2K Sports 2008 Annual Report Download - page 15

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leverage our wholly-owned intellectual property, BioShock, by allowing Universal Pictures to develop it
into a feature film.
Rockstar Games. Software titles published by our Rockstar Games label are primarily internally developed.
Rockstar Games is the publisher of our blockbuster Grand Theft Auto franchise and is focused on creating
premium content and groundbreaking entertainment. We believe that Rockstar has established a uniquely
original, popular cultural phenomenon with its Grand Theft Auto series and we have taken advantage of its
success by developing new proprietary brands as well as sequels to our existing franchises. Our latest
iteration in the Grand Theft Auto series, Grand Theft Auto IV, was released on the PS3 and Xbox 360
platforms in the second quarter of fiscal 2008. For the years ended October 31, 2008, 2007 and 2006, our
Grand Theft Auto titles accounted for 46.2%, 13.1% and 22.4% of our total net revenue, respectively. No
other products accounted for more than 10% of our revenue for the year ended October 31, 2008.
Rockstar is also well known for developing brands in other genres, including the Bully, Manhunt, Max
Payne, Midnight Club, and Red Dead Revolver franchises.
In addition, Rockstar and Microsoft announced an agreement whereby Rockstar will publish additional
downloadable content for Grand Theft Auto IV exclusively on Xbox Live. The digitally delivered content
will be available for purchase by Xbox Live subscribers, allowing them to expand their Grand Theft Auto IV
gameplay experience. We expect downloadable content to become more prevalent as broadband
connectivity continues to gain popularity and digital delivery platforms such as Xbox Live, PlayStation
Network and Valve’s Steam gain additional customers.
2K Games. 2K Games has published a variety of popular entertainment properties across multiple genres
and platforms. 2K Games’ internally owned and developed franchises include the critically acclaimed,
multi-million unit selling BioShock, Mafia, and Sid Meier’s Civilization series. Externally developed titles
have included The Darkness↩, The Elder Scrolls IV↦: Oblivion↩ and Fantastic Four↩: Rise of the Silver
Surfer.
2K Sports. We develop most of our 2K Sports software titles through our internal development studios
including the Major League Baseball 2K series, NBA 2K series, NHL 2K series, and our Top Spin tennis
series. Since its formation, our 2K Sports label has secured major sports league licenses including
long-term, third party exclusive licensing relationships with Major League Baseball Properties, the Major
League Baseball Players Association and Major League Baseball Advanced Media.
2K Play. Our 2K Play label focuses on developing and publishing titles for the growing market of casual and
family-friendly games. While the majority of our 2K Play titles are developed by third party developers, we
have also developed titles for our 2K Play label internally, including Carnival Games and the Deal or No
Deal series. 2K Play also has a partnership with Nickelodeon to publish video games based on its’ top rated
Nick Jr. titles such as Dora the Explorer and Go, Diego, Go! We expect family-oriented gaming to be an
important component of our industry in the future.
Our Distribution Business
Our distribution segment, which is primarily comprised of our Jack of All Games subsidiary, distributes
our products and derives its revenue from the sale of third party software, hardware and accessories to
retail outlets primarily in North America. Operating margins in our distribution business are largely
dependent on the mix of software and hardware sales with software sales generally yielding higher margins
than hardware sales.
In September 2008, we sold certain assets of our distribution segment, pertaining to warehouse
management, processing and shipping operations, to Ditan, a logistics management solutions provider. As
part of the transaction, Ditan assumed our warehouse lease and personnel. In addition, we agreed to
outsource the pick, pack, ship and warehousing functions for our publishing and distribution businesses to
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