Blizzard 2010 Annual Report Download - page 24

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12
� Limited market success of the two new intellectual properties, Blur and Singularity.
These negative impacts on net revenues were partially offset by the:
� Strong performance from Call of Duty: Black Ops, which was released in the fourth quarter of 2010; and
� Continued strong performance of Call of Duty: Modern Warfare 2 in retail and its related digital downloadable
content.
Activision’s net revenues decreased for 2009 as compared to 2008, primarily due to:
� The weakness in the economy adversely impacting the casual game and music genres and the weaker
performance of the Guitar Hero franchise in 2009 as compared to 2008; and
� The decline in sales of PS2 platform titles due to the aging lifecycle of the PS2 platform as consumers
transitioned to current-generation platforms.
Partially offsetting these negative impacts on net revenues were the:
� Increase in net revenues from the strong performance of Call of Duty: Modern Warfare 2; and
� Growth in online digital revenues from Call of Duty downloadable content.
Pro Forma Activision Segment Income from Operations
Activision’s operating income decreased in 2010 as compared to 2009, primarily due to the:
� Release of fewer key titles in 2010 than in 2009 and weaker sales of games in the music and casual genres;
� Limited market success of Blur and Singularity; and
� Higher inventory obsolescence of peripherals and write-offs resulting from the cancellations of certain titles in
development.
These negative impacts to operating income were partially offset by:
� Stronger performance from our Call of Duty franchise in both retail and digital channels;
� A positive shift in the sales mix of higher-margin products;
� Lower sales and marketing expenses as a result of fewer releases; and
� Savings realized from headcount reductions within certain administrative functions in the first quarter of 2010.
Activision’s operating income increased in 2009 as compared to 2008, primarily due to:
� Strong performance of Call of Duty: Modern Warfare 2, which was released in November 2009;
� The change in business mix, with fewer sales of hardware peripherals and accordingly lower product costs;
� Launches of two new intellectual properties, DJ Hero and PROTOTYPE in 2009;
� Growth in higher margin online digital revenues; and
� Lower operating expenses stemming from continuing effective cost-containment strategies.
These factors were partially offset by the decrease in net revenues described above.