ATVI Activision Blizzard Inc.

Risks

• If we do not consistently deliver popular, high-quality content in a timely manner, or if consumers prefer competing products, our business may be negatively impacted.
• We depend on a relatively small number of franchises for a significant portion of our revenues and profits.
• If we do not continue to attract, retain, and motivate skilled personnel, we will be unable to effectively conduct our business.
• Our industry is subject to rapid technological change, and if we do not adapt to, and appropriately allocate our resources among, emerging technologies and business models, our business may be negatively impacted.
• Competition within, and to, the interactive entertainment industry is intense, and competitors may succeed in reducing our sales.
• The increasing importance of digital sales to our business exposes us to the risks of that business model, including greater competition.
• The importance of retail sales to our business exposes us to the risks of that business model.
• We may be unable to effectively manage the continued growth in the scope and complexity of our business, including our expansion into new business models that are untested and into adjacent business opportunities with large, established competitors.
• Due to our reliance on third-party platforms, platform providers are frequently able to influence our products and costs.
• Transitions to next-generation consoles could adversely affect the market for interactive entertainment software.
• Our business is highly dependent on the success and availability of video game consoles manufactured by third parties, as well as our ability to develop commercially successful products for these consoles.
• The increasing importance of free-to-play games to our business exposes us to the risks of that business model, including the dependence on a relatively small number of consumers for a significant portion of revenues and profits from any given game.
• The increasing importance of mobile gaming to our business exposes us to increased competition.
• We may not realize the expected financial and operational benefits of our recent restructuring actions, and implementation of such actions may negatively impact our business.
• We may not be able to adequately adjust our cost structure in a timely fashion in response to a sudden decrease in demand.
• We may be involved in legal proceedings that have a negative impact on our business.
• Changes in tax rates or exposure to additional tax liabilities could negatively impact our business.
• We rely on external developers to develop some of our software products.
• We engage in strategic transactions and may encounter difficulties in integrating acquired businesses or otherwise realizing the anticipated benefits of these transactions.
• Our debt could adversely affect our business.
• We may not be able to borrow funds under our revolving credit facility if we are not able to meet the conditions to borrowing under that facility.
• The London Interbank Offered Rate (“LIBOR’) calculation method may change and LIBOR is expected to be phased out after 2021.
• Lawsuits have been filed, and may continue to be filed, against publishers of interactive entertainment software products.
• We are exposed to seasonality in the sale of our products.
• Our business may be harmed if our distributors, retailers, development and licensing partners, or other third parties with whom we are affiliated, act in ways that put our brand at risk.
• 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.
• Our products are subject to the threat of piracy and unauthorized copying, and inadequate intellectual property laws and other protections could prevent us from enforcing or defending our proprietary technologies. Further, the use of unauthorized “cheat” programs or the use of other unauthorized software modifications by users could impact multiplayer gameplay or lead to reductions in microtransactions in our games.
• The insolvency or business failure of any of our business partners could negatively impact us.
• We are a global company and are subject to the risks and uncertainties of conducting business outside the U.S.
• Fluctuations in currency exchange rates could negatively impact our business.
• Our games are subject to scrutiny regarding the appropriateness of their content. If we fail to receive our target ratings for certain titles, or if our retailers refuse to sell such titles due to what they perceive to be objectionable content, it could have a negative impact on our business.
• Our games may include undisclosed content or features. If our retailers refuse to sell such titles, or consumers refuse to purchase such titles, due to what they perceive to be objectionable undisclosed content, it could have a negative impact on our business.
• Our results of operations or reputation may be harmed as a result of objectionable consumer- or other third party-created content.
• Our business, products, and distribution are subject to increasing regulation in key territories. If we do not successfully respond to these regulations, our business could be negatively impacted.
• Change in government regulations relating to the Internet could negatively impact our business.
• The laws and regulations concerning data privacy are continually evolving. Failure to comply with these laws and regulations could harm our business.
• We depend on servers and networks to operate our games with online features and our proprietary online gaming service. If we were to lose functionality in any of these areas for any reason, our business may be negatively impacted.
• Our reported financial results could be significantly impacted by changes in financial accounting standards or by the application of existing or future accounting standards to our business as it evolves.
• Provisions in our corporate documents and Delaware state law could delay or prevent a change of control.
• Catastrophic events may disrupt our business.
• Large-scale medical emergencies or public health epidemics could adversely effect on our business.
• If general economic conditions decline, demand for our products could decline.