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Seasonality
Theinteractiveentertainmentindustryishighlyseasonal.Wehavehistoricallyexperiencedour
highestsalesvolumeintheyearendholidaybuyingseason,whichoccursinthefourthquarterandlowest
salesvolumeinthesecondquarterofourcalendaryear.Wedefertherecognitionofasignificantamountof
netrevenuerelatedtooursoftwaretitlescontainingonlinefunctionalitythatconstitutesa
morethaninconsequentialseparateservicedeliverableoveranextendedperiodoftime(i.e.,typicallysix
monthstolessthanayear).Asaresult,thequarterinwhichwegeneratethehighestsalesvolumemaybe
differentthanthequarterinwhichwerecognizethehighestamountofnetrevenue.Ourresultscanalso
varybasedonanumberoffactors,includingtitlereleasedates,consumerdemandforourproducts,and
shipmentschedules.
ConsolidatedStatementsofOperationsData
Note—ThehistoricalfinancialstatementspriortoJuly10,2008arethoseofVivendiGamesonly.
ThefinancialinformationofthebusinessesoperatedbyActivision,Inc.priortotheBusinessCombination
isincludedfromthedateoftheBusinessCombination(i.e.fromJuly10,2008onwards),butnotforprior
periods.
Thefollowingtablesetsforthcertainconsolidatedstatementsofoperationsdatafortheperiods
indicatedindollarsandasapercentageoftotalnetrevenues(amountsinmillions):
FortheyearsendedDecember31,
2009
2008
2007
Netrevenues:
Productsales.............................................................................................
$3,080
72%
$1,872
62%
$457
34%
Subscription,licensing,andotherrevenues................................
1,199
28
1,154
38
892
66
Totalnetrevenues................................................................................
4,279
100
3,026
100
1,349
100
Costsandexpenses:
Costofsales—productcosts................................................................
1,432
33
1,160
38
171
13
Costofsales—softwareroyaltiesandamortization................................
348
8
267
9
52
4
Costofsales—intellectualpropertylicenses................................
315
7
219
7
9
1
Costofsales—massivelymultiplayeronlineroleplaying
game(“MMORPG”)................................................................
212
5
193
7
204
15
Productdevelopment................................................................................
627
15
592
20
397
29
Salesandmarketing..................................................................................
544
13
464
15
172
13
Generalandadministrative................................................................
395
9
271
9
166
12
Impairmentofintangibleassets................................................................
409
10
—
—
—
—
Restructuring............................................................................................
23
1
93
3
(1)
—
Totalcostsandexpenses................................................................
4,305
101
3,259
108
1,170
87
Operatingincome(loss)................................................................
(26)
(1)
(233)
(8)
179
13
Investmentandotherincome(loss),net.......................................................
18
1
46
2
(4)
—
Income(loss)beforeincometaxbenefit......................................................
(8)
—
(187)
(6)
175
13
Incometaxbenefit........................................................................................
(121)
(3)
(80)
(2)
(52)
(4)
Netincome(loss).........................................................................................
$113
3%
$(107)
(4)%
$227
17%
OperatingSegmentResults
Ouroperatingsegmentshavebeendeterminedinaccordancewithourinternalorganizational
structure,themannerinwhichouroperationsarereviewedandmanagedbyourChiefExecutiveOfficer,
whoisourChiefOperatingDecisionMaker(“CODM”),themannerinwhichoperatingperformanceis
assessedandresourcesareallocated,andtheavailabilityofseparatefinancialinformation.Wedonot
aggregateoperatingsegments.