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Annual
Report
resulting perception that our products or services do not adequately protect the privacy of personal information
could result in a loss of current or potential consumers and business partners for our online offerings that require
the collection of consumer data. Our key business partners also face these same risks and any security breaches
of their systems could adversely impact our ability to offer our products and services through their platforms,
resulting in a loss of meaningful revenues. In addition, the rate of privacy law-making is accelerating globally
and the interpretation and application of consumer protection and data privacy laws in the United States, Europe
and elsewhere are often uncertain, contradictory and in flux. As business practices are being challenged by
regulators, private litigants, and consumer protection agencies around the world, it is possible that these laws
may be interpreted and applied in a manner that is inconsistent with our data and/or consumer protection
practices. If so, this could result in increased litigation, government or court-imposed fines, judgments or orders
requiring that we change our practices, which could have an adverse effect on our business and reputation.
Complying with these various laws could cause us to incur substantial costs or require us to change our business
practices in a manner adverse to our business.
If we release defective products or services, our operating results could suffer.
Products and services such as ours are extremely complex software programs, and are difficult to develop and
distribute. We have quality controls in place to detect defects in our products and services before they are
released. Nonetheless, these quality controls are subject to human error, overriding, and reasonable resource
constraints. Therefore, these quality controls and preventative measures may not be effective in detecting defects
in our products and services before they have been released into the marketplace. In such an event, we could be
required to or may find it necessary to voluntarily recall a product or suspend the availability of the product or
service, which could significantly harm our business and operating results.
Our business is subject to increasing regulation and the adoption of proposed legislation we oppose could
negatively impact our business.
Legislation is continually being introduced in the United States and other countries to mandate rating
requirements or set other restrictions on the advertisement or distribution of entertainment software based on
content. In the United States, most courts, including the United States Supreme Court, that have ruled on such
legislation have ruled in a manner favorable to the interactive entertainment industry. Some foreign countries
have adopted ratings regulations and certain countries allow government censorship of entertainment software
products. Adoption of government ratings system or restrictions on distribution of entertainment software based
on content could harm our business by limiting the products we are able to offer to our customers and
compliance with new and possibly inconsistent regulations for different territories could be costly or delay the
release of our products.
As we increase the online delivery of our products and services, we are subject to a number of foreign and
domestic laws and regulations that affect companies conducting business on the Internet. In addition, laws and
regulations relating to user privacy, data collection and retention, content, advertising and information security
have been adopted or are being considered for adoption by many countries throughout the world. The costs of
compliance with these laws may increase in the future as a result of changes in interpretation. Furthermore, any
failure on our part to comply with these laws or the application of these laws in an unanticipated manner may
harm our business.
If we do not continue to attract and retain key personnel, we will be unable to effectively conduct our
business.
The market for technical, creative, marketing and other personnel essential to the development and marketing of
our products and management of our businesses is extremely competitive. Our leading position within the
interactive entertainment industry makes us a prime target for recruiting of executives and key creative talent. If
we cannot successfully recruit and retain the employees we need, or replace key employees following their
departure, our ability to develop and manage our business will be impaired.
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