What changed in this filing

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Item 1. Business

2024-05-22 compared with 2023-05-26 · 62 added, 65 removed, 164 unchanged (44% of the section changed)

Recent Developments

Zynga Acquisition.

On May 23, 2022, we completed our acquisition of Zynga Inc.

("Zynga"), a global leader in interactive entertainment that develops, markets, and operates social games as live services played on mobile platforms, with a mission to connect the world through games.

Refer to Note 2 0 - Acquisitions for additional information.

Also, in connection with the Zynga Acquisition, we entered into several debt transactions (refer to Note 11 - Debt ).

Subsequent to our fiscal year end, in April 2023, we issued additional bonds and paid off our Term Loan (refer to Note 2 1 - Subseq uent Events ).

We are a leading developer, publisher, and marketer of interactive entertainment for consumers around the globe.

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We have established a portfolio of proprietary software content for the major hardware and mobile platforms in a wide range of genres, including action, adventure, family/casual, hyper-casual, role-playing, shooter, social casino, sports, and strategy, which we distribute worldwide.

We believe that our commitment to creativity and innovation is a distinguishing strength, enabling us to differentiate our products in the marketplace by combining advanced technology with compelling storylines and characters that provide unique gameplay experiences for consumers.

We believe that our player-first mentality and commitment to creativity and innovation are distinguishing strengths, enabling us to differentiate our products in the marketplace by combining advanced technology with compelling storylines and characters that provide unique gameplay experiences for consumers.

We have created, acquired, or licensed a group of highly recognizable brands to match the broad consumer demographics that we serve, ranging from adults to children and game enthusiasts to casual gamers.

Another cornerstone of our strategy is to support the success of our products in the marketplace through innovative marketing programs and global distribution on platforms and through channels that are relevant to our target audience.

Another cornerstone of our strategy is to support the success of our products in the

marketplace through innovative marketing programs and global distribution on platforms and through channels that are relevant to our target audience.

Support World-Class Creative Teams.

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Our teams balance the art and science of game making by combining creative innovation with a player-centric, data driven approach to delight players.

We support our teams by focusing on talent acquisition and retention, and our label structure enables us to target distinct market sectors and opportunities.

We support our teams by focusing on talent acquisition and retention, and we seek to foster an environment where people build long-term careers and do their best work.

Focus on Core Strength of Producing High-Quality Titles.

We focus on publishing a number of high-quality titles based on internally owned and developed intellectual properties.

We focus on publishing high-quality titles based on internally owned and developed intellectual properties.

We currently own the intellectual property rights to 48 proprietary brands.

In addition, we selectively develop titles based on licensed properties, including sports leagues, and also publish externally developed titles.

We take steps to optimize efficiency and effectiveness in our operations while also maintaining high standards of quality and customer satisfaction.

Our objective is to achieve greater operating expense leverage as we grow our scale with the release of our eagerly-anticipated pipeline.

We use a product investment review process to evaluate potential titles for investment, to review existing titles in development, and to assess titles after release by measuring their performance in the market and the return on our investment.

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We develop our products using a combination of our internal development teams and external development resources acting under contract with us.

We typically select external developers based on their track record and expertise in developing products in the same category or genre.

We select external developers based on their track record and expertise in developing products in the same category or genre.

One developer will generally produce the same game for multiple platforms and will also produce sequels to the original game.

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The global market for interactive entertainment continues to grow, and we seek to increase our presence internationally, particularly in Asia, the Middle East, and Latin America.

We are continuing to execute on our growth initiatives in Asia, where our strategy is to build on our licensing relationships and also broaden the distribution of our existing products and expand our online gaming presence, especially in China and South Korea.

2K has secured a multi-year license from the NBA to develop an online version of our NBA simulation game in China, Taiwan, Hong Kong, and Macau.

Our first such title, NBA 2K Online , a free-to-play NBA simulation game based on the console edition of NBA 2K ,

which was co-developed by 2K and Tencent, is the top online PC sports game in China with over 60 million registered users.

Our first such title, NBA 2K Online , a free-to-play NBA simulation game based on the console edition of NBA 2K , which was co-developed by 2K and Tencent, is the top online PC sports game in China with over 60 million registered users.

We have released two iterations of NBA 2K Online and continue to enhance the title with new features.

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Operating margins are dependent in part upon our ability to release new, commercially successful software products and to manage effectively their development and marketing costs.

We have internal development studios located in Australia, Canada, China, Czech Republic, Finland, Germany, Hungary, India, Serbia, South Korea, Spain, Turkey, the United Kingdom (U.K.), and the United States (U.S.).

internal development studios located in Australia, Canada, China, Czech Republic, Finland, Germany, Hungary, India, Serbia, South Korea, Spain, Turkey, the United Kingdom (U.K.), and the United States (U.S.).

As of March 31, 2024, we had a research and development staff of 9,639 employees with the technical capabilities to develop software titles for all major consoles, PCs, and mobile platforms in multiple languages and territories.

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We also regularly monitor the level of development payments in light of the expected sales for the related titles.

We continue to engage in evolving business models such as online gaming, virtual currency, add-on content, and in-game purchases, and we expect to continue to generate incremental revenue from these opportunities.

We engage in evolving business models such as online gaming, virtual currency, add-on content, and in-game purchases, and we expect to continue to generate incremental revenue from these opportunities.

We also generate revenue from advertising within our software products.

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Our most recent installment, Grand Theft Auto V , which was released in 2013, has sold-in over 195 million units worldwide and includes access to Grand Theft Auto Online .

Rockstar Games continues to invest in the franchise and plans to release Grand Theft Auto VI in the Fall of calendar 2025.

The label released its first trailer for the title in December 2023 and will share more details over time.

Red Dead Redemption 2 , which has been a critical and commercial success that set numerous entertainment industry records, has sold-in more than 60 million units worldwide to date.

Rockstar Games confirmed that active development for the next entry in the Grand Theft Auto franchise is well underway with more details to be shared over time.

Rockstar Games continues to expand on its established series by developing sequels, offering downloadable episodes, and additional content.

Rockstar Games continues to expand on its established series by developing sequels, offering downloadable episodes, and providing additional content.

Rockstar Games' titles are published across all key platforms, including mobile.

Our 2K label has published a variety of popular entertainment properties across all key platforms and across a range of genres including shooter, action, role-playing, strategy, sports, and family/casual entertainment.

In recent years, 2K has expanded its offerings to include several new franchises that are expected to diversify its slate of games and provide opportunities for sequels and post-launch monetization.

In recent years, 2K has expanded its offerings to include several new franchises that are expected to enhance and diversify its slate of games and provide opportunities for sequels and additional content.

We expect 2K to continue to develop new, successful franchises in the future.

2K's internally owned and developed franchises include the critically acclaimed, multi-million unit selling BioShock , Mafia , Sid Meier's Civilization , and XCOM franchises.

2K also publishes externally developed franchises such as Borderlands and Tiny Tina's Wonderlands .

2K's realistic sports simulation titles include our flagship NBA 2K series, which continues to be the top-ranked NBA basketball video game, the WWE 2K professional wrestling series, and PGA TOUR 2K .

In March 2020, 2K announced a multi-year partnership with the National Football League encompassing multiple future video games that will be non-simulation football game experiences.

2K also has long-held publishing rights for Borderlands and Tiny Tina's Wonderlands from Gearbox.

As set forth under "Recent Developments," below, on March 27, 2024, we entered into an agreement to purchase Gearbox, which is expected to close in first quarter of Fiscal 2025 and will bring these intellectual properties in-house.

2K's realistic sports simulation titles include our flagship NBA 2K series, which continues to be the top-ranked NBA basketball video game, the WWE 2K professional wrestling series, PGA TOUR 2K , and TopSpin 2K .

2K also publishes mobile titles, including WWE SuperCard .

We have expanded our relationship with the NBA through the NBA 2K League , a groundbreaking competitive gaming league jointly owned by us and the NBA.

We have expanded our relationship with the NBA through the NBA 2K League , a competitive eSports league jointly owned by us and the NBA.

Private Division.

Our Private Division label is dedicated to bringing titles from the industry's leading creative talent to market and is the publisher, developer, and owner of Kerbal Space Program and OlliOlli World .

Kerbal Space Program 2 was released for early access in fiscal year 2023.

Private Division also previously released The Outer Worlds and Ancestors:

The Humankind Odyssey .

Our Zynga label, which includes our former T2 Mobile Games label (which included Socialpoint, Playdots, and Nordeus) publishes popular free-to-play mobile games that deliver high quality, deeply engaging entertainment experiences and generates revenue from in-game sales and in-game advertising.

Our Zynga label publishes popular free-to-play mobile games that deliver high quality, deeply engaging entertainment experiences and generates revenue from in-game sales and in-game advertising.

Zynga's strategy is to have numerous games in concept development and to determine which titles are best suited for soft launch and worldwide launch based on the achievement of various milestones and KPI thresholds.

Zynga's diverse portfolio of popular game franchises has been downloaded more than 6 billion times, including CSR Racing , Dragon City , Empires & Puzzles , FarmVille , Golf Rival , Harry Potter:

Puzzles & Spells , Merge Dragons , Merge Magic , Monster Legends , Toon Blast , Top Eleven , Toy Blast , Two Dots , Words With Friends , Zynga Poker , and a high volume of hyper-casual mobile titles, including Fill the Fridge!, Parking Jam 3D , Pressure Washing Run , and Pull the Pin .

Zynga is also an industry-leading next-generation platform with the ability to acquire new users, cross-promote games, apply live services content updates, and optimize programmatic advertising and yields at scale through Chartboost, its leading mobile advertising and monetization platform.

Zynga's diverse portfolio of popular game franchises has been downloaded more than six billion times, including CSR Racing , Dragon City , Empires & Puzzles , FarmVille , Golf Rival , Harry Potter:

Puzzles & Spells , Match Factory!

, Merge Dragons!

, Merge Magic!

, Monster Legends , Toon Blast , Top Eleven , Top Troops , Toy Blast , Two Dots , Words With Friends , Zynga Poker , and a high volume of hyper-casual mobile titles, including Fill the Fridge!, Parking Jam 3D , Power Slap , Pull the Pin, Twisted Tangle, and Tangled Snakes .

Recent Developments

Pending Acquisition.

On March 27, 2024, we entered into a Share Purchase Agreement to purchase 100% of the issued and outstanding capital stock of The Gearbox Entertainment Company, Inc.

("Gearbox"), from Embracer Group AB.

The purchase price is $460.0, consisting of newly issued shares of Take-Two common stock, valued based on the volume weighted average closing price per share of our common stock on the Nasdaq Global Select Market for the five consecutive trading days ending on (and including) the trading day immediately preceding the closing date, subject to adjustments as defined in the Share Purchase Agreement.

The transaction, which is currently anticipated to close during the first quarter in fiscal 2025, is subject to the satisfaction or waiver of customary closing conditions for both parties.

Intellectual Property

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Under the terms of the license agreements that we have entered into with Microsoft Corporation and its affiliates, Microsoft granted us the right and license to develop, publish, have manufactured, market, advertise, distribute and sell Xbox compatible products.

The agreements require us to submit products to Microsoft for approval and to make royalty

payments to Microsoft based on the number of units manufactured or revenue from digitally downloaded content.

The agreements require us to submit products to Microsoft for approval and to make royalty payments to Microsoft based on the number of units manufactured or revenue from digitally downloaded content.

In addition, products for the Xbox consoles are required to be manufactured by Microsoft-approved manufacturers.

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Effective as of July 1, 2020, we entered into an Xbox Console Publisher License Agreement with Microsoft for the Xbox Series X|S and Xbox One consoles (the “Xbox Next Gen Agreement” and together with Xbox 360 Agreement, the “Xbox Agreements”).

The term of Xbox 360 Agreement expires on March 31, 2024, and the term of the Xbox Next Gen Agreement expires on March 31, 2024, each with automatic one-year renewal terms thereafter (unless one party gives the other advance notice of non-renewal).

The terms of both Xbox Agreements expire on March 31, 2025, each with automatic one-year renewal terms thereafter (unless one party gives the other advance notice of non-renewal).

These Xbox Agreements may be terminated by Microsoft immediately in the event of a breach by us, and the Xbox Next Gen Agreement may also be terminated by Microsoft immediately in the event of our bankruptcy or insolvency.

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We sell software titles both digitally and physically through direct relationships with digital storefronts and platform partners, large retail customers, and third-party distributors.

We sell our products globally and have sales operations in Australia, Canada, France, Germany, Japan, the Netherlands, Singapore, South Korea, Spain, Taiwan, the United Kingdom, and the United States.

We sell our products globally and have sales operations in Australia, Canada, France, Germany, Japan, Singapore, South Korea, Spain, Taiwan, the United Kingdom, and the United States.

We are dependent on a limited number of customers that account for a significant portion of our sales.

Sales to our five largest customers during the fiscal year ended March 31, 2023, accounted for 79.6% of our net revenue, with Sony, Google, Apple, and Microsoft each accounting for more than 10.0% of our net revenue.

We also distribute our titles, add-on content, and in-game purchases through direct digital download to consoles, PCs, and mobile devices.

We view digital distribution as an important growth opportunity for our industry and Company;

Sales to our five largest customers during the fiscal year ended March 31, 2024, accounted for 79.8% of our net revenue, with Sony, Apple, Google, and Microsoft each accounting for more than 10.0% of our net revenue.

We distribute our titles, add-on content, and in-game purchases through direct digital download to consoles, PCs, and mobile devices.

We view digital distribution as the principal channel for our industry and Company;

however, we expect that packaged goods and traditional retailers will continue to be an important channel for the sale of our console products for the foreseeable future, particularly in connection with the release of certain titles for consoles or certain regions where digital distribution is not as well established.

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Our advertising offerings provide creative ways for marketers and advertisers to reach and engage with our players and are generally essential for our free-to-play titles.

Our advertising offerings include banner and interstitial advertisements, engagement advertisements and offers in which players can participate in watch-to-earn engagements or other offer engagements, branded virtual items and sponsorships that integrate relevant advertising and messaging within game play, and advertising networks through which we offer a unified advertising platform that includes a demand side platform and supply side platform, as well as mediation capabilities.

Our marketing and promotional efforts are intended to acquire new users, maximize consumer interest in our titles, promote brand name recognition of our franchises, assist retailers and to properly position, package and merchandise our titles.

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• Implementing public relations campaigns, using social, digital, online, television, outdoor, and print marketing, including certain performance marketing programs.

We believe that we label and market our products in accordance with the applicable principles and guidelines of the Entertainment Software Rating Board, ("ESRB"), an independent self-regulatory body that assigns ratings and enforces advertising guidelines for the interactive software industry.

We aim to label and market our products in accordance with the applicable principles and guidelines of the Entertainment Software Rating Board, ("ESRB"), an independent self-regulatory body that assigns ratings and enforces advertising guidelines for the interactive software industry.

• Stimulating continued sales by reducing the wholesale prices of our products to retailers, digital storefronts, and platform providers at various times during the life of a product.

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• We have been able to build a large community of players, particularly for mobile titles, through players discovering of our games in platform storefronts, the viral and social features built into the network effects of our games, as well as the cross-promotion of our games to our existing audience.

However, we also acquire our players through paid

advertising channels.

However, we also acquire our players through paid advertising channels.

We advertise our mobile games primarily within other mobile applications and on social networks, often through in-app and other advertising partners such as Facebook and Google.

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• Other interactive entertainment companies, including those offering mobile games, that range in size and cost structure from very small with limited resources to very large with greater financial, marketing, technical, and other resources than ours.

Examples of our competitors include Activision Blizzard, Inc., Electronic Arts Inc., Embracer Group AB, Playrix, Playtika, Roblox, Scopely, Tencent, and Ubisoft Entertainment S.A.

Examples of our competitors include Activision Blizzard, Electronic Arts Inc., Embracer Group AB, Playrix, Playtika, Roblox, Scopely, Tencent, and Ubisoft Entertainment S.A.

We also expect new competitors to enter the market and existing competitors to allocate more resources to develop and market competing games and applications.

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• Other software, hardware, entertainment, and media for limited retail shelf space and promotional resources.

The competition is intense among an increasing number of newly introduced entertainment software titles and hardware for adequate levels of shelf space and promotional support.

• Other forms of entertainment such as motion pictures, television, social networking, online computer applications, and other forms of entertainment, which may be less expensive or provide other advantages to consumers.

Competition in the entertainment software industry is based on innovation, features, playability, product quality, brand name recognition, compatibility with popular platforms, access to distribution channels, price, marketing, and customer service.

The competition for shelf space, whether physical or virtual, and promotional support is intense among an increasing number of newly introduced entertainment software titles and hardware.

• Other forms of entertainment such as motion pictures, television, social networking, online applications, and other forms of entertainment, which may be less expensive or provide other advantages to consumers.

Competition in the interactive entertainment industry is based on innovation, features, playability, product quality, brand name recognition, compatibility with popular platforms, access to distribution channels, price, marketing, and customer service.

Our business is driven by hit titles, which require increasing budgets for development and marketing.

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For the fiscal years ended March 31, 2024, 2023 and 2022, we earned 38.7%, 37.2% and 40.1%, respectively, of our net revenue outside the United States.

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.

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.

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 effect on our operating results.

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One of Take-Two’s most important assets is our people.

With 11,580 full-time employees as of March 31, 2023, of which 7,064 were employed outside of the United States, we are constantly focused on our teams – their success, their structure, and how best to support them given their particular needs and projects.

With 12,371 full-time employees as of March 31, 2024, of which 7,621 were located outside of the United States, we are constantly focused on our teams – their success, their structure, and how best to support them given their particular needs and projects.

46% of our employees are located in North America, 36% in Europe, and 18% in the Asia-Pacific region;

78% of our employees are focused on product development.

While the repercussions of COVID-19 continue to be felt across the industry, over the past year, more of our employees have returned to office, and we are supporting a hybrid work environment within many teams.

This evolving approach to the workplace presents new challenges for managing teams and supporting employees.

In that vein, we are continuing existing programs and identifying others to ensure our people feel supported in their roles, including enhanced manager training to help strengthen teams despite the varied approaches to working, broadening our wellness and mental health offerings, encouraging people to step away from their screens when they can and spending a lot of time listening to employee feedback and encouraging employees to collaborate in person where appropriate and effective.

Our hybrid approach to the workplace, where appropriate, enables our continued focus on creativity and innovation as two of the core tenets of our organization and the lifeblood of our ongoing success.

The creative teams at our labels are

renowned for their consistent ability to deliver games that set new benchmarks for excellence.

Although some repercussions of COVID-19 remain across the industry, most of our employees have returned to their offices, with many of our teams productively working in a hybrid work environment.

This approach to the workplace presents new challenges, as well as opportunities, for managing teams and supporting employees.

Our varying approaches to the workplace, facilitate our continued focus on creativity and innovation as two of the core tenets of our organization and the lifeblood of our ongoing success.

The creative teams at our labels are renowned for their consistent ability to deliver games that set new benchmarks for excellence.

We support our creative and corporate teams by focusing on talent acquisition and retention, including through offering job development and skills training initiatives, extensive employee benefits and numerous well-being programs, and partnering with the leadership at our labels to foster the types of cultures our leaders believe best support and grow the creative processes for their particular teams.

Environmental, Social, and Governance (ESG).

We recognize the synergies between corporate citizenship and smart business and are committed to focusing on, and measuring, the impact of our ESG activities, which are rooted in our core tenets of creativity, innovation, and efficiency.

We believe ESG creates value for all stakeholders, employees and customers while also helping to mitigate risks, reduce costs, protect brand value, and identify market opportunities.

We have an organization-wide ESG committee, overseen by the Board of Directors, to lead our ESG efforts.

Through this committee, we developed a comprehensive, five-pillar ESG framework that reflects our top priority issues and stakeholder needs.

In 2022, we made significant progress in managing our ESG performance.

We are dedicated to driving positive change across our industry and society through our ESG efforts.

Sustainability.

We recognize the synergies between corporate citizenship and smart business and are committed to focusing on, and measuring, the impact of our Sustainability activities, which are rooted in our core tenets of creativity, innovation, and efficiency.

We believe Sustainability creates value for all stakeholders, including employees and customers, while also helping to mitigate risks, reduce costs, protect brand value, and identify market opportunities.

We have an organization-wide Sustainability committee, overseen by the Board of Directors, to lead our Sustainability efforts.

Through this committee, we developed a comprehensive, Sustainability framework that reflects our top priority issues and stakeholder needs.

In 2023, we made significant progress in managing our Sustainability performance.

We are dedicated to driving positive change across our industry and society through our Sustainability efforts.

Diversity, Equity, and Inclusion.

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The feedback generated through these tools helps to ensure we are providing a supportive, dynamic, and stimulating work environment for all of our employees.

These efforts and more contributed to Take-Two being named one of The Wall Street Journal’s Best Managed US Companies in 2018, 2019, and 2020, and included in Forbes' Best Mid-Size Employers list in 2019, 2021, and 2022.

In addition, we were included on Fortune’s Great Places to Work list in 2020, 2021, and 2022 and were recently honored by Gay Gaming Professionals in 2021 as a DEI&B leader in the interactive entertainment industry.

These efforts and more contributed to Take-Two being named one of Forbes' Best Mid-Size Employers list in 2019, 2021, 2022, and 2024, and one of Newsweek's America's Greatest Workplaces for Diversity, Women, LGBTQ+, and Job Starters in 2024.

In addition, we were included on Fortune’s Great Places to Work list in 2020, 2021, and 2022 and were honored by Gay Gaming Professionals in 2021 as a DEI&B leader in the interactive entertainment industry.

Compensation and Benefits.

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In addition to awarding Restricted Stock Units to employees at certain levels, we also offer an Employee Stock Purchase Plan to further align the interests of our employees with our shareholders.

fitness reimbursement, mental health benefits, mental health awareness training for Human Resources personnel and managers throughout the Company, and charitable giving with a company match.

We also provide a comprehensive benefits package that includes traditional offerings, such as medical, dental vision, retirement, disability, accident and life insurance, prescription drugs, and leaves, and also includes programs such as well-being, fitness reimbursement, mental health benefits, mental health awareness training for Human Resources personnel and managers throughout the Company, and charitable giving with a company match.

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.

What changed 10-K

Item 1. Business