Activision 2008 Annual Report Download - page 13

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M A R K E T G R O W T H E X P E C T E D T O C O N T I N U E
As technology continues to transform the media landscape, global consumer demand for interactive virtual- and digital-
content has increased. We believe that this growth can continue even in these unprecedented economic conditions.
In the U.S., the average number of movie tickets per person declined 6% from 2003 to 20071. From 2004 to 2007, hours of
network television consumption per person declined 6%2 and the sales of recorded music in a physical format declined 12%3.
Yet, the consumption of digital media over the same period increased 107%4 and video games grew by 46%3. Not only are
video games growing, but they also are capturing a larger share of all media and offer a cost-per-hour value that is more
appealing than other forms of entertainment.
Today, there are more than 400 million hardware consoles in the market worldwide. In 2008 alone, the North American and
European software market totaled $24 billion, an increase of 20% year over year, according to The NPD Group, Charttrack
and GfK. We believe this growth comes from new audiences recognizing how differentiated games are from movies and
television. Consumers want to compose their own music, lead squads into combat, embark on magical quests and embody
characters in environments that are worlds apart from their everyday lives.
The dynamic growth in interactive media provides enormous opportunity. What sets us apart from our competitors in
taking advantage of it is our entrepreneurial inventiveness and our ability to marry consumers’ desires with creative game
experiences, as well as an integrated rewards and compensation program that enables our employees to remain focused on
strategic priorities. This discipline has allowed us to build a company that turns ideas, artistry, game concepts and brands
into engines of growth.
T H E P O W E R O F O U R P O R T F O L I O
The tremendous shift in consumer consumption of media continues to confer added importance to brands. According to The
NPD Group, Charttrack and GfK, 90% of the top-ten best-selling games worldwide in calendar 2008 were based on proven
franchises. Few companies today can match the breadth and diversity of Activision Blizzard’s portfolio of proven entertain-
ment franchises.
For the calendar year, we generated 75% of our revenues from owned franchises. We had three of the best-selling console and
PC franchises in North America and Europe—Activision’s Guitar Hero® and Call of Duty® and Blizzard Entertainment’s
World of Warcraft—and four of the top-10 console and handheld games across all platforms—Call of Duty: World at War™,
Call of Duty 4: Modern Warfare™, Guitar Hero III: Legends of Rock™ and Guitar Hero World Tour™. Additionally, World
of Warcraft: Wrath of the Lich King™ was the #1 best-selling PC game worldwide for the calendar year and the fastest-
selling PC title in the history of the industry.
In 2008, we once again grew the Call of Duty franchise with Call of Duty: World at War selling more than eight million
units worldwide in just November and December, according to The NPD Group, Charttrack and GfK. The franchise con-
tinues to top the Xbox LIVE® Marketplace charts with millions of people playing Call of Duty games online. During the
calendar year, life-to-date sales of the franchise exceeded $1 billion and the popularity of Call of Duty has never been greater.
Our Guitar Hero franchise continues to redefine gaming by delivering innovative entertainment experiences that tap into the
universal dream of being a rock star. The convergence of gaming with the passion of music has brought Guitar Hero to the
forefront of entertainment. Guitar Hero is not only changing how video games are played, it is also introducing recording
artists to new audiences and letting consumers interact with music in a whole new way. According to Nielsen SoundScan, one
artist whose songs appeared in Guitar Hero III: Legends of Rock experienced as much as 800% in download sales growth.
During the calendar year, the franchise debuted on the Nintendo DS™ with Guitar Hero: On Tour™, which resulted in our
largest North American launch ever for the DS platform. We also introduced a cooperative band experience for consoles with
Guitar Hero World Tour adding a drum controller and microphone to the popular guitar controller. The game set a new
A C T I V I S I O N B L I Z Z A R D , I N C .
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1 National Association of Theater Owners and the U.S. Census Bureau
2 The Nielsen Company
3 PricewaterhouseCoopers
4 eM arketer