Activision Blizzard (ATVI)

Sony PlayStation 3 Net Revenues (in thousands)

The PS3 was released in North America in November 2006 and in Europe in March 2007. For the three months ended September 30, 2007, we released TRANSFORMERS: The Game on PS3 in Europe. For the six months ended September 30, 2007, PS3 net revenues were primarily derived from the worldwide sales of Spider-Man 3 and TRANSFORMERS: The Game. These titles were released at premium retail pricing (i.e. $59.99 in the United States).

Over the last six months, Sony has cut prices and introduced lower priced models for the PS3. It is uncertain how these price reductions will impact consumer demand for the platform. However, we expect net revenues from sales of titles for the PS3 to increase as the installed base of hardware grows. We have a robust slate of titles for the PS3 and expect net revenues from this platform to represent a larger proportion of total publishing net revenues for the remainder of fiscal 2008.

Sony PlayStation 2 Net Revenues (in thousands)

Net revenues from sales of titles for the PS2 increased 186% from $51.3 million for the three months ended June 30, 2006 to $146.9 million for the three months ended June 30, 2007.  The increase in absolute dollars is primarily due to continued momentum for our fiscal 2007 third quarter title, Guitar Hero II for the PS2 (game and accessories), as well as the strong performance of our worldwide first quarter title releases, Spider-Man 3, Shrek The Third, and Tony Hawk’s Downhill Jam for the PS2, and the late first quarter release in North America and Asia of TRANSFORMERS: The Game.  In addition, net revenues for the fiscal 2008 first quarter included strong catalog sales.  Fiscal 2007 first quarter net revenues were driven by the first quarter fiscal 2007 titles releases, Over the Hedge and X-Men: The Official Game.  Net revenue for the quarter also included sales of Guitar Hero as the acquisition of RedOctane occurred on June 6, 2006.  As a percentage of publishing net revenues, sales of titles for the PS2 decreased from 38% to 34%, due to the strong fiscal 2008 first quarter performance of the Xbox360 platform with the release of Guitar Hero II for Xbox360, and a shift to the next generation PS3 platform of 6% of total publishing net revenues.

Although we expect net revenues from sales of titles for the PS2 to decline over time as consumers transition to next generation platforms, we continue to expect significant net revenues for PS2 for fiscal 2008 as we plan to develop and release many of our key titles on this platform.

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Sony PlayStation 2 Net Revenues (in thousands)

Net revenues from sales of titles for the PS2 increased 1% from $417.3 million for the year ended March 31, 2005 to $422.2 million for the year ended March 31, 2006. The slight increase was primarily due to an increase in the number of major titles released for the PS2 from seven major titles in fiscal 2005 to nine major titles in fiscal 2006. This increase was offset by an increase in the provision for returns and price protection on new releases due to weaker market conditions. In addition, Madagascar, which was our fifth best selling PS2 title for fiscal 2006 in terms of units sold, was released at a lower initial retail pricing point of $39.99 compared to $49.99 for comparable children’s titles in fiscal 2005. As a percentage of publishing net revenues, net revenues from sales of titles for the PS2 decreased from 39% for the year ended March 31, 2005 to 36% for the year ended March 31, 2006. The decrease is due to a change in our platform revenue mix due to the introduction of the Xbox360.

Sony PlayStation 2 Net Revenues (in thousands)

Net revenues from sales of titles for the PS2 decreased 22% from $65.5 million for the three months ended June 30, 2005 to $51.3 million for the three months ended June 30, 2006.   The decrease in absolute dollars is primarily due to first quarter fiscal 2006 release of the LucasArts’ affiliate title, Star Wars: Episode III Revenge of the Sith, in European territories.  This title was our top selling title in the first quarter of fiscal 2006 and there were no corresponding affiliate label titles released in the first quarter of fiscal 2007.  The decrease was partially offset by sales of Guitar Hero since the acquisition of RedOctane on June 6, 2006.  As a percentage of publishing net revenues, net revenues from sales of titles for the PS2 increased from 34% to 38%.  The increase as a percentage of publishing net revenues is the result of a more than proportionate decline in net revenues on titles for the Xbox console platform due to the transition to the next-generation console systems causing a greater percentage of net revenues to come from sales of titles for the PS2.  Due to the market uncertainty involving the transition to the next-generation console systems, we plan on releasing a more focused slate for the duration of fiscal 2007 resulting in a significant decrease in PS2 titles from fiscal 2006 where we had the largest slate of titles in our history.  As a result, we expect net revenues from sales of titles for the PS2 to continue to decrease for the remainder of fiscal 2007 in comparison to fiscal 2006.

Microsoft Xbox Net Revenues (in thousands)

Net revenues from sales of titles for the Xbox decreased 79% from $66.6 million for the three months ended June 30, 2005 to $14.2 million for the three months ended June 30, 2006.  The decrease in both absolute dollars and as a percentage of publishing net revenues was primarily attributable to the strong performance of the first quarter fiscal 2006 release of the Xbox exclusive Doom 3 and, in European territories, the LucasArts’ affiliate title, Star Wars: Episode III Revenge of the Sith.  There were no comparable Xbox exclusive titles or affiliate label titles released in the first quarter of fiscal 2007.  Further contributing to the decreases were increased provisions for returns and price protection in anticipation of quicker required pricing actions as a result of the introduction of the Xbox360, which is expected to result in a gradual slowdown in sales for the Xbox as customers upgrade or anticipate upgrading to the next-generation platform.  We expect net revenues from sales of titles for the Xbox to continue to decrease over the remainder of fiscal 2007 versus fiscal 2006 due to fewer anticipated title releases for the Xbox in fiscal 2007 combined with a declining customer base as the Xbox360 hardware becomes more readily available and its installed base grows.

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Sony PlayStation 2 Net Revenues (in thousands)

Net revenues from sales of titles for the PS2 increased 44% from $289.0 million for the year ended March 31, 2004 to $417.3 million for the year ended March 31, 2005.  The increase was primarily due to strong, worldwide sales of several of our fiscal 2005 releases including THUG 2, Call of Duty: Finest Hour, X-Men Legends, Spider-Man 2, Shrek 2, Shark Tale, Lemony Snicket’s A Series of Unfortunate Events, and Cabela’s Big Game Hunter 2005. In fiscal 2005 we released thirteen titles for PS2 compared to ten in fiscal 2004 which included: True Crime: Streets of L.A., Tony Hawk’s Underground, X2: Wolverine’s Revenge, Return to Castle Wolfenstein, Cabela’s Dangerous Hunts, and Cabela’s Deer Hunt 2004 Season.

Sony PlayStation Net Revenues (in thousands)

Net revenues from sales of titles for the Sony PlayStation console system (“PS1”) for the year ended March 31, 2004 decreased 60% from the prior fiscal year, from $52.7 million to $20.8 million.  The decrease was expected due to the market transition away from the prior generation of hardware platforms, such as PS1, to the current generation console systems.