material, or other generally objectionable content, or if any of our previously "M" rated series products are rated "AO," we might be required to significantly change or discontinue particular titles or series, which in the case of our best-selling Grand Theft Auto titles could seriously affect our business.
+Added: Consumer advocacy groups have opposed sales of interactive entertainment software containing objectionable themes, violence, sexual material, or other objectionable content by pressing for legislation in these areas and by engaging in public demonstrations and media campaigns.
Additionally, although lawsuits seeking damages for injuries allegedly suffered by third parties as a result of video games have generally been unsuccessful in the courts, claims of this kind have been asserted against us from time to time and may be asserted and be successful in the future.
An increase in the number of lawsuits filed by the families of victims of violence may trigger supplemental governmental scrutiny, damage our reputation, and negatively affect the sale of our products.
−Removed: Further, in 2019, the World Health Organization included "gaming disorder" in the 11th revision of the International Classification of Diseases (ICD-11), leading some to consider legislation and policies aimed at addressing this issue.
+Added: Further, in 2019, the World Health Organization included "gaming disorder" in the 11th revision of the International Classification of Diseases, leading some to consider legislation and policies aimed at addressing this issue.
In addition, public dialogue concerning interactive entertainment may have an adverse impact on our reputation and our customers' willingness to purchase our products.
4 unchanged sentences
We may also be subject to consumer backlash from comments made in response to postings we make on social media sites such as Facebook, YouTube and Twitter.
−Removed: We are subject to risks and uncertainties of international trade, including fluctuations in the values of local foreign currencies against the dollar.
−Removed: Sales in international markets, primarily in Europe, have accounted for a significant portion of our net revenue.
−Removed: For the fiscal year ended March 31, 2020, 42.5% of our net revenue was earned outside the U.S.
−Removed: We are continuing to execute on our growth initiatives in Asia, where our strategy is to broaden the distribution of our existing products and expand our online gaming presence, especially in China and South Korea.
−Removed: We are subject to risks inherent in foreign trade, including increased credit risks, tariffs, and duties, fluctuations in foreign currency exchange rates, shipping delays, and international political, regulatory and economic developments, all of which can have a significant influence on our operating results.
−Removed: Many of our international sales are made in local currencies, which could fluctuate against the dollar.
−Removed: While we may use forward exchange contracts to a limited extent to seek to mitigate foreign currency risk, our operating results could be adversely affected by unfavorable foreign currency fluctuations.
We face risks from our international operations.
1 unchanged sentence
Changes to and compliance with a variety of foreign laws and regulations may increase our cost of doing business and our inability or failure to obtain required approvals could harm our international and domestic sales.
−Removed: Trade legislation in either the U.S.
−Removed: or other countries, such as a change in the current tariff structures, import/export compliance laws, or other trade laws or policies, could adversely affect our ability to sell or to distribute in international markets.
−Removed: Additionally, cultural differences may affect consumer preferences and as a result, some of our “hit” products may not sell as well as they do in the U.S.
+Added: In either the U.S.
+Added: or other countries, trade legislation, such as a change in the current tariff structures, import/export compliance laws, or other trade laws or policies, could adversely affect our ability to sell or to distribute in international markets.
+Added: Additionally, cultural differences may affect consumer preferences and as a result, some of
+Added: our "hit" products may not sell as well as they do in the U.S.
Cultural differences may also require us to modify the content of our products or the method by which we charge our customers.
−Removed: If we do not correctly assess consumer preferences in the countries in which we sell our products, or respond to other risks related to our international operations, it could negatively impact our business.
−Removed: The current U.S.
−Removed: administration has voiced concerns about imports from countries potentially engaging in unfair trade practices, increased tariffs on certain goods imported into the U.S.
−Removed: from those countries, including China and other countries to which we sell products, and raised the possibility of imposing significant additional tariff increases.
−Removed: The announcement of tariffs and proposed tariffs on imported products by the U.S.
−Removed: has triggered actions from certain foreign governments, including China, and may trigger additional actions by those and other foreign governments that could have a negative impact on our business.
+Added: If we do not correctly assess consumer preferences in the countries in which we sell our products, or respond to other risks related to our international operations, it could negatively affect our business.
Further, the enforcement of regulations relating to mobile and other games with an online element in China remains uncertain, and further changes, either in the regulation or their enforcement could have a negative impact on our business in China.
1 unchanged sentence
A decision by the Chinese government to revoke its approval for any of our games or to decline to approve any products we desire to sell in China in the future could have a negative impact on our business.
−Removed: We incur additional legal compliance costs associated with our international operations and could become subject to legal penalties in foreign countries if we do not comply with local laws and regulations which may be substantially different from those in the U.S.
+Added: We incur legal compliance costs associated with our international operations and could become subject to legal penalties in foreign countries if we do not comply with local laws and regulations which may be substantially different from those in the U.S.
In many foreign countries, particularly in those with developing economies, it may be common to engage in business practices that are prohibited by U.S.
laws and regulations, such as the Foreign Corrupt Practices Act, and by local laws, such as laws prohibiting corrupt payments to government officials.
−Removed: Although we implement policies and procedures designed to ensure compliance with these laws, there can be no assurance that all of our employees, contractors and agents, as well as those companies to which we outsource certain of our business operations, including those based in or from countries where practices which violate such laws may be customary, will not take actions in violation of our policies.
+Added: Although we implement policies and procedures designed to ensure compliance with these laws, there can be no assurance that all of our employees, contractors and agents, as well as those companies to which we outsource certain of our business operations, including those based in countries where practices which violate such laws may be customary, will not take actions in violation of our policies.
Any such violation, even if prohibited by our policies, could have a material adverse effect on our business.
−Removed: On January 31, 2020, the U.K.
−Removed: left the E.U.
−Removed: (“Brexit”) and entered a transition period expected to last until the end of calendar 2020 during which the U.K.
−Removed: will continue to be subject to E.U.
−Removed: rules and regulations while it negotiates the future terms of its relationship with the E.U.
−Removed: A substantial amount of uncertainty remains regarding the outcome of the ongoing negotiations.
−Removed: We continue to assess and monitor the risks our business is likely to face as a result of Brexit.
+Added: In 2020, the U.K.
+Added: left the European Union ("E.U.") ("Brexit").
+Added: Subsequently, the U.K.
+Added: struck a bilateral trade and cooperation deal governing the future relationship between the U.K.
+Added: (the "Trade and Cooperation Agreement"), which took effect on May 1, 2021.
+Added: There remains unavoidable uncertainties and risks to our business related to Brexit and the new relationship between the U.K.
+Added: and E.U., which will continue to be developed and defined.
We are preparing to mitigate those risks with operational and commercial changes to the extent possible and warranted.
However, the legal and regulatory landscape remains uncertain, and we have no assurance that such preparations will enable us to avoid a material adverse impact on our business from Brexit.
−Removed: For example, Brexit could lead to legal uncertainty and potentially divergent national laws and regulations as the U.K.
+Added: Brexit could lead to legal uncertainty and potentially divergent national laws and regulations as the U.K.
determines which E.U.
laws to replace and replicate.
−Removed: If there are changes to U.K.
−Removed: immigration policy as a result of Brexit, this could affect our employees and their ability to move freely between the E.U.
−Removed: member states for work related matters.
+Added: For example, if there are changes to U.K.
+Added: immigration policy as a result of Brexit, our employees and their ability to move freely between the E.U.
+Added: member states for work-related matters could be affected.
The effects of the U.K.'s future trade agreements with the E.U.
or other nations could potentially disrupt the markets we serve and may cause us to lose customers, distributors, and employees.
−Removed: Access to the single E.U.
−Removed: market and benefits from the E.U.
−Removed: global trade deals depend on the U.K.'s future trade agreements with the E.U., and the terms of such agreements could have a detrimental impact on our U.K.
+Added: The Trade and Cooperation Agreement sets out preferential arrangements in areas such as the trade in goods and services but does not reach the level of integration that existed while the U.K.
+Added: member state, which could have a detrimental impact on our U.K.
Such a decline could also make our doing business in Europe more difficult, which could negatively affect sales to consumers of our products.
11 unchanged sentences
This may lead to lost revenues from paying consumers or increased cost of developing technological measures to respond to these, either of which could negatively affect our business.
−Removed: If we infringe on or are alleged to infringe on the intellectual property rights of third parties, our business could be adversely affected.
−Removed: As our industry grows, we may be subject to an increasing amount of litigation that is common in the software industry based on allegations of infringement or other alleged violations of patent, copyright, or trademarks.
−Removed: In addition, we believe that interactive entertainment software will increasingly become the subject of claims that such software infringes on the intellectual property rights of others with both the growth of online functionality and advances in technology, game content and software graphics as games become more realistic.
−Removed: From time to time, we receive notices from third parties or are named in lawsuits by third parties alleging infringement of their proprietary rights.
−Removed: Although we believe that our software and technologies and the software and technologies of third-party developers and publishers with whom we have contractual relations do not and will not infringe or violate proprietary rights of others, it is possible that infringement of proprietary rights of others may occur.
−Removed: Any claims of infringement, with or without merit, could be time consuming, costly and difficult to defend.
−Removed: Moreover, intellectual property litigation or claims could require us to discontinue the distribution of products, obtain a license or redesign our products, which could result in additional substantial costs and material delays.
Our software is susceptible to errors, which can harm our financial results and reputation.
1 unchanged sentence
As software products become more complex, the risk of undetected errors in new products increases.
−Removed: We may need to produce and distribute patches in order to repair such errors, which could be costly and may distract our developers from working on new products.
+Added: We may need to
+Added: produce and distribute patches in order to repair such errors, which could be costly and may distract our developers from working on new products.
If, despite testing, errors are found in new products or releases after shipments have been made, we may have to consider suspending distribution of defective products or offering refunds, and we could experience a loss of or delay in timely market acceptance, product returns, loss of revenue, increases in costs relating to the repair of such errors and damage to our reputation.
23 unchanged sentences
If we are unable to maintain and renew these licenses or obtain additional licenses on reasonable economic terms or with significant commercial value, our revenue and profitability could decline significantly.
−Removed: Competition for these licenses may also increase the advances, guarantees and royalties that we must pay to the licensor, which could significantly increase our costs and adversely affect our profitability.
+Added: Competition for these licenses may also increase the advances, guarantees
+Added: and royalties that we must pay to the licensor, which could significantly increase our costs and adversely affect our profitability.
In addition, on certain intellectual property licenses, we are subject to guaranteed minimum payments, royalties or standards of performance and may not be able to terminate these agreements prior to their stated expiration.
If such licensed products do not generate revenues in excess of such minimum guarantees, our profitability will be adversely affected.
−Removed: We are subject to contractual covenants which place certain limitations on how we manage our business .
+Added: We are or may be subject to contractual covenants which place certain limitations on how we manage our business .
Our credit agreement (the "Credit Agreement") may limit our ability to take various actions, including incurring additional debt, paying dividends, repurchasing shares, and acquiring or disposing of assets or businesses.
−Removed: In addition, we have granted a security interest in connection with certain compensatory arrangements which limits our ability to incur senior debt in excess of certain amounts.
Accordingly, we may be restricted from taking actions that management believes would be desirable and in the best interests of us and our stockholders.
1 unchanged sentence
A breach of any of the covenants contained in our Credit Agreement could result in an event of default, which would allow our lenders to pursue various remedies, including accelerating the repayment of any outstanding indebtedness under our Credit Agreement.
+Added: Risks related to legal or regulatory compliance
+Added: The laws and regulations concerning data privacy and certain other aspects of our business are continually evolving.
+Added: Failure to comply with these laws and regulations could harm our business.
+Added: We are subject to certain privacy and data protection laws, including those in the U.S.
+Added: Certain activities related to processing the personal data of individuals in the E.U.
+Added: are conducted by our U.K.-based data controller or our local entities in the E.U.
+Added: Children's Online Privacy Protection Act also regulates the collection, use, and disclosure of personal information from children under 13 years of age.
+Added: Failure to comply with privacy and data protection laws or age restrictions may increase our costs, subject us to expensive and distracting government investigations, and result in substantial fines, or result in lawsuits and claims against us to the extent these laws include a private right of action.
+Added: Privacy and data protection laws and industry terms are rapidly changing and likely will continue to do so for the foreseeable future, which could have an impact on our approach to operating and marketing our games and which may harm the sales of our products or decrease the size of our potential audience.
+Added: For example, the E.U.
+Added: General Data Protection Regulation ("GDPR") and the UK Data Protection Act 2018 ("DPA 2018") both became effective in May 2018.
+Added: GDPR and DPA 2018 apply to us because we receive and process the personal information of individuals in the E.U.
+Added: and the U.K., and we maintain certain local entities in the E.U.
+Added: responsible for processing personal information.
+Added: GDPR and DPA 2018 contain significant penalties for non-compliance.
+Added: Countries in the E.U.
+Added: are still enacting national laws that correspond to certain portions of the GDPR.
+Added: also implemented an Age Appropriate Design Code that applies to how personal data is used for individuals up to age 18.
+Added: In the U.S., the California Consumer Privacy Act ("CCPA") became effective on January 1, 2020 and applies to processing of personal information of California residents.
+Added: California also enacted the California Privacy Rights Act ("CPRA"), which updates the CCPA, and Virginia enacted the Consumer Data Protection Act, both effective January 1, 2023.
+Added: Other states, including Nevada, have enacted or are considering similar privacy or data protection laws that may apply to us.
+Added: government, including the Federal Trade Commission and the Department of Commerce, also continue to review the need for greater or different regulation over the collection of personal information and information about consumer behavior on the Internet and on mobile devices, and the U.S.
+Added: Congress is considering a number of legislative proposals to regulate in this area.
+Added: Various government and consumer agencies worldwide have also called for new regulation and changes in industry practices.
+Added: Further, and most notably in the mobile ecosystem, companies that provide the platforms on which our games are played are changing the terms on how publishers can collect and use personal data obtained from users on those platforms.
+Added: Player use of our games is subject to our privacy policy, end user license agreements ("EULA"), and terms of service.
+Added: If we fail to comply with our posted privacy policy, EULA, or terms of service, or if we fail to comply with existing privacy or data protection laws and regulations, it could result in proceedings or litigation against us by governmental authorities or others, which could result in fines or judgments against us, damage our reputation, affect our financial condition, and harm our business.
+Added: If regulators, the media, or consumers raise any concerns about our privacy and data protection or consumer protection practices, even if unfounded, this could also result in fines or judgments against us, damage our reputation, negatively affect our financial condition, and damage our business.
+Added: It is possible that a number of laws and regulations may be adopted or construed to apply to us in the U.S.
+Added: and elsewhere that could restrict the interactive entertainment industry, including player privacy, advertising, taxation, content suitability, copyright, distribution, and antitrust.
+Added: Furthermore, the growth and development of electronic commerce and virtual goods may prompt calls for more stringent consumer protection laws that may impose additional burdens on companies such as ours conducting business through digital sales.
+Added: Any such changes would require us to devote legal and other resources to address such regulation.
+Added: For example, existing laws or new laws regarding the regulation of currency, banking institutions, and unclaimed property may be interpreted to cover virtual currency or virtual goods.
+Added: If that were to occur, we may be required to
+Added: seek licenses, authorizations, or approvals from relevant regulators, the granting of which may be dependent on us meeting certain capital and other requirements and we may be subject to additional regulation and oversight, all of which could significantly increase our operating costs.
+Added: Changes in current laws or regulations or the imposition of new laws and regulations in the U.S.
+Added: or elsewhere regarding these activities may lessen the growth of the interactive entertainment industry and impair our business, financial condition, and operating results.
+Added: Further, in 2019, the World Health Organization included "gaming disorder" in the 11th revision of the International Classification of Diseases, leading some to consider legislation and policies aimed at mitigating the overuse of, and overspending within, video games.
+Added: Although we have structured and operate our skill tournaments and game mechanics, including random digital item mechanics, with applicable laws in mind, including any applicable laws relating to gambling, and believe that playing these games does not constitute gambling, our skill tournaments or game mechanics could become subject to gambling-related rules and regulations, or be deemed violative of current rules and regulations, and expose us to civil and criminal penalties.
+Added: We also sometimes offer consumers of our online and casual games various types of contests and promotional opportunities.
+Added: We are subject to laws in a number of jurisdictions concerning the operation and offering of such activities and games, many of which are still evolving and could be interpreted in ways that could harm our business.
+Added: Further, random digital item mechanics may become subject to regulations in various jurisdictions.
+Added: If these were to occur, we might be required to seek licenses, authorizations, or approvals from relevant regulators, the granting of which may be dependent on us meeting certain capital and other requirements, and we may be subject to additional regulation and oversight, such as reporting to regulators, all of which could significantly increase our operating costs.
+Added: Moreover, the inclusion of random digital item mechanics has attracted the attention of the interactive gaming community, and if the future implementation of these features creates a negative perception of gameplay fairness or other negative perceptions, our reputation and brand could be harmed and revenue could be negatively impacted.
+Added: Changes in current laws or regulations or the imposition of new laws and regulations in the U.S., the E.U., or elsewhere regarding these activities may lessen the growth of online or casual game services and impair our business.
+Added: Also, existing laws or new laws regarding the marketing of in-game or in-app purchases, regulation of currency, banking institutions, unclaimed property, or money laundering may be interpreted to cover virtual currency or goods.
+Added: If we infringe on or are alleged to infringe on the intellectual property rights of third parties, our business could be adversely affected.
+Added: As our industry grows, we may be subject to an increasing amount of litigation that is common in the software industry based on allegations of infringement or other alleged violations of patent, copyright, or trademarks.
+Added: In addition, we believe that interactive entertainment software will increasingly become the subject of claims that such software infringes on the intellectual property rights of others with both the growth of online functionality and advances in technology, game content and software graphics as games become more realistic.
+Added: From time to time, we receive notices from third parties or are named in lawsuits by third parties alleging infringement of their proprietary rights.
+Added: Although we believe that our software and technologies and the software and technologies of third-party developers and publishers with whom we have contractual relations do not and will not infringe or violate proprietary rights of others, it is possible that infringement of proprietary rights of others may occur.
+Added: Any claims of infringement, with or without merit, could be time consuming, costly and difficult to defend.
+Added: Moreover, intellectual property litigation or claims could require us to discontinue the distribution of products, obtain a license or redesign our products, which could result in additional substantial costs and material delays.
Our business and products are subject to potential legislation.
3 unchanged sentences
If any such proposals are enacted into law, it may limit the potential market for some of our games in the U.S., and adversely affect our business, financial condition and operating results.
−Removed: Other countries, such as Germany, have adopted laws regulating content both in packaged games and those transmitted over the Internet that are stricter than current U.S.
−Removed: In the U.S., proposals have also been made by numerous state legislators to regulate and prohibit the sale of interactive entertainment software products containing certain types of violent or sexual content to under 17 or 18 audiences, such as the State of California's "ultraviolent video games law" that sought to ban the sale or rental of violent video games to minors.
+Added: Other countries have adopted laws regulating content both in packaged games and those transmitted over the Internet that are stricter than current U.S.
+Added: In the U.S., proposals have also been made by numerous state legislators to regulate and prohibit the sale of interactive entertainment software products containing certain types of violent or sexual content to audiences under the ages of 17 or 18 , such as the State of California's "ultraviolent video games law" that sought to ban the sale or rental of violent video games to minors.
While such legislation to date has been enjoined by industry and retail groups or been found unconstitutional, the adoption into law of such legislation in federal and/or in state jurisdictions in which we do significant business could severely limit the retail market for some of our games.
3 unchanged sentences
Although certain jurisdictions have implemented laws and regulations intended to prevent Internet service providers from discriminating against particular types of legal traffic on their networks, other jurisdictions may lack such laws and regulations or repeal existing laws or regulations.
−Removed: For example, on December 14, 2017, the Federal Communications Commission voted to repeal net neutrality regulations in the U.S.
+Added: For example, on December 14, 2017, the Federal Communications Commission voted to repeal net neutrality regulations in the U.S., and, following that decision, several states enacted net neutrality regulations.
Given uncertainty around these rules, including changing interpretations, amendments, or repeal, coupled with the potentially significant political and economic power of local Internet service providers and the relatively significant level of Internet bandwidth access our products and services require, we could experience discriminatory or anti-competitive practices that could impede our growth, cause us to incur additional expenses, or otherwise negatively affect our business.
−Removed: We may be required to record a significant charge to earnings if our goodwill becomes impaired.
−Removed: We are required under U.S.
−Removed: generally accepted accounting principles to review our goodwill for impairment at least annually or more frequently when events or changes in circumstances indicate the carrying value may not be recoverable.
−Removed: Factors that may be considered a change in circumstances, indicating a requirement to reevaluate whether our goodwill continues to be recoverable, include a significant decline in stock price and market capitalization, slower growth rates in our industry or other materially adverse events.
−Removed: We may be required to record a significant charge to earnings in our financial
−Removed: statements during the period in which any impairment of our goodwill is determined.
−Removed: This may adversely affect our operating results.
+Added: Risks related to financial and economic condition
+Added: Declines in consumer spending and other adverse changes in the economy could have a material adverse effect on our business, financial condition and operating results.
+Added: Most of our products involve discretionary spending on the part of consumers.
+Added: We believe that consumer spending is influenced by general economic conditions and the availability of discretionary income.
+Added: This makes our products particularly sensitive to general economic conditions and economic cycles as consumers are generally more willing to make discretionary purchases, including purchases of products like ours, during periods in which favorable economic conditions prevail.
+Added: Adverse economic conditions, such as a prolonged U.S.
+Added: or international general economic downturn, such as those caused by COVID-19, including periods of increased inflation, unemployment levels, tax rates, interest rates, energy prices, or declining consumer confidence, could also reduce consumer spending.
+Added: Reduced consumer spending has and may in the future continue to result in reduced demand for our products and may also require increased selling and promotional expenses, which has had and may continue to have an adverse effect on our business, financial condition and operating results.
+Added: In addition, during periods of relative economic weakness, our consolidated credit risk, reflecting our counterparty dealings with distributors, customers, capital providers and others may increase, perhaps materially so.
+Added: As a result of COVID-19, our counterparty credit risk may be particularly exacerbated, as certain of our counterparties may face financial difficulties in paying owed amounts on a timely basis or at all.
+Added: Furthermore, uncertainty and adverse changes in the economy could also increase the risk of material losses on our investments, increase costs associated with developing and publishing our products, increase the cost and availability of sources of financing, and increase our exposure to material losses from bad debts, any of which could have a material adverse effect on our business, financial condition and operating results.
+Added: If economic conditions worsen, our business, financial condition and operating results could be adversely affected.
+Added: 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;
+Added: changes in consumer demographics;
+Added: the availability and popularity of other forms of entertainment and leisure;
+Added: and critical reviews and public tastes and preferences, which may change rapidly and cannot necessarily be predicted.
+Added: Changes in our tax rates or exposure to additional tax liabilities could adversely affect our earnings and financial condition.
+Added: We are a multinational corporation with operations in the U.S.
+Added: and various other jurisdictions around the world.
+Added: Accordingly, we are subject to tax in the U.S.
+Added: and in various other jurisdictions.
+Added: Significant judgment is required in determining our worldwide provision for income taxes, and, in the ordinary course of business, there are many transactions and calculations where the ultimate tax determination is uncertain.
+Added: We are required to estimate future taxes.
+Added: Although we currently believe our tax estimates are reasonable, the estimation process is inherently uncertain, and such estimates are not binding on tax authorities.
+Added: Further, our effective tax rate or tax payable could be adversely affected by a variety of factors, including changes in the business, the mix and level of earnings between countries with differing statutory tax rates, changes in the realizability of deferred tax assets, changes in tax elections, and changes in applicable tax laws.
+Added: Additionally, tax determinations are regularly subject to audit by tax authorities, and developments in those audits could adversely affect our income tax provision.
+Added: Should the ultimate tax liability exceed estimates, our income tax provision and net income or loss could be materially affected.
+Added: On March 11, 2021, the U.S.
+Added: enacted the American Rescue Plan Act of 2021 (“ARPA”) which provided numerous tax and other stimulus measures.
+Added: One such measure will expand limitation of compensation deductions for certain covered employees of publicly held corporations, beginning in 2027, to also include our next five highly compensated employees.
+Added: It is possible that these changes could have an adverse impact on our effective tax rate, tax payments, and financial condition in future periods.
+Added: In addition, numerous countries are evaluating their existing tax laws due in part to recommendations made by the Organization for Economic Co-operation and Development’s (“OECD’s”) Base Erosion and Profit Shifting (“BEPS”) project.
+Added: Although we cannot predict whether, or in what form, any legislation based on such proposals may be adopted by the countries in which we do business, future tax reform based on such proposals may have an adverse impact on our effective tax rate, tax payments, and financial condition in future periods.
+Added: We are also required to pay taxes other than income taxes, such as payroll, sales, use, value-added, net worth, property, and goods and services taxes, in both the U.S.
+Added: and foreign jurisdictions.
+Added: We are regularly under examination by tax authorities with respect to these non-income taxes.
+Added: There can be no assurance that the outcomes from these examinations, changes in our business or changes in applicable tax law or interpretations will not have an adverse effect on our net income or loss and financial condition.
+Added: We are subject to risks and uncertainties of international trade, including fluctuations in the values of local foreign currencies against the dollar.
+Added: Sales in international markets, primarily in Europe, have accounted for a significant portion of our net revenue.
+Added: For the fiscal year ended March 31, 2021, 40.2% of our net revenue was earned outside the U.S.
+Added: We are continuing to execute on our growth initiatives in Asia, where our strategy is to broaden the distribution of our existing products and expand our online gaming presence, especially in China and South Korea.
+Added: We are subject to risks inherent in foreign trade, including increased credit risks, tariffs, and duties, fluctuations in foreign currency exchange rates, shipping delays, and international political, regulatory and economic developments, all of which can have a significant influence on our operating results.
+Added: Many of our international sales are made in local currencies, which could fluctuate against the dollar.
+Added: While we may use forward exchange contracts to a limited extent to seek to mitigate foreign currency risk, our operating results could be adversely affected by unfavorable foreign currency fluctuations.
Our reported financial results could be adversely affected by the application of existing or future accounting standards to our business as it evolves.
4 unchanged sentences
As we enhance, expand and diversify our business and product offerings, the application of existing or future financial accounting standards, particularly those relating to the way we account for revenue, could have a significant adverse effect on our reported results although not necessarily on our cash flows.
+Added: Delaware 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.
+Added: We are a Delaware corporation, and the anti-takeover provisions of Delaware law impose various impediments to the ability of a third party to acquire control of us, even if a change in control would be beneficial to our existing stockholders.
+Added: Our Board of Directors has the power, without stockholder approval, to adopt a stockholder rights plan and/or to designate the terms of one or more series of preferred stock and issue shares of preferred stock.
+Added: The ability of our Board of Directors to create and issue a new series of preferred stock and certain provisions of Delaware law, our certificate of incorporation and bylaws could impede a merger, takeover or other business combination involving us or discourage a potential acquirer from making a tender offer for our common stock, which, under certain circumstances, could reduce the market price of our common stock and the value of any outstanding notes.
+Added: General Risk Factors
We are subject to risks related to corporate and social responsibility and reputation.
5 unchanged sentences
Climate change could result in an increase in the frequency or severity of natural disasters, such as earthquakes, fires, floods, or significant power outages and other catastrophic events.
−Removed: Such events may adversely impact critical infrastructure, have the potential to disrupt our business, our third-party suppliers, or the business of our customers, and may cause us to experience higher attrition, losses and additional costs to maintain or resume operations.
−Removed: Risks relating to our common stock
−Removed: For purposes of this section "Risks relating to our common stock," references to "the Company," "we," "our," and "us" refer only to Take-Two Interactive Software, Inc.
−Removed: and not to its subsidiaries.
+Added: Such events may adversely impact critical infrastructure,
+Added: have the potential to disrupt our business, our third-party suppliers, or the business of our customers, and may cause us to experience higher attrition, losses and additional costs to maintain or resume operations.
Additional 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 stock.
3 unchanged sentences
The sale or the availability for sale of a large number of shares of our common stock in the public market could cause the price of our common stock to decline.
−Removed: There is no guarantee that we will do additional share repurchases in the future.
−Removed: The share repurchase program authorized by the Board of Directors, which authorized the repurchase of up to 14.2 million shares of our common stock and had 3.8 million shares available for repurchase as of the date of this filing, does not obligate us to make any purchases at any specific time or situation.
−Removed: Discontinuing repurchases could adversely affect the price of our common stock.
−Removed: The program may be suspended or discontinued at any time for any reason.
−Removed: Our stock price has been volatile and may continue to fluctuate significantly.
−Removed: The market price of our common stock historically has been, and we expect will continue to be, subject to significant fluctuations.
−Removed: These fluctuations may be due to factors specific to us including those discussed in the risk factors in this section as well as others not currently known to us or that we currently do not believe are material, to changes in securities analysts' earnings estimates or ratings, to our results or future financial guidance falling below our expectations and analysts' and investors' expectations, to factors affecting the computer, software, entertainment, media or electronics industries, or to national or international economic conditions, such as the impact of COVID-19.
−Removed: Stock markets, in general, have experienced over the years, and continue to experience significant price and volume fluctuations that have affected market prices for companies such as ours and that may be unrelated or disproportionate to the operating performance of the affected companies.
−Removed: These broad market and industry fluctuations may adversely affect the price of our stock, regardless of our operating performance.
−Removed: Delaware 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.
−Removed: We are a Delaware corporation, and the anti-takeover provisions of Delaware law impose various impediments to the ability of a third party to acquire control of us, even if a change in control would be beneficial to our existing stockholders.
−Removed: Our Board of Directors has the power, without stockholder approval, to adopt a stockholder rights plan and/or to designate the terms of one or more series of preferred stock and issue shares of preferred stock.
−Removed: The ability of our Board of Directors to create and issue a new series of preferred stock and certain provisions of Delaware law, our certificate of incorporation and bylaws could impede a merger, takeover or other business combination involving us or discourage a potential acquirer from making a tender offer for our common stock, which, under certain circumstances, could reduce the market price of our common stock and the value of any outstanding notes.
−Removed: Our 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 382.
−Removed: Section 382 of the Internal Revenue Code contains rules that limit the ability of a company to use its net operating loss and tax credit carryforwards in years after an ownership change, which is generally defined as any change in ownership of more than 50% of its stock over a three-year testing period.
−Removed: These rules generally operate by focusing on ownership changes among stockholders owning directly or indirectly 5% or more of the stock of a company and/or any change in ownership arising from a new issuance of stock by the company.
−Removed: If, as a result of future transactions involving our common stock, including purchases or sales of stock by 5% stockholders, we undergo cumulative ownership changes which exceed 50% over the testing period, our ability to use our net operating loss and tax credit carryforwards would be subject to additional limitations under Sections 382 and 383.
−Removed: Generally, if an ownership change occurs, the annual taxable income limitation on the use of net operating loss and tax credit carryforwards is equal to the product of the applicable long-term tax-exempt rate and the value of the company's stock immediately before the ownership change.
−Removed: Depending on the resulting limitation, a portion of our net operating loss and tax credit carryforwards could expire before we would be able to use them.
−Removed: Our inability to fully utilize any net operating losses or tax credit carryforwards to reduce tax liability in the future could have a material and negative affect on our future financial position and results of operations.
Unresolved Staff Comments
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.