This excerpt taken from the ATVI 10-Q filed Aug 8, 2008.
Our business may be burdened with payment defaults and uncollectible accounts if our distributors or retailers cannot honor their existing credit arrangements.
Distributors and retailers in the interactive entertainment industry have from time to time experienced significant fluctuations in their businesses and a number of them have failed. The insolvency or business failure of any of our significant retailers or distributors could materially harm our business and financial results. We typically make sales to most such retailers and some such distributors on unsecured credit, with terms that vary depending upon the customers credit history, solvency, credit limits, and sales history, as well as whether such customer can obtain sufficient credit insurance. Although, as in the case with most customers, we have insolvency risk insurance to protect against a customers bankruptcy, insolvency, or liquidation, this insurance contains a significant deductible and co-payment obligation, and does not cover all instances of non-payment. In addition, although we maintain a reserve for uncollectible receivables, the reserve may not be sufficient in every circumstance. As a result, a payment default by a significant customer could significantly harm our business and financial results.