This excerpt taken from the ATVI DEFA14A filed Mar 5, 2008.
I think likewise on the Blizzard side really figuring out things like the Starcraft business model for the future with in-game advertising and sponsorship that really had not been something that has moved the dial for anybody in the videogame industry, but we think presents tremendous opportunity for the future.
They have started to think about how Starcraft, because it is a short session experience, can actually be the model for in-game advertising and sponsorship and tournament play and ladder play for the future. So these are the early days, but these are the kinds of things that have come out of just the first few months of integration planning. And I think when you look out at what the business looks like we are the biggest company in the category, by far the highest amount of absolute operating margin, the highest operating margin in percentage terms. And a lead that anyone who wants to try and compete, and will do the same risk assessment that weve done, will result in a decline in their margins, and an enormous amount of capital to put at risk to effectively compete.
Just to kind of go back to the first part of your answer in terms of Call of Duty and Guitar Hero, Call of Duty it seems like a natural fit, especially in terms of age of distribution it can certainly be an MMO, absolutely. Guitar Hero seems a little bit of a challenge because of the instruments that are involved and the people playing all at the same time in one room potentially, or I guess you could play now online.
I guess the point is that youre going after a little bit of white space by kind of pursuing a new and improved distribution channel in a foreign market. Where do you think the opportunity maybe you can help me understand a little bit more of the opportunity of Guitar Hero in Asia, where it is not so much a consul market, it is going to have to be distributed online. And how does that play out? Do you have guitars that are plugged into keyboards, or how does it work?
Here is the really excited opportunity in our opinion is you have roughly 300,000 game rooms between China and Korea that they operate in today. They already have credit and collection infrastructure, billing infrastructure, a recognized brand franchise. And these are places where people are going to have a social experience.
If you were to launch and you know that we already have a USB guitar that is working on a PC today but you could easily host it with local content. We now have a relationship with the largest music company in the world. They have an unusual presence in Asia, as compared to other Western music companies. So you can see us using
local artists, local content. Doing a little bit more of an industrial strength guitar where you are going to have multiple instruments in a game room, with a pure prepaid model, with downloadable content available, with organized competition and ladders that would exist throughout a territory. It is an incredibly natural way to think about Guitar Hero in a market like China.