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This excerpt taken from the ATVI DEFA14A filed Mar 5, 2008. Exactly
7
Bobby Kotick — Activision, Inc. - Chairman, CEO
If my contract gets renewed. But you start with great fundamentals in the marketplace. Then you look at all these opportunities to expand our geographic reach. I mean, Asia is a place that we have had no opportunities before. Europe, we’re still so under represented. And Guitar Hero is a great example of a product where the demand so far outstripped the supply we had to make a very difficult decision. And the decision was we’re going to focus on North America in calendar ‘07. And we will then focus on — in calendar ‘08 — on Europe.
And our relationship with Universal Music is giving us an enormous amount of local content, access to local artists, access to local promotional capability. And we probably, by the end of the year, will have an adequate enough supply that we can go beyond just the UK, France and Germany with the kind of investments that we need to make.
But the market is the same size as the U.S. Music, it truly is a universal language. The enthusiasm for the product is there. So when you think about how we’re going to grow, just getting to parity on the U.S. business will add a significant amount of revenues this year. Then you think about what we’re doing in specialized programming, whether it is new platforms or Aerosmith, or other bands that are proprietary to our format, or new product categories that are line extensions.
This is a business that it is just at the beginnings of its opportunity cycle. And the thing that is unique about Guitar Hero, unlike any other product that we have created, for example, 40% of the audience is female. And the demographic reach is incredible. And so what we’re finding is that the popularity of the product is so far beyond the historical demographics of the videogame, that we’re just scratching the surface of opportunity.
And when I looked out over the next five-year business plan for Guitar Hero, you can see both revenue expansion, but you also see enormous opportunity for margin expansion. Downloadable content. Today we have a very, very small number of songs. If you look out over the next five years how big our library will be, and how easy it is for us to generate incremental margin from — today it is a $6 three song download, but the model, as compared to iTunes, is unbelievably appealing from a profit standpoint to us. And you’ll see a lot of that.
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