Activision 2014 Annual Report Download - page 17

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The increase/(decrease) in deferred revenues recognized by geographic region for the years ended December 31, 2014,
2013, and 2012 was as follows (amounts in millions):
For the Years Ended December 31,
2014 2013 2012
Increase/
(Decrease)
2014 v 2013
Increase/
(Decrease)
2013 v 2012
Increase/(decrease) in deferred revenues recognized by
geographic region:
North America .......................................................... $ (206) $ 108 $ (78) $ (314) $ 186
Europe ....................................................................... (153) 107 (28) (260) 135
Asia Pacific ............................................................... (46) 26 (25) (72) 51
Total impact on consolidated net revenues ................... $ (405) $ 241 $ (131) $ (646) $ 372
Consolidated net revenues in all regions decreased in 2014 as compared to 2013, except for the Asia Pacific region. As
previously discussed, the decrease in the Company’s consolidated net revenues in 2014, as compared to the same period in
2013, was mainly due to lower revenues from Call of Duty and Skylanders franchises, lower revenues recognized from
StarCraft II: Heart of the Swarm, which was released in March 2013, and lower revenues recognized from World of
Warcraft: Mists of Pandaria, which was released in September 2012. The decreases were partially offset by the launch of
Destiny and its first expansion pack The Dark Below, revenues from Hearthstone: Heroes of Warcraft, value-added services
revenues from the launch of the World of Warcraft paid character boost, revenues from World of Warcraft: Warlords of
Draenor, and revenues from Diablo III: Reaper of Souls, which was released in March 2014 on the PC, and Diablo III:
Reaper of Souls—Ultimate Evil Edition, which was released in August 2014 on certain consoles. All of the above factors
impact our year-over-year comparisons for North America and Europe. Further, in the Europe region, the decreases were
partially offset by the increase in Distribution segment revenues. In the Asia Pacific region, the higher mix of Blizzard
segment operations, as compared to Publishing segment operations, resulted in a year-over-year increase of revenues.
In all regions, the decrease in deferred revenues recognized in 2014, as compared to the same period in 2013, was primarily
attributed to the higher deferral of revenues from World of Warcraft: Warlords of Draenor, which was released in
November 2014, as compared to the recognition of revenues from World of Warcraft: Mists of Pandaria, which was
released in September 2012, deferral of revenues from Destiny and its first expansion pack The Dark Below, both of which
were released in 2014, and the deferral of revenues from Hearthstone: Heroes of Warcraft, which was also released in
2014.
Consolidated net revenues in all regions decreased in 2013 as compared to 2012. As previously discussed, the decrease in
the Company’s consolidated net revenues in 2013, as compared to the same period in 2012, was mainly due to lower
revenues from Diablo III for the PC, which was released in May 2012, lower revenues from our Skylanders franchise,
lower revenues from the launch of Call of Duty: Ghosts as compared to the launch of Call of Duty: Black Ops II, and fewer
releases from our value business due to its more focused slate of titles. In the Asia Pacific region, net revenues were further
impacted by lower World of Warcraft revenues resulting from a lower number of subscribers. In all regions, the decreases
were partially offset by a stronger performance from Call of Duty: Black Ops II digital downloadable content, as compared
to Call of Duty: Modern Warfare 3 downloadable content packs, recognition of previously deferred revenues from Call of
Duty: Black Ops II, and revenues from StarCraft II: Heart of the Swarm, which was released in 2013. The decreases in
North America and Europe were also partially offset by the recognition of previously deferred revenues from World of
Warcraft: Mists of Pandaria.
In all regions, the increase in deferred revenues recognized in 2013, as compared to the same period in 2012, was primarily
attributed to the lower deferral of revenues from Call of Duty: Ghosts, which was released in November 2013, as compared
to the deferral of revenues for Call of Duty: Black Ops II, which was released in November 2012, and recognition of
previously deferred revenues from Call of Duty: Black Ops II, which was released in November 2012, and World of
Warcraft: Mists of Pandaria, which was released in September 2012. This increase was partially offset by the higher
deferral of revenues from stronger catalog sales of Call of Duty: Black Ops II in 2013, as compared to catalog sales of Call
of Duty: Modern Warfare 3 in 2012, and the deferral of revenues from Diablo III on the PS3 and Xbox 360, which was
released in September 2013, and Call of Duty: Black Ops II digital downloadable content released in 2013.
Foreign Exchange Impact
Changes in foreign exchange rates had a negative impact of $2 million, a positive impact of $33 million, and a negative
impact of $114 million on Activision Blizzard’s consolidated net revenues in 2014, 2013, and 2012, respectively, as
compared to the same periods in the previous year. The changes are primarily due to changes in the value of the U.S. dollar
relative to the euro and British pound.
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For the year ended December 31, 2014, given that a significant portion of the Company’s GAAP net consolidated revenues
is generated in the first half of the fiscal year due to the impact of deferrals, where the euro and British pound strengthened
against the U.S dollar as compared to the same period in 2013, the negative impact from the significant weakening of the
euro and British pound relative to U.S. dollar in the later stages of 2014 was largely offset in the Company’s consolidated
net revenues for the full year 2014.
Net Revenues by Platform
The following tables detail our net revenues by platform and as a percentage of total consolidated net revenues for the years
ended December 31, 2014, 2013, and 2012 (amounts in millions):
Year
Ended
December 31,
2014
% of
total(3)
consolidated
net revs.
Year
Ended
December 31,
2013
% of
total(3)
consolidated
net revs.
Year
Ended
December 31,
2012
% of
total(3)
consolidated
net revs.
Increase/
(Decrease)
2014 v
2013
Increase/
(Decrease)
2013 v
2012
Platform net revenues:
Online
(
1
)
........................... $ 867 20% $ 912 20% $ 986 20% $ (45) $ (74)
PC .................................... 551 13 340 7 675 14 211 (335)
Next-generation (PS4,
Xbox One, Wii U) ....... 720 16 92 2 16
—
628 76
Prior-generation (PS3,
Xbox 360, Wii) ............ 1,430 32 2,287 50 2,170 45 (857) 117
Total Console ................... 2,150 49 2,379 52 2,186 45 (229) 193
Mobile and other(2) ........... 433 10 629 14 703 14 (196) (74)
Total Activision Blizzard . 4,001 91 4,260 93 4,550 93 (259) (290)
Distribution ...................... 407 9 323 7 306 6 84 17
Total consolidated net
revenues ........................... $ 4,408 100% $ 4,583 100% $ 4,856 100% $ (175) $ (273)
The increase / (decrease) in deferred revenues recognized by platform for years ended December 31, 2014, 2013, and 2012
was as follows (amounts in millions):
For the Years Ended December 31,
2014 2013 2012
Increase/
(Decrease)
2014 v 2013
Increase/
(Decrease)
2013 v 2012
Increase/(decrease) in deferred revenues recognized by
platform:
Online(1) ..................................................................... $ (168) $ 107 $ (85) $ (275) $ 192
PC .............................................................................. (41) 22 (37) (63) 59
Next-generation (PS4, Xbox One, Wii U) ................ (477) (213) (16) (264) (197)
Prior-generation (PS3, Xbox 360, Wii) ..................... 295 324 1(29) 323
Total console ............................................................. (182) 111 (15) (293) 126
Mobile and other(2) .................................................... (14) 1 6 (15) (5)
Total impact on consolidated net revenues ................... $ (405) $ 241 $ (131) $ (646) $ 372
(1) Revenues from online consists of revenues from all World of Warcraft products, including subscriptions, boxed
products, expansion packs, licensing royalties, and value-added services.
(2) Revenues from mobile and other includes revenues from handheld, tablet, and mobile devices, as well as
non-platform specific game- related revenues such as standalone sales of toys and accessories products from our
Skylanders franchise and other physical merchandise and accessories.
(3) The percentages of total are presented as calculated. Therefore the sum of these percentages, as presented, may
differ due to the impact of rounding.
Net revenues from online decreased in 2014, as compared to 2013, primarily due to the deferral of revenues from World of
Warcraft: Warlords of Draenor, which was released in November 2014, as compared to the recognition of revenues from
World of Warcraft: Mists of Pandaria, which was released in September 2012, and lower subscription revenues from World
of Warcraft. The decrease was partially offset by the strong performance of value-added services revenues driven by the
launch of the World of Warcraft paid character boost.