THQ 2008 Annual Report Download - page 23

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• the popularity of both new titles and titles released in prior periods;
• the profit margins for titles we sell;
• the competition in the industry for retail shelf space;
• fluctuations in the size and rate of growth of consumer demand for titles for different platforms;
and
• the timing of the introduction of new platforms and the accuracy of retailers’ forecasts of consumer
demand.
We believe that quarter-to-quarter comparisons of our operating results are not a good indication of our
future performance. We may not be able to maintain consistent profitability on a quarterly or annual basis.
It is likely that in some future quarter, our operating results may be below the expectations of public
market analysts and investors as a result of the factors described above and others described throughout
this ‘‘Risk Factors’’ section, and the price of our common stock may fall or significantly fluctuate.
Rating systems and future legislation may make it difficult to successfully market and sell our
products.
Currently, the interactive software entertainment industry is self-regulated and rated by the Entertainment
Software Rating Board (‘‘ESRB’’). Our retail customers take the ESRB rating into consideration when
deciding which of our products they will purchase. If the ESRB or a manufacturer determines that a
product should have a rating directed to an older or more mature consumer, we may be less successful in
our marketing and sales of a particular product.
From time to time, legislation has been introduced at the local, state and federal levels for the
establishment of a government mandated rating and governing system in the United States and in foreign
countries for our industry. Various foreign countries already allow government censorship of interactive
entertainment products. We believe that if our industry were to become subject to a government rating
system or other regulation, our ability to successfully market and sell our products could be adversely
affected.
Any significant downturn in general economic conditions that results in a reduction in discretionary
spending could reduce demand for our products and harm our business.
Our product sales are affected by the retail customer’s ability and desire to spend disposable income on the
purchase of our games. Any significant downturn in general economic conditions that results in a reduction
in discretionary spending could result in a reduction in demand for our products and could harm our
business. Such industry downturns have been, and may continue to be, characterized by diminished
product demand and subsequent erosion of average selling prices.
Because of these and other factors affecting our operating results and financial condition, past financial
performance should not be considered a reliable indicator of future performance, and investors should not
use historical trends to anticipate results or trends in future periods.
Item 1B. Unresolved Staff Comments
None.
15