"Hot Coffee" Dispute Changes Industry

It has been reported that the class-action lawsuit opposing Take-Two and its shareholders has now been settled for $20 million. The dispute allegedly began when it was discovered that a sexual minigame hidden in the code of Grand Theft Auto: San Andreas could be unlocked by a downloaded hack. This discovery reportedly lead to the game being re-rated to "Adults Only", to copies being removed from store shelves and to a drop in stock price for the company.

The scandal was allegedly named "Hot Coffee" because the minigame was initiated by the game character agreeing to enter a woman's house for a cup of coffee.

Take-Two was reportedly accused of several missteps in this case, namely that its management was not cooperating or assisting with the company's audit committee, that its management was failing to keep the board of directors informed of important issues or failing to do so in a timely manner, that inventory and software development costs were misstated, that it did not have the ability to accurately report its financial results due to failing and deficient internal controls and procedures and that it lied about where the content of the game came from. It has been reported that a new management team was installed in 2007 as a result of these missteps.

Despite the end of this particular dispute, some have stated that the gaming industry has been forever changed in the way games are rated, because all of the content on a game disc now has to be disclosed and rated.

Coverage at Arstechnica.com