Blizzard 2005 Annual Report Download - page 23
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Please find page 23 of the 2005 Blizzard annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.Our Focus
Withrespecttofuturegamedevelopment,wewillcontinuetofocusonour“bigpropositions,”productsthatarebackedbystrongbrandsandhighqualitydevelopment,
forwhichwewillprovidesignificantmarketingsupport.
Ourfiscal2006“bigpropositions”willincludewell-establishedbrands,whicharebackedbyhigh-profileintellectualpropertyand/orhighlyanticipatedmotionpicture
releases. Examples of these brands are our superheroes and skateboarding brands. We have a long-term relationship with Marvel Enterprises through an exclusive
licensingagreement.ThisagreementgrantsustheexclusiverightstodevelopandpublishvideogamesbasedonMarvel’scomicbookfranchisesSpider-Man,X-Men,
Fantastic4andIronMan.Throughourlong-termrelationshipwithMarvelEnterprises,weexpectourfiscal2006releasestoincludetitlesbasedonMarvel’sSpider-Man,
Fantastic4andX-Men.Thevideogamereleaseof
Fantastic 4
isscheduledforJune2005justpriortothetheatricalreleaseof“Fantastic4.”Wewillalsobedevelopingand
publishing video games based onNew LineCinema’supcomingfeaturefilm “IronMan,” which isexpected to bereleased incalendar 2007. Inaddition, through our
licensing agreement with Spider-Man Merchandising, LLP, we willbe developing and publishing video games based on Columbia Pictures/Marvel Enterprises,Inc.’s
upcoming feature film “Spider-Man 3,” which is expected to be released in May 2007. In addition, we have an exclusive licensing agreement with professional
skateboarderTonyHawk.TheagreementgrantsusexclusiverightstodevelopandpublishvideogamesusingTonyHawk’snameandlikeness.Throughfiscal2005,we
havereleasedsixsuccessfultitlesintheTonyHawkfranchisewithcumulativenetrevenuesof$958.1million,includingthemostrecent,
THUG 2
,whichwasreleasedin
thethirdquarteroffiscal2005.Wewillcontinuetopromoteourskateboardingfranchisewiththereleaseinfiscal2006of
Tony Hawk’s American Wasteland
.
WealsocontinuetodevelopanumberoforiginalintellectualpropertieswhicharedevelopedandownedbyActivision.Forexample,inthethirdquarteroffiscal2005,we
releasedthehighlysuccessful
Call of Duty: Finest Hour
,onmultipleconsoleplatforms.ThistitlewasrankedbyNPDFunworld(“NPD”)asoneofthetop-fivebestsellinggames
inDecember2004andwasthethirdgamebaseduponthisoriginalpropertyfollowingthe
Call of Duty
and
Call of Duty: United Offensive
titlesforthePC.Thehighlysuccessful
title
True Crime: Streets of L.A.
,releasedinthethirdquarteroffiscal2004,isanothertitlebaseduponoriginalintellectualproperty.Weexpecttodevelopavarietyofgameson
multipleplatformsbasedonthesetwooriginalproperties.Wealsoexpecttoestablishourfiscal2006release,
GUN
,asasourceofrecurringrevenues.
Wewillalsocontinuetoevaluateandexploitemergingbrandsthatwebelievehavepotentialtobecomesuccessfulgamefranchises.Forexample,wehaveamulti-year,
multi-property,publishingagreementwithDreamWorksLLCthatgrantsustheexclusiverightstopublishvideogamesbasedonDreamWorksAnimationSKG’stheatrical
release“Shrek2,”whichwasreleasedinthefirstquarteroffiscal2005,“SharkTale,”whichwasreleasedinthesecondquarteroffiscal2005,“Madagascar,”whichwas
releasedinthefirstquarteroffiscal2006,aswellasupcomingcomputer-animatedfilms“OvertheHedge,”andalloftheirrespectivesequels,including“Shrek3.”
Inadditiontoacquiringorcreatinghighprofileintellectualproperty,wehavealsocontinuedourfocusonestablishingandmaintainingrelationshipswithtalentedand
experiencedsoftwaredevelopmentteams.Wehavestrengthenedourinternaldevelopmentcapabilitiesthroughtheacquisitionofseveraldevelopmentcompanieswith
talentedandexperiencedteamsincluding,mostrecently,theacquisitionsofVicariousVisions,Inc.inJanuary2005,ToysForBob,Inc.inApril2005andBeenox,Inc.in
May2005.Wehavedevelopmentagreementswithothertop-level,third-partydeveloperssuchasidSoftwareandLionheadStudios.
Weareutilizingthesedeveloperrelationships,newintellectual propertyacquisitions,neworiginalintellectualpropertycreationsandour existinglibraryofintellectual
propertytofurtherfocusourgamedevelopmentonproductlinesthatwilldeliversignificant,lastingandrecurringrevenuesandoperatingprofits.
CRITICAL ACCOUNTING POLICIES
Wehaveidentifiedthepoliciesbelowascriticaltoourbusinessoperationsandtheunderstandingofourfinancialresults.Theimpactandanyassociatedrisksrelatedto
thesepoliciesonourbusinessoperationsisdiscussedthroughoutManagement’sDiscussionandAnalysisofFinancialConditionandResultsofOperationswheresuch
policiesaffectourreportedandexpectedfinancialresults.Foradetaileddiscussionontheapplicationoftheseandotheraccountingpolicies,seeNote1totheNotestothe
ConsolidatedFinancialStatementsincludedinthisAnnualReport.Thepreparationoffinancialstatementsinconformitywithgenerallyacceptedaccountingprinciples
page 21
Activision, Inc. — 2005 Annual Report