Activision 2009 Annual Report Download - page 21

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9
� Launch of the Call of Duty: Modern Warfare 2 Stimulus Package map pack on Microsoft Xbox Live
(“XBLive”) in the first quarter of 2010 and on PlayStation Network (“PSN”) in the second quarter of 2010; and
� Launch of the Call of Duty: Modern Warfare 2 Resurgence map pack on XBLive in the second quarter of 2010
and on PSN in the third quarter of 2010.
For 2009, net revenues from the Activision segment increased as compared to 2008 primarily due to the following:
� As a result of the consummation of the Business Combination, net revenues of $685 million from the Activision
businesses operated by Activision, Inc. for the six months ended June 30, 2009 were included in 2009, but not
in 2008;
� Launches of two new intellectual properties, DJ Hero and PROTOTYPE in 2009; and
� Strong performance from Call of Duty: Modern Warfare 2, which was released in November 2009.
These were partially offset by weaker performance of the Guitar Hero franchise in 2009 versus 2008.
Blizzard
Blizzard’s net revenues increased for 2010 as compared to 2009 primarily as a result of the release of World of
Warcraft: Cataclysm in the fourth quarter of 2010 and StarCraft II: Wings of Liberty in the third quarter of 2010. The
increase in net revenues also reflects growth in sales of value-added services related to World of Warcraft, which consist of
transactions such as realm transfers, faction changes, and other character customizations within the World of Warcraft
gameplay. The China region business was also back online for the full year of 2010 and Blizzard successfully launched
World of Warcraft: Wrath of the Lich King in China in August 2010.
Blizzard’s net revenues decreased for the year ended December 31, 2009 as compared to 2008 primarily due to no
new releases in 2009 and an interruption of World of Warcraft in China from June 2009 to September 2009 as a result of a
license transfer. This compared to 2008 with the successful November 2008 release of the second expansion pack of World of
Warcraft: Wrath of the Lich King. This decrease was partially offset by an increase in other value-added service revenues.
Distribution
Distribution’s net revenues decreased in 2010 as compared to 2009, primarily due to weakness in the interactive
software industry in the United Kingdom (“U.K.”) resulting in lower sales from U.K. independent retailers and warehousing
services.
The increase in Distribution net revenues for 2009 as compared to 2008 was primarily due to the consummation of
Business Combination in which net revenues of $148 million from the Distribution businesses operated by Activision, Inc.
for the six months ended June 30, 2009 were included in the year ended December 31, 2009, but not in 2008.
Segment Income from Operations
Activision
Activision’s operating income decreased in 2010 as compared to 2009, primarily due to the following:
� 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 two new intellectual properties, Blur and Singularity; and
� Higher inventory obsolescence of peripherals and write offs as a result of cancellations of certain titles (e.g., a
Guitar Hero title that had been planned for release in 2011 and True Crime: Hong Kong).
These negative impacts on operating income were partially offset by:
� Stronger performance from our Call of Duty franchise in both retail and digital channels;