Blizzard 2009 Annual Report Download - page 16
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In2010,weexpecttocontinuetobuildonoursuccessbyreleasingkeyfranchisegamesincluding
Blizzard’sStarCraftII:WingsofLibertyandtheWorldofWarcraftexpansionpack,Cataclysm,aswellas
adiversifiedlineupofgamesbasedonActivision’sbestsellingfranchisesincludingCallofDuty,Guitar
Hero,andTonyHawk,togetherwithotherwellknowntitlessuchasTrueCrime,SpiderMan,and
Bakugan,andaselectnumberofnewintellectualpropertyfranchisessuchasBlurandSingularity.
InternationalOperations
Internationalsalesareafundamentalpartofourbusiness.Netrevenuesfrominternationalsales
accountedforapproximately48%,50%,and53%ofourtotalconsolidatednetrevenuesfortheyearsended
December31,2009,2008and2007,respectively.WemaintainsignificantoperationsintheUnitedStates,
Canada,theUnitedKingdom,Germany,France,Italy,Spain,Australia,Sweden,SouthKorea,Norway,
Denmark,China,andtheNetherlands.Webelievethatitisimportanttodevelopcontentlocallythatis
specificallydirectedtowardlocalculturesandcustomstosucceedinternationally.Ourinternational
businessissubjecttoriskstypicalofaninternationalbusiness,including,butnotlimitedto,foreign
currencyexchangeratevolatility.Accordingly,ourfutureresultscouldbemateriallyandadverselyaffected
bychangesinforeigncurrencyexchangerates.
Management’sOverviewofBusinessTrends
OnlineContentandDigitalDownloads
Weprovideavarietyofelectronicallydeliveredproducts.Manyofourvideogamesthatare
availablethroughretailersasphysical“boxed”productssuchasDVDsarealsoavailablebydirectdigital
downloadthroughtheInternet(fromwebsitesthatweownandothersownedbythirdpartiestowhichwe
licenseourproducts).Wealsoofferdownloadablecontentandaddonstoourproducts(e.g.,mappacks
andadditionalsongs).Electronicallydeliveredcontentisgenerallyofferedtoconsumersforaonetimefee.
Wecontinuetofocusonandgrowourdigitaldownloadandonlinerevenuesandwebelievethatthiswill
becomeanincreasinglyimportantpartofourbusinessovertime.
CurrentGenerationofGameConsoles
ThecurrentgenerationofgameconsolesbeganwithMicrosoft’slaunchoftheXbox360in2005,
andcontinuedin2006whenSonyandNintendolaunchedtheirnextgenerationsystems,thePS3andthe
Wii,respectively.WehaveseenasignificantdeclineinPS2revenuesduring2009ascomparedto2008,
suggestingthatthispriorgenerationplatformmaysoonbecompletelyreplacedbythecurrentgenerationof
consoles.Overallconsolesalesremainedstrongin2009,withaninstalledbaseofhardwareintheU.S.and
Europeof218millionunitsasofDecember31,2009,representinganincreaseof37%inunitsyearover
year.Wewillcontinuetomonitorgameconsolesalestomanageourproductdeliveryoneachplatformina
mannerwebelievetobemosteffective.
ConcentrationofTopTitles
Asignificantportionofourrevenueshashistoricallybeenderivedfromvideogamesbasedona
fewpopularfranchisesandthesevideogamesareresponsibleforadisproportionatelyhighpercentageof
ourprofits.Weexpectthatalimitednumberofpopularfranchiseswillcontinuetoproducea
disproportionatelyhighpercentageofourrevenuesandprofits.Forexample,ourtopthreefranchises,Call
ofDuty,GuitarHero,andWorldofWarcraft,accountedforapproximately68%ofournetrevenuesforthe
yearendedDecember31,2009.Thisissimilartotheoveralltrendinthevideogameindustry.For
example,thetop10titlesaccountedfor37%ofthesalesintheU.S.videogameindustryinthethree
monthsendedDecember31,2009,accordingtoTheNPDGroup.In2010,weexpecttoreleasekey
franchisegamesincludingBlizzard’sStarCraftII:WingsofLibertyandtheWorldofWarcraftexpansion
pack,Cataclysm,aswellasadiversifiedlineupofgamesbasedonActivisionPublishing’sbestselling
franchisesincludingCallofDuty,GuitarHero,andTonyHawk,togetherwithotherwellknowntitlessuch
asTrueCrime,SpiderMan,andBakugan.Alsoin2010,weexpecttocontinuetoexplorenewintellectual
propertiestobroadenourfranchiseportfoliobyreleasingaselectnumberofnewintellectualproperties,
suchasBlurandSingularity.