865570--6/4/2010--THQ

related topics

{product, market, service}

{customer, product, revenue}

{property, intellectual, protect}

{stock, price, operating}

{system, service, information}

{condition, economic, financial}

{operation, international, foreign}

{personnel, key, retain}

{tax, income, asset}

{control, financial, internal}

{debt, indebtedness, cash}

We must continue to develop and sell new titles in order to generate net sales and remain profitable. Our business is "hit" driven. If we do not deliver "hit" games, our net sales and profitability can suffer. Ongoing uncertainty regarding the duration and extent of the recent economic downturn could result in a reduction in discretionary spending by consumers that could reduce demand for our products. We may not be able to adequately adjust our cost structure in a timely fashion in response to a sudden decrease in demand. We have significant net operating loss and tax credit carryforwards ("NOLs"). If we are unable to use our NOLs, our future profitability may be significantly impacted. We believe our financial condition is sufficient to meet our operating requirements for at least the next twelve months. However, in the event our net sales differ significantly from our expectations, we may need to defer and/or curtail currently-planned expenditures, and/or pursue additional funding to meet our cash needs. Since a significant portion of our net sales are based upon licensed properties, failure to renew such licenses, or renewals of such licenses on less advantageous terms, could cause our net sales and/or our profitability to decline. A decrease in the popularity of our licensed brands could materially impact our net sales and financial position. Our inability to acquire or create new intellectual property that has a high level of consumer recognition or acceptance could negatively impact our net sales and profitability. Increasing development costs for games which may not perform as anticipated and failure of platforms to achieve significant market penetration could decrease our profitability and result in potential impairments of capitalized software development costs. We rely on a small number of customers that account for a significant amount of our sales. If these customers reduce their purchases of our products or become unable to pay for them, our business could be harmed. A significant portion of our net sales are derived from our international operations, which may subject us to economic, currency, political, regulatory and other risks. Fluctuations in our quarterly operating results due to seasonality in the interactive entertainment software industry and other factors related to our business operations could result in substantial losses to investors. Our stock price has been volatile and may continue to fluctuate significantly. Video game product development schedules are difficult to predict and can be subject to delays. Postponements in shipments can substantially impact our sales and profitability in any given quarter. Our business is dependent upon the success and availability of the video game platforms on which consumers play our games. Our inability to enter into agreements with the manufacturers to develop, publish and distribute titles on their platforms could seriously impact our operations. Software pricing and sales allowances may impact our net sales and profitability. Increased sales of used video game products could reduce demand for new copies of our games. We may face difficulty obtaining access to retail shelf space necessary to market and sell our products effectively. Competitive launches may negatively impact the sales of our games. Failure to appropriately adapt to rapid technological changes or emerging distribution channels may negatively impact our market share and our operating results. Our platform licensors control the fee structures for online distribution of our games on their platforms. Development of software by platform manufacturers may lead to reduced sales of our products. Increased development of software and online games by intellectual property owners may lead to reduced net sales. Competition for licenses may negatively impact our profitability. Competition with emerging forms of home-based entertainment may reduce sales of our products. Competition for qualified personnel is intense in the interactive entertainment software industry and failure to hire and retain qualified personnel could seriously harm our business. We rely on external developers for the development of some of our titles. Defects in our game software could harm our reputation or decrease the market acceptance of our products. We may not be able to protect our intellectual property rights against piracy, infringement by third parties, or declining legal protection for intellectual property. Software piracy may negatively impact our business. Third parties may claim we infringe their intellectual property rights. We cannot be certain of the future effectiveness of our internal control over financial reporting or the impact of the same on our operations and the market price for our common stock. Rating systems and future legislation may make it difficult to successfully market and sell our products.

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865570--6/4/2010--THQ_INC