Activision 2010 Annual Report Download - page 22

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10
� A positive shift in the sales mix to higher-margin digital 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 the following:
� The increase in revenues from Activision as noted previously; and
� Lower operating expenses stemming from continuing effective cost-containment strategies.
Blizzard
Blizzard’s operating income increased for 2010 as compared to 2009, primarily due to:
� Release of World of Warcraft: Cataclysm in the fourth quarter of 2010 and StarCraft II: Wings of Liberty in the
third quarter of 2010;
� Increase in sales of value-added services related to World of Warcraft; and
� The China region business being back online for full year of 2010 and the successful launch of World of
Warcraft: Wrath of the Lich King in China in August 2010.
Blizzard’s operating income for 2009 decreased as compared to 2008, primarily as a result of the following:
� The decrease in net revenues noted previously; and
� Incremental investments made by Blizzard for customer service and for product development for the sequel to
StarCraft, the next World of Warcraft expansion pack, and enhancing Battle.net.
Supplemental Pro Forma Operating Segment Results
The consummation of the Business Combination has resulted in the businesses operated by Activision, Inc. prior to
the Business Combination being included from the date of the Business Combination (i.e. from July 9, 2008 onwards), but
not for prior periods. Therefore, for comparability purposes, we combined Activision, Inc.’s financial information with
Activision Blizzard’s reported financial information in the following table to create pro forma Activision Blizzard financial
information for the year ended December 31, 2008. This pro forma information is for informational purposes only and does
not reflect any operating efficiencies or inefficiencies which may have resulted from the Business Combination and therefore
is not necessarily indicative of results that would have been achieved had the business been combined during the years
presented. We have included a reconciliation between the reported consolidated and segment financial information to the pro
forma consolidated and segment financial information. See Note 14 of the Notes to Consolidated Financial Statements for
further details of our segment presentation.