Activision Blizzard (ATVI)

Last year we would have deployed a lot more of our marketing capital to Facebook, to MySpace, to Yahoo, to iLife, to any of the different things that would actually have been useful. They didn’t actually have the personnel or the capacity to take our money.

And so as you start to see infrastructure develop there where you have more thoughtful marketing managers, and people dedicated to our category, as well as our increasing our resources to leverage those, what you’re going to see is a continued shift of our typical dollars that used to go to television and consumer-enthusiast print and trade marketing, to things that are actually more relevant to our customer base.

And whether it is — if you look on Facebook, for example, the number of Guitar Hero groups that you have, that is the perfect opportunity for us to build a community of Guitar Hero users, in addition to what we’re doing in our own Guitar Hero initiatives. And so you will see a lot more of our capital being deployed thoughtfully, I think, on the social networks.

The other thing is as the social networks figure out monetization strategies, and they are in the early days, a lot of those monetization strategies apply to our properties on our franchisees. And the Holy Grail for us has been to build a rate card for sponsors and advertises that has credibility, and that is measurable.

People understand the dynamics of not being able to click through like your TV commercials. They know that we have a much thicker environment to sell a message or to integrate a product thoughtfully. But it is still early days. I think as you start to see monetization on the social networks, a lot of those same principles and tools will be the ones that we use in our games. And so that will just validate that opportunity to a much greater degree.

When you look at — let me take your middle question next. When you think about the communities that we have, and let’s say Guitar Hero is a good example. Let’s say roughly 15 million people who you have purchased guitars, with roughly 45 million people using those guitars at any one time. So the pass along rate is roughly three times.

And you look at the quality of interaction, the type of interaction, and the thing that is missing today is the over-the-Internet social interaction. Most of what is taking place today is in the bar, in the living room, in the family room. It is not multiplayer play, tournament play, ladder play, prize play, cash play that could occur over a network.

That will be the evolution of the medium. And it is one that is usually accessible, that I think lends itself very well to that type of promotion. And I think when you look at how we will crossover into linear media, and what we’re doing in terms of building a network that has more of an attractive appeal for competition, that will be a big part of our initiative over the next few years.

Then you look at the online opportunities for those social networks for over-the-long-term user generated content. Today playing Guitar Hero — and making Guitar Hero software is not an easy thing to do. You can envision those tools being available for people to create their own songs, and note track their own songs, and creating an opportunity for people to be able to self publish their own songs. It will happen over time.

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