Activision Blizzard (ATVI)

Capitalized Software Development Costs

Capitalized software development costs represent costs incurred in connection with the internal development of products.  Vivendi Games accounts for capitalized software development costs in accordance with Statement of Financial Accounting Standard (“SFAS”) No. 86, Accounting for the Costs of Computer Software to be Sold, Leased, or Otherwise Marketed.  Software development costs are capitalized once the technological feasibility of a product is established and such costs are determined to be recoverable.  Technological feasibility is evaluated on a product-by-product basis.  Prior to a product’s release, Vivendi Games expenses capitalized costs when it believes such amounts are not recoverable.  Capitalized costs for those products that are cancelled or abandoned are charged to research and development expense in the period of cancellation.  Amounts related to software development which are not capitalized are charged immediately to research and development expense.  For many of the Vivendi Games’ internal development projects, technological feasibility has been determined to be achieved late in the development cycle.  As a result, most software development costs are expensed as research and development costs, and not capitalized.

Capitalized software development costs are classified as current based upon the expected future release dates of the associated software titles. Capitalized software development costs are amortized on a product-by-product basis generally over a four-month period which commences in the month that the product is released, with a majority of the expense being recognized in the first month. Capitalized software costs related to the initial development of World of Warcraft were amortized straight-line over a ten-month period commencing on its first launch in November 2004.

During the six months ended June 30, 2008 and 2007, amortization of capitalized software development costs was $4.4 million, and $4.0 million, respectively.

Capitalized Software Development Costs

Capitalized software development costs represent costs incurred in connection with the internal development of products. Vivendi Games accounts for capitalized software development costs in accordance with Statement of Financial Accounting Standard (“SFAS”) No. 86, Accounting for the Costs of Computer Software to be Sold, Leased, or Otherwise Marketed. Software development costs are capitalized once the technological feasibility of a product is established and such costs are determined to be recoverable. Technological feasibility is evaluated on a product-by-product basis. Prior to a product’s release, Vivendi Games expenses capitalized costs when it believes such amounts are not recoverable. Capitalized costs for those products that are cancelled or abandoned are charged to research and development expense in the period of cancellation. Amounts related to software development which are not capitalized are charged immediately to research and development expense. For many of the Vivendi Games’ internal development projects, technological feasibility has been determined to be achieved late in the development cycle. As a result, most software development costs are expensed as research and development costs, and not capitalized.

As of December 31, 2007 capitalized software development costs are classified as current based upon the expected 2008 release dates of the associated software titles. Capitalized software development costs are amortized on a product-by-product basis generally over a four-month period which commences in the month that the product is released, with a majority of the expense being recognized in the first month. Capitalized software costs related to the initial development of World of Warcraft were amortized straight-line over a ten-month period commencing on its first launch in November 2004.

During the years ended December 31, 2007, 2006 and 2005, amortization expense of capitalized software development costs was $10.1 million (as adjusted), $8.1 million, and $17.9 million, respectively.

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Capitalized Software Development Costs

Capitalized software development costs represent costs incurred in connection with the internal development of products. Vivendi Games accounts for capitalized software development costs in accordance with Statement of Financial Accounting Standard (“SFAS”) No. 86, Accounting for the Costs of Computer Software to be Sold, Leased, or Otherwise Marketed. Software development costs are capitalized once technological feasibility of a product is established and such costs are determined to be recoverable. Technological feasibility is evaluated on a product-by-product basis. Prior to a product’s release, Vivendi Games expenses capitalized costs when it believes such amounts

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Capitalized Software Development Costs

Capitalized software development costs represent costs incurred in connection with the internal development of products. Vivendi Games accounts for capitalized software development costs in accordance with Statement of Financial Accounting Standard (“SFAS”) No. 86, Accounting for the Costs of Computer Software to be Sold, Leased, or Otherwise Marketed. Software development costs are capitalized once the technological feasibility of a product is established and such costs are determined to be recoverable. Technological feasibility is evaluated on a product-by-product basis. Prior to a product’s release, Vivendi Games expenses capitalized costs when it believes such amounts are not recoverable. Capitalized costs for those products that are cancelled or abandoned are charged to research and development expense in the period of cancellation. Amounts related to software development which are not capitalized are charged immediately to research and development expense. For many of the Vivendi Games’ internal development projects, technological feasibility has been determined to be achieved late in the development cycle. As a result, most software development costs are expensed as research and development costs, and not capitalized.

Capitalized software development costs are classified as current based upon the expected future release dates of the associated software titles. Capitalized software development costs are amortized on a product-by-product basis generally over a four-month period which commences in the month that the product is released, with a majority of the expense being recognized in the first month. Capitalized software costs related to the initial development of World of Warcraft were amortized straight-line over a ten-month period commencing on its first launch in November 2004.

During the three months ended March 31, 2008 and 2007, amortization expense of capitalized software development costs was $1.03 million (as adjusted), and $1.96 million (as adjusted), respectively. During the years ended December 31, 2007, 2006 and 2005, amortization expense of capitalized software development costs was $10.1  million (as adjusted), $8.1 million, and $17.9 million, respectively.