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Results of Operations—Years Ended December 31, 2011, 2010, and 2009
Non-GAAP Financial Measures
We currently define digital online channels-related sales as revenues from subscriptions and memberships, licensing
royalties, value-added services, downloadable content, digitally distributed products, and wireless devices.
The following table provides reconciliation between GAAP and non-GAAP net revenues by distribution channel for
the years ended December 31, 2011, 2010, and 2009 (amounts in millions):
For the Years Ended December 31,
2011 2010 2009
Increase/
(decrease)
2011 v 2010
Increase/
(decrease)
2010 v 2009
% Change
2011 v 2010
% Change
2010 v 2009
GAAP net revenues by distribution channel
Retail channels ................................................
.
$2,697 $2,629 $2,622 $68 $7 3% —%
Digital online channels ....................................
.
1,640 1,440 1,234 200 206 14 17
Total Activision and Blizzard .........................
.
4,337 4,069 3,856 268 213 7 6
Distribution ......................................................
.
418 378 423 40 (45) 11 (11)
Total consolidated GAAP net revenues ..........
.
4,755 4,447 4,279 308 168 7 4
Change in deferred net revenues
Retail channels ................................................
.
(185) 251 457 (436) (206) (174) (45)
Digital online channels ....................................
.
(81) 105 39 (186) 66 (177) 169
Total changes in deferred net revenues ...........
.
(266) 356 496 (622) (140) (175) (28)
Non-GAAP net revenues by distribution
channel
Retail channels ................................................
.
2,512 2,880 3,079 (368) (199) (13) (6)
Digital online channels ....................................
.
1,559 1,545 1,273 14 272 1 21
Total Activision and Blizzard .........................
.
4,071 4,425 4,352 (354) 73 (8) 2
Distribution ......................................................
.
418 378 423 40 (45) 11 (11)
Total non-GAAP net revenues(1) ...................
.
$4,489 $4,803 $4,775 $(314) $28 (7)% 1%
(1) Total non-GAAP net revenues presented also represents our total operating segment net revenues.
The increase in GAAP net revenues from digital online channels for 2011 as compared to 2010 was primarily due to
the continuing success of the Call of Duty franchise, including the stronger performance and greater number of downloadable
content packs associated with Call of Duty: Black Ops released in 2011 versus Call of Duty: Modern Warfare 2 in the prior year,
and a higher number of full game downloads from the Call of Duty catalogue titles. In addition, revenues generated from the
World of Warcraft franchise, particularly from the digital release of World of Warcraft: Cataclysm in December 2010, as well as
the digital release of StarCraft II: Wings of Liberty in July 2010, resulted in more deferred revenues recognized in 2011 as
compared to 2010. The increase in GAAP net revenues from retail channels for 2011 as compared to 2010 was the result of the
continued strong performance of the Call of Duty franchise as described above, recognition of deferred revenues from the 2010
launches of StarCraft II: Wings of Liberty and World of Warcraft: Cataclysm, and revenues generated from the launch of
Skylanders Spyro’s Adventure, partially offset by the release of fewer key titles.
The decrease in non-GAAP net revenues from retail channels for 2011 as compared to 2010 was the result of our
more focused slate, with the release of fewer key titles, and lower revenues generated from the casual “value” titles. The
decrease was partially offset by the continued strong performance of the Call of Duty franchise and revenues generated from
Skylanders Spyro’s Adventure. The increase in non-GAAP net revenues from digital online channels for 2011 as compared to
2010 was attributable to the stronger performance and greater number of downloadable content packs associated with Call of
Duty: Black Ops released in 2011 versus Call of Duty: Modern Warfare 2 in the prior year, and a higher number of full game
downloads from the Call of Duty catalogue titles. This increase was partially offset by the unfavorable impact of the decrease in
World of Warcraft’s subscriber base, the decrease of full game downloads of World of Warcraft: Cataclysm, which was released
in December 2010, and StarCraft II: Wings of Liberty, which was released in July 2010.
The increase in both GAAP and non-GAAP net revenues from digital online channels for 2010 as compared to 2009
was mainly due to the increase in revenues from the World of Warcraft’s value-added services, revenues from the sales of
downloadable content packs associated with Call of Duty: Modern Warfare 2 in 2010, the full game downloads of StarCraft II:
Wings of Liberty in July 2010, and the release of World of Warcraft: Cataclysm in December 2010. The decrease in non-GAAP
net revenues from retail channels for 2010 as compared to 2009 was primarily due to the fewer key titles releases and the weaker
sales of games in the music and casual genres.
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