2K Sports 2009 Annual Report Download - page 14

America. Products that are designated Sony’s Greatest Hits (for PS3, PS2 and PSP) and Microsoft’s
Platinum Hits (for Xbox 360) generally sell at prices ranging from $19.99 to $29.99 in North America.
Product Procurement and Distribution
We procure products from suppliers principally using standard purchase orders based on our assessment of
market demand, as well as pre-orders from retailers. We periodically enter into agreements with our
suppliers that provide exclusive distribution rights to certain products. We carry inventory quantities that
we believe are necessary to provide rapid response to retailer orders. We utilize electronic data
interchange with many of our customers to enhance the efficiency of placing and shipping orders and
receiving payments.
We distribute our own titles as well as software, hardware and accessories developed by others in North
America through our Jack of All Games subsidiary. The products we distribute consist principally of newly
released and popular software titles, budget and catalog software titles, and hardware for third party
console, handheld and PC products. Both of our Jack of All Games subsidiaries, based in Ohio and
Canada, outsource the pick, pack, ship and warehousing functions while maintaining sales offices. We
generally ship products by common carrier. Backlog is not material to our business as we generally ship
products within seven days after receipt of orders.
Competition
In our publishing business, we compete with:
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companies with greater financial, marketing and technical personnel and other resources than ours,
including Activision Blizzard, Electronic Arts and THQ, and international companies, such as
Capcom, Square Enix, Konami, Namco-Bandai, SEGA and Ubisoft.
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software, each of which is a large developer and marketer of software for its own platforms. Each of
these competitors has the financial resources to withstand significant price competition and to
implement extensive advertising campaigns.
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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.
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programs 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, and
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. Competition for our titles is influenced by the timing
of competitive product releases and the similarity of such products to our titles and may result in loss of
shelf space or a reduction in sell-through of our titles at retail stores.
In our distribution business, we compete with large national companies as well as smaller regional
distributors. We also compete with the efforts of the major entertainment software companies that
distribute directly to retailers or over the Internet. Some of our competitors have greater financial,
technical, personnel and other resources than we do and are able to carry larger inventories, adopt more
aggressive pricing policies and provide more comprehensive product selection than we can.
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