Activision 2012 Annual Report Download - page 55

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ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
1. Description of Business and Business Combination
Description of Business
Activision Blizzard, Inc. is a worldwide online, personal computer (“PC”), video game console, tablet, handheld, and mobile game
publisher. The terms “Activision Blizzard,” the “Company,” “we,” “us,” and “our” are used to refer collectively to Activision Blizzard, Inc. and
its subsidiaries. We maintain significant operations in the United States, Canada, the United Kingdom, France, Germany, Ireland, Italy, Sweden,
Spain, the Netherlands, Australia, South Korea and China.
The common stock of Activision Blizzard is traded on The NASDAQ Stock Market under the ticker symbol “ATVI.” Vivendi S.A.
(“Vivendi”) owned approximately 62% of Activision Blizzard’s outstanding common stock at December 31, 2012.
Based upon our current organizational structure, we operate three operating segments as follows:
(i) Activision Publishing, Inc.
Activision Publishing, Inc. (“Activision”) is a leading international developer and publisher of interactive entertainment. Activision
develops games based on both internally-developed and licensed intellectual property. Activision markets and sells games we develop and,
through our affiliate label program, games developed by certain third-party publishers. We sell games both through retail channels and by digital
download. Activision currently offers games that operate on the Sony Computer Entertainment, Inc. (“Sony”) PlayStation 3 (“PS3”),
Nintendo Co. Ltd. (“Nintendo”) Wii (“Wii”) and Nintendo Wii U (“Wii U”), and Microsoft Corporation (“Microsoft”) Xbox 360 (“Xbox 360”)
console systems; the Nintendo Dual Screen (“DS”) and Nintendo 3DS (3DS”) handheld game systems; the PC; and other handheld and mobile
devices.
(ii) Blizzard Entertainment, Inc.
Blizzard Entertainment, Inc. (“Blizzard”) is a leader in the subscription-based massively multi-player online role-playing game
(“MMORPG”) category in terms of both subscriber base and revenues generated through its World of Warcraft® franchise, which it develops,
hosts and supports. Blizzard also develops, markets, and sells role-playing action and strategy PC-based computer games, including games in the
multiple-award winning Diablo® and StarCraft® franchises. In addition, Blizzard maintains a proprietary online-game related service, Battle.net®.
Blizzard distributes its products and generates revenues worldwide through various means, including: subscriptions (which consist of fees from
individuals playing World of Warcraft), sales of prepaid subscription cards, and revenue from value-added services such as realm transfers,
faction changes, and other character customizations within the World of Warcraft gameplay, retail sales of physical “boxed” products; online
download sales of PC products; and licensing of software to third-party or related party companies that distribute World of Warcraft, Diablo® III,
and StarCraft® II products.
(iii) Activision Blizzard Distribution
Activision Blizzard Distribution (“Distribution”) consists of operations in Europe that provide warehousing, logistical and sales
distribution services to third-party publishers of interactive entertainment software, our own publishing operations, and manufacturers of
interactive entertainment hardware.
Business Combination
On July 9, 2008, a business combination (the “Business Combination”) by and among Activision, Inc., Sego Merger Corporation, a
wholly-owned subsidiary of Activision, Inc., Vivendi, VGAC LLC, a wholly-owned subsidiary of Vivendi , and Vivendi Games, Inc. (“Vivendi
Games”), a wholly-owned subsidiary of VGAC LLC, was consummated. As a result of the consummation of the Business Combination,
Activision, Inc. was renamed Activision Blizzard, Inc. For accounting purposes, the Business Combination is treated as a “reverse acquisition,”
with Vivendi Games deemed to be the acquirer.