Page 25 - 2012 Annual Report

VIVENDI l 2012 l Annual Report 25
GROUP PROFILE – BUSINESSES – LITIGATION – RISK FACTORS 1
1
SECTION 2 - BUSINESSES
ACTIVISION BLIZZARD
2.3. ACTIVISION BLIZZARD
Activision Blizzard is a global interactive entertainment software leader
and the world’s largest independent video game publisher. The company
was formed in 2008 through the merger of Activision, Inc. and Blizzard
Entertainment, Inc., two of the leading players in the field of interactive
entertainment.
Activision Publishing, Inc. (“Activision”) is a leading international publisher
of interactive software products and content. Activision develops and
publishes video games on various consoles, handheld platforms and
the PC platform through internally developed franchises and license
agreements.
Blizzard Entertainment, Inc. (“Blizzard”) is the leading company in the
subscription-based massively multiplayer online role-playing game
(“MMORPG”) category. Blizzard internally develops and publishes
PC-based computer games and maintains its proprietary online-game
related service, Battle.net® .
In 2012, Activision Blizzard reported record digital revenues and was
the #1 third-party interactive entertainment Western digital publisher.
2.3.1. Strategy/Positioning
Activision Blizzard’s portfolio of proven franchises is unmatched in the
industry. The company’s core franchises include Activision Publishing’s
Call of Duty® and Skylanders® and Blizzard Entertainment’s World of
Warcraft® , StarCraft ® and Diablo®. Each of these franchises is a long-
standing leader in its respective genre. Call of Duty ®, World of Warcraft,
StarCraft and Diablo all have strong online player communities.
Activision Blizzard’s objective is to continue to be a worldwide leader
in the development, publishing, and distribution of quality interactive
entertainment software, online content and services that deliver a highly
satisfying entertainment experience.
The company adopted four strategic priorities: continue to improve its
profitability, create shareholder value, continue to grow and focus on
delivery of digital content and online services.
In addition to investing in its wholly-owned portfolio of franchises, in
May 2010, Activision entered into an exclusive 10-year partnership with
Bungie, the developer of blockbuster game franchises including Halo,
Myth and Marathon , to bring Destiny, Bungie’s next big action game
universe, to market. During the term of the agreement, Activision will
have exclusive, worldwide rights to publish and distribute all future Bungie
games based on Destiny on multiple platforms and devices.
Activision Blizzard’s existing core franchises, coupled with Bungie’s
new Destiny game universe, as well as a new massively multiplayer
online game currently in development by Blizzard Entertainment, should
provide the company with a solid foundation for long-term growth.
The company’s strong financial position, its global best-in-class retail
and online distribution capabilities and its proven ability to create value
should enable it to grow its biggest franchises through innovation, online
business models expanding within Asia and into new geographies and
continuing to partner with some of the industry’s best development talent.
2.3.2. Activision Publishing
Activision Publishing focuses on development and publishing activities
principally for products and content that are, or have the potential
to become, franchises with sustainable mass consumer appeal and
recognition. It is the company’s experience that these products and
content can then serve as the basis for sequels, prequels, and related
new products and content that can be released over an extended period
of time.
In recent years, Activision Publishing has been best known for its
success in the first-person action category from its internally developed
intellectual property, Call of Duty®, Call of Duty: Black Ops II, and it plans
on continuing to develop this franchise. In aggregate, the Call of Duty
franchise has achieved more than $8 billion in life-to-date revenue and
has an active global community of millions of players.
The latest game in the Call of Duty franchise, Call of Duty: Black Ops II ,
was launched on November 13, 2012 and became the first video game
ever to cross $1 billion in worldwide retail sales in the first 15 days of
its launch (according to GfK Chart-Track retail customer sell through
information, internal company estimates and screenrant.com).
Additionally, on July 3, 2012, Activision Publishing and Tencent Holdings
Limited, a leading ISP in China, announced a strategic relationship to bring
the Call of Duty franchise to Chinese game players. Under the multi-year
agreement with Activision Publishing, Tencent has the exclusive license
to operative Activision’s new free-to-play Call of Duty Online game in
mainland China. The game will be monetized through the sale of in-game
items.
On October 21, 2012, Activision released Skylanders Giants ™, the second
title in its Skylanders franchise, an internally developed intellectual
property that combines the use of toys with videogames, delivering
an unprecedented gameplay experience to audiences. Specifically,
the game involves “smart toys” consisting of action figures and an
electronic “portal” which, when used together, allow a player to store and
access information about his/her character’s performance in the game.
The company sells the toys both bundled with the game software for the
title and on a stand-alone basis.