Activision 2010 Annual Report Download - page 30

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For 2010, product development costs increased as compared to 2009, mainly due to the write off of capitalized
software development costs of cancelled titles, primarily a Guitar Hero title that had been planned for 2011 and True Crime:
Hong Kong. This increase in product development expense was partially offset by lower stock-based compensation expense
and the benefits realized from headcount reductions at certain Activision studios, primarily in the first quarter of 2010, to
align the Company’s resources with its product slate.
For 2009, product development costs increased as compared to 2008, primarily due to post-Business Combination
product development costs of $143 million from businesses previously operated by Activision, Inc., for the six month period
ended June 30, 2009 that were included in 2009, but not in 2008. This increase in product development expense was partially
offset by the complete wind down of Non-Core operations, resulting in lower product development expense from Non-Core
operations in 2009 as compared to 2008. Product development costs in 2008 included the write off of capitalized software
development costs of cancelled titles in the amount of $71 million as a result of the rationalization of our title portfolio after
the Business Combination.
Sales and Marketing (amounts in millions)
Year
Ended
December 31,
2010
% of
consolidated
net revs.
Year
Ended
December 31,
2009
% of
consolidated
net revs.
Year
Ended
December 31,
2008
% of
consolidated
net revs.
Increase
(Decrease)
2010 v
2009
Increase
(Decrease)
2009 v
2008
Sales and marketing ............. $520 12% $544 13% $464 15% $(24) $80
Sales and marketing expenses decreased in 2010 as compared to the same period in 2009, primarily as a result of a
reduction in the number of major titles released in 2010 versus 2009. This decrease in sales and marketing expenses was
partially offset by higher expenditures in connection with the continued marketing support for the Call of Duty and World of
Warcraft franchises, and the launch of StarCraft II: Wings of Liberty.
For 2009, sales and marketing expense increased as compared to 2008, primarily due to post-Business Combination
sales and marketing expenses of $147 million from businesses previously operated by Activision, Inc., for the six month
period ended June 30, 2009 that were included in 2009, but not in 2008. This increase was partially offset by a decrease in
amortization of intangible assets of $40 million related to retail customer relationships and the complete wind down of Non-
Core operations.
General and Administrative (amounts in millions)
Year
Ended
December 31,
2010
% of
consolidated
net revs.
Year
Ended
December 31,
2009
% of
consolidated
net revs.
Year
Ended
December 31,
2008
% of
consolidated
net revs.
Increase
(Decrease)
2010 v
2009
Increase
(Decrease)
2009 v
2008
General and administrative .. $364 8% $395 9% $271 9% $(31) $124
General and administrative expenses decreased in 2010, as compared to the same period in 2009, primarily due to:
� Favorable foreign exchange effects; and
� Lower stock-based compensation expense.
These factors were partially offset by higher accrued bonuses and legal expenses.
For 2009, general and administrative expenses increased as compared to 2008, primarily due to:
� Post-Business Combination general and administrative expenses of $114 million from businesses previously
operated by Activision, Inc., for the six month period ended June 30, 2009 that were included in 2009, but not
in 2008;
� Increases in stock-based compensation expense; and
� Foreign exchange losses from revaluation of our transaction exposures.