Blizzard 2015 Annual Report Download - page 25

Download and view the complete annual report

Please find page 25 of the 2015 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.

Page out of 108

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108

7
Overall, we do expect that a limited number of popular franchises will continue to produce a disproportionately high percentage of
our, and the industry’s, revenues and profits in the near future.
Seasonality
While our business is transitioning to a year-round engagement model, the interactive entertainment industry remains highly seasonal.
We have historically experienced our highest sales volume in the year-end holiday buying season, which occurs in the fourth quarter.
We defer the recognition of a significant amount of our net revenues, related to our software titles containing online functionality that
constitutes a more-than-inconsequential separate service deliverable, over an extended period of time (i.e., typically less than a year).
As a result, the quarter in which we generate the highest sales volume may be different than the quarter in which we recognize the
highest amount of net revenues. Our results can also vary based on a number of factors including, but not limited to, title release date,
consumer demand, market conditions and shipment schedules.
Outlook
For 2016, our results will include the operations of King, beginning on February 23, 2016, the date the King Acquisition closed. Our
earnings under accounting principles generally accepted in the United States of America (“GAAP”) are expected to be down versus
prior-year, as the expected results will be impacted by additional accounting charges associated with the King Acquisition, which
include, among other things, integration and acquisition-related costs, the amortization of intangible assets resulting from purchase
price accounting adjustments, and the related tax impact from the King Acquisition. The majority of these GAAP accounting charges
will not impact the economics or operating cash flows of our business, although they will have a material impact on our 2016 GAAP
results.
For Activision, we expect to deliver multiple map packs to Call of Duty: Black Ops III, along with additional in-game content, during
2016. For the Destiny franchise, Activision expects to deliver a new expansion in 2016 with the full-game Destiny sequel to come in
2017. Also in the fourth quarter of 2016, Activision plans to release new Call of Duty and Skylanders games. Blizzard plans to release
Overwatch in the spring of 2016, as well as World of Warcraft: Legion™ in the summer of 2016. In addition, Hearthstone: Heroes of
Warcraft and Heroes of the Storm will have ongoing content updates throughout the year.
10-K Activision_Master_032416_PrinterMarksAdded.pdf 7 3/24/16 11:00 PM