Activision Blizzard Inc. (ATVI) 2015年年度報告「NASDAQ」.pdf

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1、2015 ANNUAL REPORTACTIVISION BLIZZARD,INC.3100 OCEAN PARK BOULEVARDSANTA MONICA,CALIFORNIA 90405ACTIVISIONBLIZZARD.COMACTIVISION BLIZZARD 2015 ANNUAL REPORTREVENUES1UP 4%YEAR-OVER-YEAR AT CONSTANT FX2DIGITAL REVENUES157%OF TOTAL REVENUE,REPRESENTING AN ALL-TIME HIGH AND UP 20%YEAR-OVER-YEAREARNINGS

2、PER SHARE1UP 13%YEAR-OVER-YEAR AT CONSTANT FX2OPERATING MARGIN1ABOVE PRIOR RECORD AT CONSTANT FX2OPERATING CASH FLOW OVER$6 BILLION OVER THE LAST 5 YEARS1 Non-GAAP;for a full reconciliation,please see tables at the end of the annual report.2 Constant FX provides current period results converted into

3、 USD using the average exchange rates from the comparative prior periods rather than the actual exchange rates in effect during the respective current periods.$4.6 BILLION$2.6 BILLION$1.32 32PERCENT$1.2 BILLION2015:FIGURES IN THIS ANNUAL REPORT DO NOT INCLUDE KINGUNLESS OTHERWISE INDICATED.COVER:YOU

4、 ARE ONLY AS GREAT AS THE CHARACTERS ON YOUR TEAM.CORPORATE INFORMATIONBOARD OF DIRECTORSRobert J.Corti Retired CFO,Avon Products,Inc.Hendrik J.Hartong IIIChairman and Chief Executive Officer,Brynwood PartnersBrian G.Kelly Chairman of the Board,Activision Blizzard Robert A.Kotick President and Chief

5、 Executive Officer,Activision Blizzard Barry Meyer Retired Chairman and CEO,Warner Brothers EntertainmentRobert J.Morgado Retired Chairman and CEO,Warner Music GroupPeter Nolan Senior Advisor,Leonard Green&Partners,L.P.Casey WassermanChairman and Chief Executive Officer,Wasserman Media GroupElaine W

6、ynn Co-founder,Wynn ResortsOFFICERSRobert A.Kotick President and Chief Executive Officer,Activision BlizzardThomas Tippl Chief Operating Officer,Activision BlizzardDennis M.Durkin Chief Financial Officer and Treasurer,Activision BlizzardEric Hirshberg President and Chief Executive Officer,Activision

7、 PublishingMike Morhaime President and Chief Executive Officer,Blizzard EntertainmentChris B.Walther Chief Legal Officer,Activision BlizzardRiccardo ZacconiChief Executive Officer,King Digital EntertainmentSPECIAL ADVISORSMichael Griffith Vice Chairman,Activision BlizzardTRANSFER AGENTContinental St

8、ock Transfer&Trust Company17 Battery Place New York,New York 10004(800)509-5586AUDITORPricewaterhouseCoopers LLPLos Angeles,CaliforniaCORPORATE HEADQUARTERSActivision Blizzard,Inc.3100 Ocean Park BoulevardSanta Monica,CA 90405(310)255-2000WORLD WIDE WEB SITEE-MAILIRANNUAL MEETINGJune 2,2016,9:00 am

9、PDTEquity Office3200 Ocean Park BoulevardSanta Monica,California 90405 ANNUAL REPORT ON FORM 10-KActivision Blizzards Annual Report on Form 10-K for the cal-endar year ended December 31,2015 is available to shareholders without charge upon request by calling our Investor Relations department at(310)

10、255-2000 or by mailing a request to our Cor-porate Secretary at our corporate headquarters.NON-INCORPORATIONPortions of the Companys 2015 Form 10-K,as filed with the SEC,are included within this Annual Report.Other than these por-tions of the Form 10-K,all other portions of this Annual Report are no

11、t“filed”with the SEC and should not be deemed so.Annual Report Design:Andra Design / Printer:Phoenix Lithographing,USA Copyright 2016 Activision Blizzard,Inc.DOMESTIC OFFICESAustin,Texas Bloomington,MinnesotaBothell,WashingtonBoulder,ColoradoCarlsbad,CaliforniaChampaign,IllinoisColumbus,OhioDallas,T

12、exasEden Prairie,MinnesotaEl Segundo,California Foster City,CaliforniaFresno,CaliforniaHilliard,OhioIrvine,CaliforniaLos Angeles,CaliforniaMenands,New YorkMiddleton,WisconsinNew York,New YorkNovato,CaliforniaPortland,MaineRedmond,WashingtonRogers,ArkansasSan Francisco,California San Jose,CaliforniaS

13、anta Monica,CaliforniaSeattle,WashingtonWoodland Hills,CaliforniaBarcelona,SpainBerlin,GermanyBirmingham,United KingdomBucharest,RomaniaBurglengenfeld,GermanyMilan,ItalyCork,IrelandDatchet,United KingdomDublin,IrelandHong Kong SAR,ChinaLeamington Spa,United KingdomLondon,United KingdomMadrid,Spain M

14、alm,SwedenSt.Julians,MaltaMexico City,MexicoMississauga,CanadaMunich,GermanyParis,FranceQuebec City,CanadaSo Paulo,BrazilSchiphol,The NetherlandsSeoul,South KoreaShanghai,ChinaShenzhen,ChinaSingaporeStockholm,SwedenSydney,AustraliaTaipei,Region of Taiwan Tokyo,JapanVancouver,CanadaVenlo,The Netherla

15、ndsVersailles,FranceWarrington,United KingdomINTERNATIONAL OFFICES1 1FRAMEWORK FOR FRANCHISE GROWTH1243 AUDIENCE REACH1TIME SPENT2CASH FLOW4ARPU3AUDIENCEREACHTIME SPENT AVERAGE REVENUE PER USERCASHFLOW?ACTIVISION BLIZZARD MAU1 GREW 25%YEAR-OVER-YEAR IN 2015,REACHING AN ALL-TIME HIGH OF OVER 80 MILLI

16、ON?WITH KING,WE NOW HAVE OVER HALF A BILLION MAU1 GLOBALLY2?IN 2015,PEOPLE PLAYED OUR GAMES FOR OVER 14 BILLION HOURS,UP 16%YEAR-OVER-YEAR,AND WATCHED VIDEO CONTENT BASED ON OUR GAMES FOR OVER 1.5 BILLION HOURS?IN-GAME REVENUES WERE OVER$1.6 BILLION IN 20153,GROWING 57%AT CONSTANT FX4,AND REPRESENTI

17、NG OVER ONE-THIRD OF TOTAL REVENUES?CONSUMER$SPENT PER HOUR OF ATVI ENTERTAINMENT:$0.37,MUCH LOWER THAN OTHER FORMS OF ENTERTAINMENT?DELIVERED MORE THAN$1 BILLION OF OPERATING CASH FLOW FOR 6 OF THE PAST 7 YEARS1 MAU defined as number of individuals who played a particular game in a given month aver

18、aged across the number of months in a respective period.Refer to definition included in press release for additional details.2 King acquisition closed on February 23,2016.Includes fourth quarter 2015 Activision Blizzard and King MAU.3Non-GAAP;for a full reconciliation,please see tables at the end of

19、 the annual report.4 Constant FX provides current period results converted into USD using the average exchange rates from the comparative prior periods rather than the actual exchange rates in effect during the respective current periods.DELIVER HIGH QUALITY CONTENT DRIVES ENGAGEMENT TALENT,TECHNOLO

20、GY&PROCESSES HIGH QUALITY CONTENT PREDICTABLE CASH FLOW AND RE-INVESTMENT RECURRING PLAYER INVESTMENT PLAYER INVESTMENT DRIVES ENGAGEMENT DRIVES PREMIUM2 23 3#1 CONSOLE GAME GLOBALLY IN 20151 AND NEXT-GEN LEADER#1 FRANCHISE IN NA 7TH YEAR IN A ROW2RECORD FRANCHISE MAU3 AT THE END OF 2015?1 NPD,Gfk C

21、hart-Track,and Activision Blizzard internal estimates.2 NPD.3 MAU defined as number of individuals who played a particular game in a given month averaged across the number of months in a respective period.Refer to definition included in press release for additional details.4 41Digital attach rate re

22、fers to expansion sales as a percentage of full games sold.ACHIEVED RECORD DIGITAL ATTACH RATES WITH THE TAKEN KING EXPANSION1OVER 25 MILLION REGISTERED USERS HAVE LOGGED NEARLY 3 BILLION HOURS IN-GAME?5 5NEW TELEVISION SERIES,SKYLANDERS ACADEMY,EXPECTED TO LAUNCH IN 2016LARGEST KIDS CONSOLE FRANCHI

23、SE SINCE ITS RELEASE1#11 CONSOLE FRANCHISE LIFE-TO-DATE1?1 NPD,Gfk Chart-Track,including toys and accessories,in NA&EU.6 6#1 SUBSCRIPTION-BASED,MASSIVELY MULTIPLAYER ONLINE ROLE-PLAYING GAME 10 YEARS RUNNING 6TH EXPANSION TO LAUNCH IN SUMMER OF 2016?7 7MORE THAN 40 MILLION REGISTERED PLAYERSRECORD E

24、NGAGEMENT AT THE END OF 2015?8 82015 LAUNCH IN CHINA BROKE PC SALES RECORDS?9 9LAUNCHED FINAL CHAPTER OF STARCRAFT II TRILOGY,LEGACY OF THE VOID,SELLING-THROUGH OVER 1 MILLION COPIES IN THE FIRST 24 HOURS?1010NUMEROUS AWARDS,INCLUDING BEST COMPETITIVE MULTIPLAYER AND BEST MOBA1 FROM GAME INFORMER?1

25、Multiplayer online battle arena.1111TEAM-BASED SHOOTER COMING TO PC AND CONSOLE THIS SPRINGOVER 8 MILLION PEOPLE HAVE SIGNED UP FOR THE BETA?12121 U.S.rankings for Apple App Store and Google Play Store,per App Annie Intelligence for fourth quarter 2015.2 King acquisition closed on February 23,2016.M

26、etrics as of fourth quarter 2015.3 OF THE TOP-15-GROSSING MOBILE GAMES FOR 8 CONSECUTIVE QUARTERS1,2NEARLY 450 MILLION MONTHLY ACTIVE USERS PLAYING 1.4 BILLION GAMES PER DAY2?1313TO OUR SHAREHOLDERS1 Based on fully diluted shares and participating securities for the quarter ending December 31,2015.P

27、lease note,all figures included in the shareholder letter are non-GAAP unless otherwise stated.For full GAAP to non-GAAP reconciliation,please see tables at the end of this annual report.In our letter last year,we shared a note we received from Rocco,a seven-year-old from England.His letter was acco

28、mpanied by pages torn out of a notebook,filled with drawings of Skylanders characters he inventedand they were excellent.This year,we want to share a letter from Jacob,a high schooler in California.We love receiving these letters because they demonstrate how much our games mean to the people who pla

29、y them.Obvi-ously Jacob will join Rocco on our future recruitment list.We talk to thousands of gifted people every year to find talent with the unique combination of passion,entrepreneurial spirit and creativity that it takes to create and market our games.These traits are hallmarks of our culture,e

30、mbodied in each of our over 9,000 employees.It is these employees who consistently deliver outstanding interactive entertainment and strong financial results.As a result of our teams dedication and hard work we ended 2015 with$4.6 billion of revenues,$1.5 billion of operating income,$1.2 billion of

31、operating cash flow and$1.32 in earnings per share.And in 2015,our company was added to the S&P 500 index.Over the past 25 years,since the present management took over,Activision Blizzards book value per share1 grew at a more than 30%compounded annual rate.While book value isnt the only objective me

32、asure of value,it is an important one to us.Our market value has increased significantly over the past 25 years as well.If you had invested$100 in our company 25 years ago,you would have over$4,300 at the end of 2015over five times more than the S&P 500 would have returned in that same period of tim

33、e.Last year alone,from January 1 through December 31,we increased our market value by$13.8 billion,or 95%.We continue to improve our allocation of capital.While our employees have much to be proud of,we havent grown operating profits the last few years at a rate that we believe represents the opport

34、unities we have from the growth in the overall market.The overall market for interactive entertainment is growing at 13%.We have grown earnings per share over the last few years,but this has largely come from non-operational activities,and we intend to return good growth to our operating businesses

35、over the next few years.Dear Mr.Kotick,Ever since I can remember,I have been interested in video games and how to make them.I am currently learning about video game design,and I have found my passion and career path.It is because of my desire to pursue video game design that I am writing to you.Alth

36、ough this is a beginning action plan,I am in need of advice to make my goals a reality.Your company is one for which I aspire to work.Because I know you are CEO of Activision Blizzard,may I ask how did you get to hold this position,and what main skills do you use daily?Thank you for your time in rea

37、ding and responding tomy letter.Sincerely,Jacob R.142015 DIGITAL REVENUES($millions of dollars)20%GROWTH46%of Total Revenues57%of Total Revenues$2,198$2,6282014 20152016 DIVIDEND(Shares)UP 13%$0.23$0.262015 2016Our greatest challenge now is prioritizing the unusually attractive opportunities we have

38、 ahead and finding the right people to pursue them.Since we joined the company,we dont remember a time with more exciting prospects.Ever.Interactive entertainment can be played on a variety of devices.Our company has always been agnostic with respect to which devices we support.We first consider whe

39、ther we can put our best creative foot forward on a device.This means we can make the very best games for the target new platform.Over the last 20 years,we have done this largely for personal computers,video game consoles and dedicated handheld devices.Over the last five years,mobile phones emerged

40、as great devices for playing games.Because of their lower cost of entry,mobile phonesunlike PCs or game consolesare much less expensive,easier to use,portable and available in every country in the world.The market for mobile games is more diverse than PCs or consoles;the mobile market is eight times

41、 the size it was five years ago and is projected to grow 64%over the next five years.Despite the size of the opportunity,we approached the mobile market with caution over the last few years.The type of games that are successful on mobile phones,and the way you make and market these games,is differen

42、t from games on PCs and consoles.We didnt really know how to do this well.To take advantage of this opportunity,we decided to acquire a company with the skills and capabilities to make mobile games.We needed to find one that met our stringent criteria for how we allocate capital through an acquisiti

43、on.As we have outlined many times before in these annual reports,we employ five principles to evaluate an acquisition or an investment.They are:?Great management with a long-term orientation?A proven history of profitable operations?Proven franchises or a proprietary technology(preferably both)?Accr

44、etive to our operating model?Non-dilutive(preferably accretive)for our shareholdersWe wanted a company as committed to product excellence as we are.We wanted a great management team that has the right balance of creativity and commercial sensibility and operates with the same integrity that is the h

45、allmark of our culture.We waited for the“fat pitch,”as Warren Buffett likes to refer to investment oppor-tunities that only come with patience.With King we hit the ball out of the park.When we first met the management team of King a few years ago,we were impressed.We watched as they operated their b

46、usiness since that first meeting,and we were even more impressed.It was hard not to be.151 MAU defined as number of individuals who played a particular game in a given month averaged across the number of months in a respective period.Refer to definition included in press release for additional detai

47、ls.2016 DIVIDEND(Shares)UP 13%$0.23$0.262015 2016TIME SPENT(Billions of Hours)12+14+2014 2015AVERAGE MAU1(Millions of users)25%GROWTH16%GROWTH60752014 2015Note:Does not include time spent spectating.Like Activision and Blizzard,King has an established portfolio of beloved franchisesCandy Crush,Farm

48、Heroes,Pet Rescue and Bubble Witchand they have new potential franchises in development.They have diverse audiences in 196 countries,and their games are played 1.4 billion times a day.King management is philosophically aligned with our strategic goals of building enduring franchises.Like Activision

49、and Blizzard franchises,King games can be expanded and nurtured year-round.King also has incredible potential upside from the careful integration of advertising into their games.Their network is bigger than Twitter or Snapchat,and they have well over 20 billion hours of game time to monetize.They al

50、so have exciting new content and services planned to further enhance the player experience.We paid a very reasonable price for King at six times their 2015 adjusted EBITDA,and as a result,with over 500 million users each month,we are now the worlds largest gaming network.To understand the scale of t

51、his network,on a global basis only Facebook,YouTube and WeChat have bigger audiences.Last year our games generated over 14 billion hours of game play(up 16%year-over-year).Additionally,spectators watchednot played,but watchedover 1.5 billion hours of video game play.The number of people watching vid

52、eo game competition continues to grow.We believe the esports spectator experience can be the equivalent of professional sports both in quality of viewing experience and in advertising,subscription and pay-per-view revenues.To improve and accelerate our efforts in this regard,we acquired Major League

53、 Gaming,the pioneer in esports.With Major League Gaming as our anchor,we accelerated the growth of the Activision Blizzard Media Networks division,which is devoted to broadcasting professionally produced esports competitions around the world,celebrating players and highlighting their successes.With

54、the goal of becoming the ESPN of esports,we recruited world-class talent to lead this effort and welcomed to Activision Blizzard Steve Bornstein,who as the long-time CEO of ESPN greatly influenced how people watch and follow sports today,and Mike Sepso,who as co-founder of Major League Gaming helped

55、 pioneer esports more than a decade ago.It is exciting to see the evolution of gaming.Recognition that the competition be-tween video game players is as thrilling to watch as traditional professional sports has resulted in over 225 million gamers watching organized gaming competitions.Our franchises

56、 are among the most important in all of esports,and no organiza-tion has more experience creating compelling esports content than Blizzard.This year we also created Activision Blizzard Studios,a television,film and short-form entertainment studio that will use storytelling to strengthen our franchis

57、es.16Bobby KotickPresident and Chief Executive OfficerActivision BlizzardBrian KellyChairman of the BoardActivision BlizzardACTIVISION PUBLISHING IN 2015DIGITAL REVENUES GREW 68%OPERATING INCOME GREW 30%AT CONSTANT FX1MAU2 GREW 20%BLIZZARD ENTERTAINMENT IN 2015REVENUES GREW AT CONSTANT FX1 RECORD AL

58、L-TIME HIGH MAU2,WITH Q4 UP 25%YEAR-OVER-YEAR1 Constant FX provides current period results converted into USD using the average exchange rates from the comparative prior periods rather than the actual exchange rates in effect during the respective current periods.2 MAU defined as number of individua

59、ls who played a particular game in a given month averaged across the number of months in a respective period.Refer to definition included in press release for additional details.We will take a low-risk,low-investment approach to development and production and focus on deeply engaging current fans an

60、d attracting new audiences.This small team is led by big talents:a two-time Academy Award-nominated producer,Stacey Sher,and a senior executive of many years at The Walt Disney Company,Nick van Dyk.Today we operate the largest gaming network in the world,with over 500 million users playing our games

61、 every month.Our entertainment franchises now reach people on mobile,console and desktop devices in almost every country in the world.And with Activision Blizzard Media Networks and Activision Blizzard Studios,we are extending our franchises to new lucrative platforms.We expect 2016 to be a record y

62、ear for the company and project$6.25 billion of revenues,more than$2 billion of operating income and earnings per share of$1.75.We are a more diversified company than we were a year ago,with a strong core business and more opportunities ahead of us than ever before,and talent continues to be our gre

63、atest asset.As we celebrate 25 years at Activision Blizzard,we always focus on remem-bering what has driven our success thus far.We have the most inspired and dedicated team of employees in our industry.They come to work each day dedicated to the players they serve,the partners we team with,and the

64、shareholders who have put their faith in us.We were grateful that for a second year we were honored by Fortune Magazine as one of the“100 Best Companies to Work For.”Its a tribute to our entire teamand we also know that to attract and retain the most talented people we must strive to do better each

65、year.So whether you first took a risk on us back in 1991 or only recently bought your stake in Activision Blizzard,we thank you for your faith in our company.The last 25 years have been an incredible journey,and theres even more excitement to come.And,we hope,more letters from the champions of tomor

66、row,like Jacob and Rocco.Sincerely,FINANCIAL REVIEW10-K Activision_Master_032416_PrinterMarksAdded.pdf 13/27/16 7:40 PM2 SELECTED FINANCIAL DATA The terms“Activision Blizzard,”the“Company,”“we,”“us,”and“our”are used to refer collectively to Activision Blizzard,Inc.and its subsidiaries.The following

67、table summarizes certain selected consolidated financial data,which should be read in conjunction with our Consolidated Financial Statements and Notes thereto and with Managements Discussion and Analysis of Financial Condition and Results of Operations included elsewhere in this Annual Report.The se

68、lected consolidated financial data presented below at and for each of the years in the five-year period ended December 31,2015 is derived from our Consolidated Financial Statements.All amounts set forth in the following tables are in millions,except per share data.For the Years Ended December 31,201

69、5 2014 2013 2012 2011 Statement of Operations Data:Net Revenues.$4,664$4,408$4,583$4,856$4,755 Net income.8928351,0101,1491,085Basic net income per share.1.21 1.14 0.96 1.01 0.93 Diluted net income per share.1.19 1.13 0.95 1.01 0.92 Cash dividends declared per share(1).0.23 0.20 0.19 0.18 0.165 Bala

70、nce Sheet Data:Total assets(2).$15,251$14,642$13,953$14,181$13,228 Total debt,net(3).4,079 4,324 4,693 (1)On February 3,2015,our Board of Directors declared a cash dividend of$0.23 per share,payable on May 13,2015,to shareholders of record at the close of business on March 30,2015.On February 6,2014

71、,our Board of Directors declared a cash dividend of$0.20 per share,payable on May 14,2014,to shareholders of record at the close of business on March 19,2014.On February 7,2013,our Board of Directors declared a cash dividend of$0.19 per share,payable on May 15,2013,to shareholders of record at the c

72、lose of business on March 20,2013.On February 9,2012,our Board of Directors declared a cash dividend of$0.18 per share,payable on May 16,2012,to shareholders of record at the close of business on March 21,2012.On February 9,2011,our Board of Directors declared a cash dividend of$0.165 per share,paya

73、ble on May 11,2011,to shareholders of record at the close of business on March 16,2011.(2)As of December 31,2015,we early adopted ASU No.2015-17,Balance Sheet Classification of Deferred Taxes,and retroactively applied to all prior periods presented in accordance with the requirements of the new stan

74、dard.As a result of this retroactive application of the new standard,total assets as of December 31,2014,2013,2012,and 2011,were reduced by$104 million,$59 million,$19 million,and$49 million,respectively.Refer to Note 21 of the Notes to Consolidated Financial Statements included in this Annual Repor

75、t for additional information regarding recent accounting pronouncements and our early adoption of this new standard.(3)In connection with the Purchase Transaction,on September 19,2013,we issued$1.5 billion of 5.625%unsecured senior notes due September 2021(the“2021 Notes”),and$750 million of 6.125%u

76、nsecured senior notes due September 2023(the“2023 Notes”,and together with the 2021 Notes,the“Notes”).On October 11,2013,we entered into a$2.5 billion secured term loan facility(the“Term Loan”),maturing in October 2020.The carrying values of the Notes and Term Loan are presented net of unamortized d

77、ebt discount fees.10-K Activision_Master_032416_PrinterMarksAdded.pdf 23/24/16 11:00 PM3 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Business Overview Activision Blizzard,Inc.is a leading global developer and publisher of interactive entertainment.The Busines

78、s Combination and Share Repurchase Activision,Inc.was originally incorporated in California in 1979 and was reincorporated in Delaware in December 1992.Activision Blizzard is the result of the 2008 business combination(“Business Combination”)by and among the Company(then known as Activision,Inc.),Se

79、go Merger Corporation,a wholly-owned subsidiary of Activision,Inc.,Vivendi S.A.(“Vivendi”),VGAC LLC,a wholly-owned subsidiary of Vivendi,and Vivendi Games,Inc.(“Vivendi Games”),a wholly-owned subsidiary of VGAC LLC.As a result of the consummation of the Business Combination,Activision,Inc.was rename

80、d Activision Blizzard,Inc.and Vivendi became a majority shareholder of Activision Blizzard.Activision Blizzard is a public company traded on the NASDAQ under the ticker symbol“ATVI.”On October 11,2013,we repurchased approximately 429 million shares of our common stock,pursuant to a stock purchase ag

81、reement(the“Stock Purchase Agreement”)we entered into with Vivendi and ASAC II LP(“ASAC”),an exempted limited partnership established under the laws of the Cayman Islands,acting by its general partner,ASAC II LLC.Pursuant to the terms of the Stock Purchase Agreement,we acquired all of the capital st

82、ock of Amber Holding Subsidiary Co.,a Delaware corporation and wholly-owned subsidiary of Vivendi(“New VH”),which was the direct owner of approximately 429 million shares of our common stock,for a cash payment of$5.83 billion,or$13.60 per share,before taking into account the benefit to the Company o

83、f certain tax attributes of New VH assumed in the transaction(collectively,the“Purchase Transaction”).Refer to Note 11 of the Notes to the Consolidated Financial Statements for information regarding the financing of the Purchase Transaction.Immediately following the completion of the Purchase Transa

84、ction,ASAC purchased from Vivendi 172 million shares of our common stock,pursuant to the Stock Purchase Agreement,for a cash payment of$2.34 billion,or$13.60 per share(the“Private Sale”).Robert A.Kotick,our Chief Executive Officer,and Brian G.Kelly,Chairman of our Board of Directors,are affiliates o

85、f ASAC II LLC.On May 28,2014,Vivendi sold approximately 41 million shares,or approximately 50%of its then-current holdings,of our common stock in a registered public offering.Vivendi received proceeds of approximately$850 million from that sale;we did not receive any proceeds.As of December 31,2015,

86、we had approximately 734 million shares of common stock issued and outstanding.At that date,(i)Vivendi held 41 million shares,or approximately 6%of the outstanding shares of our common stock,(ii)ASAC held 172 million shares,or approximately 23%of the outstanding shares of our common stock,and(iii)ou

87、r other stockholders held approximately 71%of the outstanding shares of our common stock.On January 13,2016,Vivendi sold all of their remaining shares of our common stock.We did not receive any proceeds.The King Acquisition On November 2,2015,we and King Digital Entertainment plc,a leading interacti

88、ve entertainment company for the mobile world incorporated under the laws of Ireland(“King”),entered into a Transaction Agreement(the“Transaction Agreement”)under the terms of which we would acquire King(the“King Acquisition”)and King would become a wholly-owned subsidiary of the Company.On February

89、 23,2016 we completed the King Acquisition under the terms of the Transaction Agreement.We transferred$5.9 billion in consideration to the existing King shareholders and share-based award holders.The Company made this acquisition because it believes that the addition of Kings highly-complementary mo

90、bile business will position the Company as a global leader in interactive entertainment across mobile,console,and PC platforms,and positions the company for future growth.The combined company has a world-class interactive entertainment portfolio of top-performing franchises.As the closing of the Kin

91、g Acquisition occurred subsequent to December 31,2015,our financial results as of,and for the year ended December 31,2015,do not contain the results of King.10-K Activision_Master_032416_PrinterMarksAdded.pdf 33/24/16 11:00 PM4 Reportable Segments Based upon our organizational structure,we conduct o

92、ur business through two reportable operating segments,Activision Publishing,Inc.and Blizzard Entertainment,Inc.Previously,we reported“Distribution”as a reportable segment.In the current period,this was no longer deemed a separate reportable segment and is included in“Other”,along with our recently a

93、nnounced media networks and film and television studio businesses.(i)Activision Publishing,Inc.Activision Publishing,Inc.(“Activision”)is a leading international developer and publisher of interactive software products and content.Activision delivers content to a broad range of gamers,ranging from c

94、hildren to adults,and from core gamers to mass-market consumers to“value”buyers seeking budget-priced software,in a variety of geographies.Activision develops games based on internally-developed properties,including games in the Call of Duty and Skylanders franchises,and to a lesser extent,based on

95、licensed intellectual properties.Additionally,we have established a long-term alliance with Bungie to publish its game universe,Destiny.Activision sells games through both retail and digital online channels.Activision currently offers games that operate on the Microsoft Corporation(“Microsoft”)Xbox

96、One(“Xbox One”)and Xbox 360(“Xbox 360”),Nintendo Co.Ltd.(“Nintendo”)Wii U(“Wii U”)and Wii(“Wii”),and Sony Computer Entertainment,Inc.(“Sony”)PlayStation 4(“PS4”)and PlayStation 3(“PS3”)console systems(Xbox One,Wii U,and PS4 are collectively referred to as“next-generation”;Xbox 360,Wii,and PS3 are co

97、llectively referred to as“prior-generation”);the personal computer(“PC”);the Nintendo 3DS,Nintendo Dual Screen,and Sony PlayStation Vita handheld game systems;and mobile and tablet devices.(ii)Blizzard Entertainment,Inc.Blizzard Entertainment,Inc.(“Blizzard”)is a leader in online PC gaming,including

98、 the subscription-based massively multi-player online role-playing game(“MMORPG”)category in terms of both subscriber base and revenues generated through its World of Warcraft franchise.Blizzard also develops,markets,and sells role-playing action and strategy games for the PC,console,mobile and tabl

99、et platforms,including games in the multiple-award winning Diablo,StarCraft,Hearthstone:Heroes of Warcraft and Heroes of the Storm franchises.In addition,Blizzard maintains a proprietary online gaming service,B,which facilitates the creation of user-generated content,digital distribution and online

100、social connectivity across all Blizzard games.Blizzard distributes its products and generates revenues worldwide through various means,including:subscriptions;sales of prepaid subscription cards;in-game purchases and services;retail sales of physical“boxed”products;online download sales of PC produc

101、ts;purchases and downloads via third-party console,mobile and tablet platforms;and licensing of software to third-party or related party companies that distribute Blizzard products.(iii)Other We also engage in other business opportunities that include:The Activision Blizzard Media Networks(“Media Ne

102、tworks”)business announced in 2015 which builds on our efforts in competitive gaming and the growing eSports industry.The Activision Blizzard Studios(“Studios”)business announced in 2015 which is devoted to creating original film and television content based on the companys extensive library of icon

103、ic and globally-recognized intellectual properties.The Activision Blizzard Distribution(“Distribution”)business which consists of operations in Europe that provide warehousing,logistical,and sales distribution services to third-party publishers of interactive entertainment software,our own publishin

104、g operations,and manufacturers of interactive entertainment hardware.Business Results and Highlights In 2015,Activision Blizzards consolidated net revenues were$4.7 billion and consolidated operating income was$1.3 billion,as compared to consolidated net revenues of$4.4 billion and consolidated oper

105、ating income of$1.2 billion in 2014.We generated cash flows from operating activities of approximately$1.2 billion in 2015,as compared to$1.3 billion in 2014.Consolidated net income was$892 million in 2015,as compared to$835 million in 2014.Our diluted earnings per common share was$1.19 in 2015,as c

106、ompared to$1.13 in 2014.Product Release Highlights Games and digital downloadable content released,among others,during the year ended December 31,2015 included:10-K Activision_Master_032416_PrinterMarksAdded.pdf 43/24/16 11:00 PM5 Call of Duty:Advanced Warfare Havoc(digital downloadable content)Call

107、 of Duty:Advanced Warfare Ascendance(digital downloadable content)Call of Duty:Advanced Warfare Supremacy(digital downloadable content)Call of Duty:Advanced Warfare Reckoning(digital downloadable content)Call of Duty:Black Ops III Destiny Expansion II:House of Wolves Destiny Expansion III:The Taken

108、King Guitar Hero Live Hearthstone:Heroes of WarcraftBlackrock Mountain Hearthstone:Heroes of WarcraftThe Grand Tournament Hearthstone:Heroes of WarcraftLeague of Explorers Heroes of the Storm Skylanders SuperChargers StarCraft II:Legacy of the Void In addition to the above,we released additional con

109、tent within our various franchises throughout 2015 that provided additional monetization opportunities,such as“supply drops”in Call of Duty:Advanced Warfare and various customization microtransactions within Destiny.On October 27,2015,Blizzard began the closed beta test for Overwatch,its upcoming te

110、am-based first-person shooter.On February 2,2016,Activision released Call of Duty:Black Ops III Awakening,the first downloadable content pack for Call of Duty:Black Ops III on the PS4,with an expected release date to other platforms of March 3,2016.International Operations International sales are a

111、fundamental part of our business.Net revenues from international sales accounted for approximately 48%,50%,and 47%of our total consolidated net revenues for the years ended December 31,2015,2014,and 2013,respectively.In addition to our United States(“U.S.”)operations,we maintain significant operatio

112、ns in Australia,Canada,China,France,Germany,Ireland,Italy,the Netherlands,South Korea,Spain,Sweden and the United Kingdom(“U.K.”).An important element of our international strategy is to develop content that is specifically directed toward local cultures and customs.Our international business is sub

113、ject to risks typical of an international business,including,but not limited to,foreign currency exchange rate volatility and changes in local economies.Accordingly,our future results could be materially and adversely affected by changes in foreign currency exchange rates and changes in local econom

114、ies.Managements Overview of Business Trends Digital Revenues We provide our products through both retail and digital distribution channels.Many of our video games that are available through retailers as physical“boxed”software products are also available digitally(from our websites and from websites

115、 and digital distribution channels owned by third parties).In addition,we offer players digital downloadable content as add-ons to our products(e.g.,new multi-player content packs or in-game microtransactions),generally for a one-time fee.We also offer subscription-based services and other value-add

116、ed services for World of Warcraft,all of which are digitally delivered and hosted by B.10-K Activision_Master_032416_PrinterMarksAdded.pdf 53/24/16 11:00 PM6 We currently define sales via digital online channels as revenues from digitally distributed subscriptions,licensing royalties,value-added ser

117、vices,downloadable content,microtransactions,and products.This definition may differ from that used by our competitors or other companies.According to Activision Blizzard internal estimates,digital gaming revenues for the interactive entertainment industry in 2015,increased by approximately 20%as co

118、mpared to 2014.The primary drivers of the increase in digital gaming revenues were increases in microtransactions and consumer purchases of full games via digital channels.In addition to increasing microtransactions within free-to-play games,the increase includes microtransactions within purchased g

119、ame software,as publishers offer increasingly new opportunities for monetization within their games to extend and enlarge the monetization cycle.Digital revenues are an important part of our business,and we continue to focus on and develop products,such as downloadable content,that can be delivered

120、via digital channels.The amount of our digital revenues in any period may fluctuate depending,in part,on the timing and nature of our specific product releases.Our sales of digital downloadable content are driven in part by sales of,and engagement by players in,our retail products.As such,lower reve

121、nues in our retail distribution channels in one year may impact our revenues through digital online channels in the subsequent year.For the year ended December 31,2015,net revenues through digital online channels increased by$605 million,as compared to 2014,and represented 54%of our total consolidat

122、ed net revenues,as compared to 43%in 2014.On a non-GAAP basis(which excludes the impact of deferred revenues),net revenues through digital online channels for the year ended December 31,2015 increased by$430 million,as compared to 2014,and represented 57%of our total non-GAAP net revenues,as compare

123、d to 46%in 2014.Please refer to the reconciliation between GAAP and non-GAAP financial measures later in this document for further discussions of retail and digital online channels.Console Platform Transition In November 2013,Sony released the PS4 and Microsoft released the Xbox One,their respective

124、 next-generation game consoles and entertainment systems.According to The NPD Group and GfK Chart-Track in North America and Europe,as of December 31,2015,the combined installed base of PS4 and Xbox One hardware was approximately 43 million units,representing growth of approximately 82%over the comb

125、ined installed base of approximately 24 million units as of December 31,2014.While the combined installed base of PS3 and Xbox 360 hardware was approximately 124 million units as of December 31,2015,at the comparable point in their release cycle,the prior-generation platforms had only 28 million uni

126、ts installed.When new console platforms are announced or introduced into the market,consumers reduce their purchases of game console software products for prior-generation console platforms in anticipation of new platforms becoming available.During these periods,sales of the game console software pr

127、oducts we publish slow or even decline until the new platforms introduced achieve wide consumer acceptance,which we believe had largely occurred with respect to the next-generation platforms by the end of 2015.We believe that for 2016,the sales impact from the console transition will not be a meanin

128、gful driver of the business.During platform transitions,we simultaneously incur costs to develop and market new titles for prior-generation video game platforms and to develop and market products for next-generation platforms.We continually monitor console hardware sales and manage our product deliv

129、ery on each of the prior-and next-generation platforms in a manner we believe to be most effective to maximize our revenue opportunities and achieve the desired return on our investments in product development.Concentration of Top Titles The concentration of retail revenues among key titles has cont

130、inued as a trend in the overall interactive software industry.According to The NPD Group,the top 10 titles accounted for 33%of the retail sales in the U.S.interactive entertainment industry in 2015.Similarly,a significant portion of our revenues has historically been derived from video games based o

131、n a few popular franchises and these video games are responsible for a disproportionately high percentage of our profits.For example,the Call of Duty,World of Warcraft,Skylanders,and Destiny franchises combined accounted for 71%,72%,and 80%of our consolidated net revenues for the years ended Decembe

132、r 31,2015,2014,and 2013,respectively,and a significantly higher percentage of our operating income.As a result,successful competition against these titles can significantly impact our performance.Notably in 2015,the toys to life category became more competitive with a new entrant competing directly

133、with us and other incumbents.We are continually exploring additional investments in existing and future franchises.During 2015,we released Heroes of the Storm,as well as Call of Duty Online in China.In the fourth quarter of 2015,we released Overwatch into closed beta with an anticipated game release

134、 in spring of 2016.There is no guarantee these investments will result in an established franchise.Additionally,on February 23,2016,we completed the King Acquisition,diversifying our portfolio of key franchises.10-K Activision_Master_032416_PrinterMarksAdded.pdf 63/24/16 11:00 PM7 Overall,we do expe

135、ct that a limited number of popular franchises will continue to produce a disproportionately high percentage of our,and the industrys,revenues and profits in the near future.Seasonality While our business is transitioning to a year-round engagement model,the interactive entertainment industry remain

136、s highly seasonal.We have historically experienced our highest sales volume in the year-end holiday buying season,which occurs in the fourth quarter.We defer the recognition of a significant amount of our net revenues,related to our software titles containing online functionality that constitutes a

137、more-than-inconsequential separate service deliverable,over an extended period of time(i.e.,typically less than a year).As a result,the quarter in which we generate the highest sales volume may be different than the quarter in which we recognize the highest amount of net revenues.Our results can als

138、o vary based on a number of factors including,but not limited to,title release date,consumer demand,market conditions and shipment schedules.Outlook For 2016,our results will include the operations of King,beginning on February 23,2016,the date the King Acquisition closed.Our earnings under accounti

139、ng principles generally accepted in the United States of America(“GAAP”)are expected to be down versus prior-year,as the expected results will be impacted by additional accounting charges associated with the King Acquisition,which include,among other things,integration and acquisition-related costs,

140、the amortization of intangible assets resulting from purchase price accounting adjustments,and the related tax impact from the King Acquisition.The majority of these GAAP accounting charges will not impact the economics or operating cash flows of our business,although they will have a material impac

141、t on our 2016 GAAP results.For Activision,we expect to deliver multiple map packs to Call of Duty:Black Ops III,along with additional in-game content,during 2016.For the Destiny franchise,Activision expects to deliver a new expansion in 2016 with the full-game Destiny sequel to come in 2017.Also in

142、the fourth quarter of 2016,Activision plans to release new Call of Duty and Skylanders games.Blizzard plans to release Overwatch in the spring of 2016,as well as World of Warcraft:Legion in the summer of 2016.In addition,Hearthstone:Heroes of Warcraft and Heroes of the Storm will have ongoing conten

143、t updates throughout the year.10-K Activision_Master_032416_PrinterMarksAdded.pdf 73/24/16 11:00 PM8 Consolidated Statements of Operations Data The following table sets forth consolidated statements of operations data for the periods indicated in dollars and as a percentage of total net revenues(amo

144、unts in millions):For the Years Ended December 31,2015 2014 2013 Net revenues:Product sales.$2,44752%$2,78663%$3,20170%Subscription,licensing,and other revenues.2,217 48 1,622 37 1,382 30 Total net revenues.4,664 100 4,408 100 4,583 100 Costs and expenses:Cost of salesproduct costs.921 20 999 23 1,0

145、53 23 Cost of salesonline.224 5 232 5 204 4 Cost of salessoftware royalties and amortization.4129 2606 1874 Cost of salesintellectual property licenses.28 34 1 87 2 Product development.646 14 571 13 584 13 Sales and marketing.734 16 712 16 606 13 General and administrative.380 8 417 9 490 11 Total c

146、osts and expenses.3,345 72 3,225 73 3,211 70 Operating income.1,319281,183271,37230Interest and other expense,net.198 4 202 5 53 1 Income before income tax expense.1,121 24 981 22 1,319 29 Income tax expense.229 5 146 3 309 7 Net income.$892 19%$835 19%$1,010 22%10-K Activision_Master_032416_Printer

147、MarksAdded.pdf 83/24/16 11:00 PM9 Operating Segment Results Our operating segments are consistent with our internal organizational structure,the manner in which our operations are reviewed and managed by our Chief Executive Officer,who is our Chief Operating Decision Maker(“CODM”),the manner in whic

148、h we assess operating performance and allocate resources,and the availability of separate financial information.Currently,we have two reportable operating segments(see Note 1 of the Notes to Consolidated Financial Statements).Previously,we reported“Distribution”as a reportable segment.In the current

149、 period,this was no longer deemed a reportable segment and is included in“Other”along with our recently announced Media Networks and Studios businesses.We do not aggregate operating segments.The CODM reviews segment performance exclusive of the impact of the change in deferred revenues and related c

150、ost of sales with respect to certain of our online-enabled games,stock-based compensation expense,amortization of intangible assets as a result of purchase price accounting,and fees and other expenses(including legal fees,costs,expenses and accruals)related to acquisitions and the Purchase Transacti

151、on.The CODM does not review any information regarding total assets on an operating segment basis,and accordingly,no disclosure is made with respect thereto.Information on the operating segments and reconciliations of total segment net revenues and total segment operating income to consolidated net r

152、evenues from external customers and consolidated income before income tax expense for the years ended December 31,2015,2014,and 2013 are presented in the table below(amounts in millions):For the Years Ended December 31,2015 2014 2013 Increase/(decrease)2015 v 2014 Increase/(decrease)2014 v 2013 Segm

153、ent net revenues:Activision.$2,700$2,686$2,895$14$(209)Blizzard.1,5651,7201,124(155)596Other(1).356407323(51)84Segments net revenues total.4,6214,8134,342(192)471Reconciliation to consolidated net revenues:Net effect from deferral of net revenues.43(405)241 448(646)Consolidated net revenues.$4,664$4

154、,408$4,583$256$(175)Segment income from operations:Activision.868762971 106(209)Blizzard.561756376(195)380Other(1).3798 281Segments income from operations total.1,4661,5271,355(61)172Reconciliation to consolidated operating income and consolidated income before income tax expense:Net effect from def

155、erral of net revenues and related cost of sales(39)(215)229 176(444)Stock-based compensation expense.(92)(104)(110)126Amortization of intangible assets.(11)(12)(23)111Fees and other expenses related to acquisitions and the Purchase Transaction.(5)(13)(79)866Consolidated operating income.1,3191,1831,

156、372 136(189)Interest and other expense,net.19820253(4)149Consolidated income before income tax expense.$1,121$981$1,319$140$(338)(1)Other includes other income and expenses from operating segments managed outside the reportable segments,including our Media Networks,Studios,and Distribution businesse

157、s.Other also includes unallocated corporate income and expenses.For a better understanding of the differences in presentation between our segment results and the consolidated results,the following explains the nature of each reconciling item.Net Effect from Deferral of Net Revenues and Related Cost

158、of Sales We have determined that some of our titles online functionality represents an essential component of gameplay and as a result,represents a more-than-inconsequential separate deliverable.As such,we are required to recognize revenues from these titles over the estimated service periods,which

159、are generally less than one year.The related costs of sales are deferred and recognized when the related revenues are recognized.In the operating segment results table,we present the amount of net revenues and related costs of sales separately for each period as a result of this accounting treatment

160、.10 Stock-Based Compensation Expense We expense our stock-based awards using the grant date fair value over the vesting periods of the stock awards.In the case of liability awards,the liability is subject to revaluation based on the stock price at the end of the relevant period.Included within this

161、stock-based compensation are the net effects of capitalization,deferral,and amortization.Amortization of Intangible Assets We amortize intangible assets over their estimated useful lives based on the pattern of consumption of the underlying economic benefits.The amount presented in the table represe

162、nts the effect of the amortization of intangible assets,as well as other purchase price accounting adjustments,where applicable,in our consolidated statements of operations.Fees and Other Expenses Related to Acquisitions and the Purchase Transaction We incurred fees and other expenses,such as legal,

163、banking and professional services fees,related to the Purchase Transaction,the King Acquisition,and other business acquisitions,inclusive of related debt financings.Such expenses are not reviewed by the CODM as part of segment performance.Segment Net Revenues Activision Activisions net revenues incr

164、eased slightly for 2015,as compared to 2014,primarily due to higher revenues from the Call of Duty franchise,specifically from Call of Duty:Black Ops III,which was released in the fourth quarter of 2015,as compared to Call of Duty:Advanced Warfare,which was released in the fourth quarter of 2014,and

165、 the strong digital content performance,including expansion packs and supply drops for Call of Duty:Advanced Warfare.Additionally,revenue increased due to revenues from Guitar Hero Live,which was released in the fourth quarter of 2015,with no comparable release in the prior-year.These increases were

166、 partially offset by lower revenues from Skylanders SuperChargers,which was released in the current year,as compared to Skylanders Trap Team,the comparable prior-year title,lower revenues from the Destiny franchise as Destiny debuted in September 2014 with no comparable full-game release in 2015,and

167、 lower revenues from The Amazing Spider-Man 2,which was released during the prior-year with no corresponding release during 2015.Activisions net revenues decreased for 2014,as compared to 2013,primarily due to lower revenues from the Call of Duty and Skylanders franchises,partially offset by higher

168、revenues from the release of Destiny and its first expansion pack,The Dark Below,in 2014.Blizzard Blizzards net revenues decreased for 2015,as compared to 2014,primarily due to the timing of game releases;most notably Diablo III:Reaper of Souls,which was released in March 2014 on the PC,Diablo III:R

169、eaper of SoulsUltimate Evil Edition,which was released in August 2014 on consoles,and World of Warcraft:Warlords of Draenor,which was released in November 2014,along with the overall lower revenues from World of Warcraft due to a smaller subscriber base.These decreases were partially offset by highe

170、r revenues from Hearthstone:Heroes of Warcraft,which had multiple content releases throughout the year,along with revenues from Heroes of the Storm and Starcraft II:Legacy of the Void,which were released in 2015.In addition to already having been released on PC,iPad,and Android tablets in the prior-

171、year,Hearthstone:Heroes of Warcraft was released on iPhone and Android smartphones in April 2015,which contributed to the current period revenue performance.Blizzards net revenues increased for 2014,as compared to 2013,primarily due to revenues from Diablo III:Reaper of Souls,which was released in M

172、arch 2014 on the PC,and Diablo III:Reaper of SoulsUltimate Evil Edition,which was released in August 2014 on certain consoles,revenue from value-added services as a result of the launch of the World of Warcraft paid character boost,revenues from World of Warcraft:Warlords of Draenor,which was releas

173、ed in November 2014,and revenues from Hearthstone:Heroes of Warcraft,which was commercially released in 2014,as compared to revenues in 2013 from StarCraft II:Heart of the Swarm,which was released in March 2013,and from Diablo III on consoles,which was released in September 2013.Segment Income from

174、Operations Activision Activisions operating income increased in 2015,as compared to 2014,primarily due to an increased percentage of revenues coming from the higher margin online digital channels,and lower sales and marketing spending on the Destiny franchise because of the September 2014 launch of

175、Destiny with no comparable full-game release in the current year.This is partially offset by operating losses 10-K Activision_Master_032416_PrinterMarksAdded.pdf 103/24/16 11:00 PM11 from Guitar Hero Live,which was released in the fourth quarter of 2015,with no comparable release in the prior-year,a

176、nd lower revenues from Skylanders SuperChargers as compared to Skylanders Trap Team.Activisions operating income decreased in 2014,as compared to 2013,primarily due to lower revenues,as described above,relatively higher cost of salessoftware royalties and amortization,and higher sales and marketing

177、activities from the release of Destiny;partially offset by lower cost of salesproduct costs as a result of lower revenues,and lower general and administrative costs,primarily resulting from lower legal-related expenses(including legal-related accruals,settlements and fees).Blizzard Blizzards operati

178、ng income decreased in 2015,as compared to 2014,primarily due to lower revenues,as described above;higher costs of salesproduct costs from Hearthstone:Heroes of Warcraft related to commissions on mobile purchases with the launch on iPhone and Android smartphones in April 2015;higher sales and market

179、ing spending for its releases,including Hearthstone:Heroes of Warcraft and Heroes of the Storm;lower capitalization of software development costs;and higher cost of salessoftware royalties and amortization.Blizzards operating income increased in 2014,as compared to 2013,primarily due to higher reven

180、ues,as described above,partially offset by higher cost of salesproduct costs,higher product development costs and higher sales and marketing activities to support a higher number of titles released in 2014.Foreign Exchange Impact Changes in foreign exchange rates had a negative impact of$364 million

181、 on Activision Blizzards segment net revenues for 2015 as compared to the same period in the previous year.The changes are primarily due to changes in the value of the U.S.dollar relative to the euro and British pound.Non-GAAP Financial Measures The analysis of revenues by distribution channel is pr

182、esented both on a GAAP(including the impact from the change in deferred revenues)and non-GAAP(excluding the impact from the change in deferred revenues)basis.We use this non-GAAP measure internally when evaluating our operating performance,when planning,forecasting and analyzing future periods,and w

183、hen assessing the performance of our management team.We believe this is appropriate because this non-GAAP measure enables an analysis of performance based on the timing of actual transactions with our customers,which is consistent with the way the Company is measured by investment analysts and indus

184、try data sources,and facilitates comparison of operating performance between periods.In addition,excluding the impact from the change in deferred net revenue provides a much more timely indication of trends in our sales and other operating results.While we believe that this non-GAAP measure is usefu

185、l in evaluating our business,this information should be considered as supplemental in nature and is not meant to be considered in isolation from,as a substitute for,or as more important than,the related financial information prepared in accordance with GAAP.In addition,this non-GAAP financial measur

186、e may not be the same as any non-GAAP measure presented by another company.This non-GAAP financial measure has limitations in that it does not reflect all of the items associated with our GAAP revenues.We compensate for the limitations resulting from the exclusion of the change in deferred revenues

187、by considering the impact of that item separately and by considering our GAAP,as well as non-GAAP,revenues.10-K Activision_Master_032416_PrinterMarksAdded.pdf 113/24/16 11:00 PM12 Results of OperationsYears Ended December 31,2015,2014,and 2013 Non-GAAP Financial Measures The following table provides

188、 reconciliation between GAAP and non-GAAP net revenues by distribution channel for the years ended December 31,2015,2014,and 2013(amounts in millions):For the Years Ended December 31,2015 2014 2013 Increase/(decrease)2015 v 2014 Increase/(decrease)2014 v 2013%Change 2015 v 2014%Change 2014 v 2013 GA

189、AP net revenues by distribution channel Retail channels.$1,806$2,104$2,701$(298)$(597)(14)%(22)%Digital online channels(1).2,502 1,897 1,559 605 338 32 22 Total Activision and Blizzard.4,308 4,001 4,260 307(259)8(6)Other(2).356 407 323(51)84(13)26Total consolidated GAAP net revenues.4,664 4,408 4,58

190、3 256(175)6(4)Change in deferred net revenues(3)Retail channels.(169)104(247)(273)351 Digital online channels(1).126 301 6(175)295 Total changes in deferred net revenues.(43)405(241)(448)646 Non-GAAP net revenues by distribution channel Retail channels.1,637 2,208 2,454(571)(246)(26)(10)Digital onli

191、ne channels(1).2,628 2,198 1,565 430 633 20 40 Total Activision and Blizzard.4,265 4,406 4,019(141)387(3)10 Other(2).356 407 323(51)84(13)26 Total non-GAAP net revenues(4).$4,621$4,813$4,342$(192)$471 (4)%11%(1)We define revenues from digital online channels as revenues from digitally distributed su

192、bscriptions,licensing royalties,value-added services,downloadable content,microtransactions,and products.(2)Net revenues from Other include revenues from our Media Networks and Studios businesses,along with revenues that were historically shown as“Distribution.”(3)We have determined that some of our

193、 titles online functionality represents an essential component of gameplay and as a result,represents a more-than inconsequential separate deliverable.As such,we recognize revenues attributed to these titles over the estimated service periods,which are generally less than one year.In the table above

194、,we present the amount of net revenues for each period as a result of this accounting treatment.(4)Total non-GAAP net revenues presented,also represents our total segment net revenues.Retail Channel Net Revenues The decrease in GAAP net revenues from retail channels for 2015,as compared to 2014,was

195、primarily due to lower revenues from Skylanders SuperChargers,which was released in the current year,as compared to Skylanders Trap Team,the comparable prior-year title,lower revenues recognized from Call of Duty:Advanced Warfare,which was released in the fourth quarter of 2014,as compared to Call o

196、f Duty:Ghosts,which was released in the fourth quarter of 2013,and lower revenues recognized from Diablo III:Reaper of Souls and Diablo III:Reaper of SoulsUltimate Evil Edition,which were released in March 2014 on PC and in August 2014 on consoles,respectively.The decreases were partially offset by

197、higher revenues recognized from the Destiny franchise and revenues from Guitar Hero Live,which was released in October 2015.The decrease in GAAP net revenues from retail channels for 2014,as compared to 2013,was primarily due to lower revenues from the Call of Duty and Skylanders franchises.The decr

198、eases were partially offset by revenues from Destiny,which was released in September 2014,and revenues from Diablo III:Reaper of Souls,which was released in March 2014 on the PC,and Diablo III:Reaper of SoulsUltimate Evil Edition,which was released in August 2014 on certain consoles.10-K Activision_

199、Master_032416_PrinterMarksAdded.pdf 123/24/16 11:00 PM13 The decrease in non-GAAP net revenues from retail channels for 2015,as compared to 2014,was primarily due to lower revenues from Destiny,which launched in September 2014 with no comparable full-game release in the current year,from Skylanders

200、SuperChargers,which was released in the current year,as compared to Skylanders Trap Team,the comparable prior-year title,and from the Diablo franchise due to timing of title releases.This was partially offset by revenues from Guitar Hero Live,which was released in the fourth quarter of 2015,with no

201、comparable release in the prior-year,and revenues from Call of Duty:Black Ops III,which was released in the fourth quarter of 2015,as compared to Call of Duty:Advanced Warfare,which was released in the fourth quarter of 2014.The decrease in non-GAAP net revenues from retail channels for 2014,as comp

202、ared to 2013,was primarily due to lower revenues from the Call of Duty and Skylanders franchises.The decreases were partially offset by revenues from Destiny,which was released in September 2014,and revenues from Diablo III:Reaper of Souls,which was released in March 2014 on the PC and Diablo III:Re

203、aper of SoulsUltimate Evil Edition,which was released in August 2014 on certain consoles,as compared to revenues from the September 2013 release of Diablo III on the PS3 and Xbox 360.Digital Channel Net Revenues The increase in GAAP net revenues from digital online channels for 2015,as compared to 2

204、014,was primarily due to:higher revenues recognized from the Destiny franchise;higher revenues recognized from Hearthstone:Heroes of Warcraft;higher revenues recognized from Call of Duty:Advanced Warfare and its digital content released during the current period,as compared to Call of Duty:Ghosts an

205、d its digital content released during the prior period,including revenues recognized from Call of Duty:Advanced Warfares new digital content known as“supply drops;”and revenues recognized from Heroes of the Storm,which was released in June 2015 with no comparable release during the prior periods.The

206、 increases were partially offset by lower revenues from the Diablo franchise due to the timing of title releases.The increase in GAAP net revenues from digital online channels for 2014,as compared to 2013,was primarily due to higher revenues from Hearthstone:Heroes of Warcraft,value-added services r

207、evenues from the launch of the World of Warcraft paid character boost,revenues from World of Warcraft:Warlords of Draenor,revenues from Diablo III:Reaper of Souls,which was released in March 2014 on the PC,and Diablo III:Reaper of SoulsUltimate Evil Edition,which was released in August 2014 on certa

208、in consoles,and the release of Destiny and its first expansion pack,The Dark Below,and higher digital download revenues from Call of Duty:Advanced Warfare.The increases were partially offset by lower revenues recognized from StarCraft II:Heart of the Swarm,which was released in March 2013,lower reve

209、nues recognized from World of Warcraft:Mists of Pandaria,which was released in September 2012,and lower downloadable content revenues from the Call of Duty franchise.The increase in non-GAAP net revenues from digital online channels for 2015,as compared to 2014,was primarily due to:revenues from Hea

210、rthstone:Heroes of Warcraft;revenues from Destiny and its associated expansion packs,including The Taken King which was released in September 2015;higher revenues from the Call of Duty franchise,specifically from Call of Duty:Black Ops III,which was released in the fourth quarter of 2015,as compared

211、 to Call of Duty:Advanced Warfare,which was released in the fourth quarter of 2014,and from the strong digital content performance,including expansion packs and supply drops,of Call of Duty:Advanced Warfare;and revenues from Heroes of the Storm,which was released in June 2015 with no comparable rele

212、ase during the prior periods.These increases were partially offset by lower revenues from World of Warcraft,primarily due to a decline in the subscriber base and the launch of World of Warcraft:Warlords of Draenor in November 2014 with no comparable release in the current year,and lower revenues rec

213、ognized from the Diablo franchise due to the timing of title releases.The increase in non-GAAP net revenues from digital online channels for 2014,as compared to 2013,was primarily due to revenues from Hearthstone:Heroes of Warcraft,value-added services revenues from the launch of the World of Warcra

214、ft:Warlords of Draenor paid character boost,revenues from World of Warcraft:Warlords of Draenor,revenues from Diablo III:Reaper of Souls,which was released in March 2014 on the PC,and Diablo III:Reaper of SoulsUltimate Evil Edition,which was released in August 2014 on certain consoles,revenues from

215、the release of Destiny and its first expansion pack,The Dark Below,and higher digital downloads of Call of Duty:Advanced Warfare.The increases were partially offset by lower downloadable content revenues from the Call of Duty franchise.10-K Activision_Master_032416_PrinterMarksAdded.pdf 133/24/16 11

216、:00 PM14 Consolidated Results Net Revenues by Geographic Region The following table details our consolidated net revenues by geographic region for the years ended December 31,2015,2014,and 2013(amounts in millions):For the Years Ended December 31,2015 2014 2013 Increase/(decrease)2015 v 2014 Increas

217、e/(decrease)2014 v 2013%Change 2015 v 2014%Change 2014 v 2013 Geographic region net revenues:North America.$2,409$2,190$2,414$219$(224)10%(9)%Europe.1,741 1,824 1,826(83)(2)(5)Asia Pacific.514 394 343 120 51 30 15 Consolidated net revenues.$4,664$4,408$4,583$256$(175)6(4)The increase/(decrease)in de

218、ferred revenues recognized by geographic region for the years ended December 31,2015,2014,and 2013 was as follows(amounts in millions):For the Years Ended December 31,2015 2014 2013 Increase/(Decrease)2015 v 2014 Increase/(Decrease)2014 v 2013 Increase/(decrease)in deferred revenues recognized by ge

219、ographic region:North America.$55$(206)$108$261$(314)Europe.20(153)107 173(260)Asia Pacific.(32)(46)26 14(72)Total impact on consolidated net revenues.$43$(405)$241$448$(646)Consolidated Net Revenues Consolidated net revenues in the North America region increased in 2015 as compared to 2014,primaril

220、y due to higher revenues recognized from the Destiny franchise,higher revenues recognized from Hearthstone:Heroes of Warcraft,and revenues recognized from Heroes of the Storm and Guitar Hero Live,which were both released in 2015 with no comparable releases during the prior periods.The increases were

221、 partially offset by lower revenues from Skylanders SuperChargers,as compared to Skylanders Trap Team,and lower revenues recognized from the Diablo franchise due to the timing of title releases.Consolidated net revenues in the Europe region decreased in 2015 as compared to 2014,primarily due to lowe

222、r revenues recognized from the Diablo and Call of Duty franchises,lower revenues from Skylanders SuperChargers,as compared to Skylanders Trap Team,and lower revenues from our Distribution business.These were partially offset by higher revenues recognized from the Destiny franchise,higher revenues re

223、cognized from Hearthstone:Heroes of Warcraft,and revenues recognized from Heroes of the Storm.Consolidated net revenues in the Asia Pacific region increased in 2015 as compared to 2014,primarily due to higher revenues recognized from Hearthstone:Heroes of Warcraft,Call of Duty Online,and Heroes of t

224、he Storm,which launched in China in 2015 with no comparable prior-year titles.The increases were partially offset by lower revenues from the Diablo franchise.Consolidated net revenues in all regions decreased in 2014 as compared to 2013,except for the Asia Pacific region.As previously discussed,the

225、decrease in the Companys consolidated net revenues in 2014,as compared to the same period in 2013,was mainly due to lower revenues from the Call of Duty and Skylanders franchises,lower revenues recognized from StarCraft II:Heart of the Swarm,which was released in March 2013,and lower revenues recogn

226、ized from World of Warcraft:Mists of Pandaria,which was released in September 2012.The decreases were partially offset by the launch of Destiny and its first expansion pack,The Dark Below,revenues from Hearthstone:Heroes of Warcraft,value-added services revenues from the launch of the World of Warcr

227、aft paid character boost,revenues from World of Warcraft:Warlords of Draenor,and revenues from Diablo III:Reaper of Souls,which was released in March 2014 on the PC,and Diablo III:Reaper of SoulsUltimate Evil Edition,which was released in August 2014 on certain consoles.All of the above factors impa

228、ct our year-over-year comparisons for North America and Europe.Further,in the Europe region,the decreases were partially offset by the increase in Distribution segment revenues.In the Asia Pacific region,the higher mix of Blizzard segment operations,as compared to Publishing segment operations,resul

229、ted in a year-over-year increase in revenues.10-K Activision_Master_032416_PrinterMarksAdded.pdf 143/24/16 11:00 PM15 Deferred Revenues Recognized In all regions,the increase in deferred revenues recognized in 2015,as compared to 2014,was primarily due to lower deferrals of revenue from Destiny,from

230、 World of Warcraft,primarily associated with World of Warcraft:Warlords of Draenor and value-added services,and from the Diablo franchise.These were partially offset by increased deferrals of revenue from the Call of Duty franchise and deferral of revenues for StarCraft II:Legacy of the Void and Gui

231、tar Hero Live,which were released in 2015 with no comparable prior-year releases.Additionally,in the Asia Pacific region there was an increase deferral of revenues from Hearthstone:Heroes of Warcraft.In all regions,the decrease in deferred revenues recognized in 2014,as compared to 2013,was primaril

232、y attributed to the higher deferral of revenues from World of Warcraft:Warlords of Draenor,which was released in November 2014,as compared to the recognition of revenues from World of Warcraft:Mists of Pandaria,which was released in September 2012,deferral of revenues from Destiny and its first expa

233、nsion pack The Dark Below,both of which were released in 2014,and the deferral of revenues from Hearthstone:Heroes of Warcraft,which was also released in 2014.Foreign Exchange Impact Changes in foreign exchange rates had a negative impact of$373 million,a negative impact of$2 million,and a positive

234、impact of$33 million on Activision Blizzards consolidated net revenues in 2015,2014,and 2013,respectively,as compared to the same periods in the previous year.The changes are primarily due to changes in the value of the U.S.dollar relative to the euro and British pound.For the year ended December 31

235、,2014,given that a significant portion of the Companys GAAP net consolidated revenues is generated in the first half of the fiscal year due to the impact of deferrals,where the euro and British pound strengthened against the U.S dollar as compared to the same period in 2013,the negative impact from

236、the significant weakening of the euro and British pound relative to U.S.dollar in the later stages of 2014 was largely offset in the Companys consolidated net revenues for the full year 2014.Net Revenues by Platform The following tables detail our net revenues by platform and as a percentage of tota

237、l consolidated net revenues for the years ended December 31,2015,2014,and 2013(amounts in millions):Year Ended December 31,2015%of total(4)consolidated net revenues Year Ended December 31,2014%of total(4)consolidated net revenues Year Ended December 31,2013%of total(4)consolidated net revenues Incre

238、ase/(Decrease)2015 v 2014 Increase/(Decrease)2014 v 2013 Platform net revenues:Online(1).$851 18%$867 20%$912 20%$(16)$(45)PC.648 14 551 13 340 7 97 211 Next-generation(PS4,Xbox One,Wii U).1,492 32 720 16 92 2 772 628 Prior-generation(PS3,Xbox 360,Wii).899 19 1,430 32 2,287 50(531)(857)Total Console

239、.2,391 51 2,150 49 2,379 52 241(229)Mobile and ancillary(2).418 9 433 10 629 14(15)(196)Total Activision Blizzard.4,308 92 4,001 91 4,260 93 307(259)Other(3).356 8 407 9 323 7(51)84 Total consolidated net revenues.$4,664 100%$4,408 100%$4,583 100%$256$(175)10-K Activision_Master_032416_PrinterMarksA

240、dded.pdf 153/24/16 11:00 PM16 The increase/(decrease)in deferred revenues recognized by platform for years ended December 31,2015,2014,and 2013 was as follows(amounts in millions):For the Years Ended December 31,2015 2014 2013 Increase/(Decrease)2015 v 2014 Increase/(Decrease)2014 v 2013 Increase/(d

241、ecrease)in deferred revenues recognized by platform:Online(1).$138$(168)$107$306$(275)PC.(82)(41)22(41)(63)Next-generation(PS4,Xbox One,Wii U).(252)(477)(213)225(264)Prior-generation(PS3,Xbox 360,Wii).274 295 324(21)(29)Total console.22(182)111204(293)Mobile and ancillary(2).(35)(14)1(21)(15)Total i

242、mpact on consolidated net revenues.$43$(405)$241$448$(646)(1)Revenues from online consists of revenues from all World of Warcraft products,including subscriptions,boxed products,expansion packs,licensing royalties,and value-added services.(2)Revenues from mobile and ancillary includes revenues from

243、handheld,mobile and tablet devices,as well as non-platform specific game-related revenues such as standalone sales of toys and accessories products from our Skylanders franchise and other physical merchandise and accessories.(3)Net revenues from Other include revenues from our Media Networks and Stu

244、dios businesses,along with revenues that were historically shown as“Distribution.”(4)The percentages of total are presented as calculated.Therefore the sum of these percentages,as presented,may differ due to the impact of rounding.Net revenues from online decreased slightly in 2015,as compared to 20

245、14,primarily due to lower World of Warcraft subscriber levels.This was partially offset by revenue recognized from the expansion World of Warcraft:Warlords of Draenor,which was released in November 2014,and from associated value-added services including a paid character boost.Net revenues from onlin

246、e decreased in 2014,as compared to 2013,primarily due to the deferral of revenues from World of Warcraft:Warlords of Draenor,as compared to the recognition of revenues from World of Warcraft:Mists of Pandaria,which was released in September 2012,and lower subscription revenues from World of Warcraft

247、.The decrease was partially offset by the strong performance of value-added services revenues driven by the launch of the World of Warcraft paid character boost.Net revenues from PC increased in 2015,as compared to 2014,primarily due to higher revenues recognized from Hearthstone:Heroes of Warcraft

248、and revenues recognized from Heroes of the Storm.This was partially offset by lower revenues recognized in 2015 from Diablo III:Reaper of Souls,due to the title releasing in March 2014 and no comparable title release in 2015.Net revenues from PC increased in 2014,as compared to 2013,primarily due to

249、 revenues from Hearthstone:Heroes of Warcraft,which had no comparable title in 2013,and higher revenues from Diablo III:Reaper of Souls,which was released in March 2014,as compared to revenues from the release of StarCraft II:Heart of the Swarm,which was released in March 2013.Net revenues from next

250、-generation consoles increased in 2015,as compared to 2014,and increased in 2014,as compared to 2013,in each case primarily due to increased consumer adoption of the PS4 and Xbox One and an increase in the number of titles released for the next-generation console platforms.Since the introduction of

251、the PS4 and Xbox One in the fourth quarter of 2013,we have released the following titles,among others,on next-generation consoles:Call of Duty:Ghosts and Skylanders SWAP Force in the fourth quarter of 2013;The Amazing Spider-Man 2 and Transformers:Rise of the Dark Spark in the second quarter of 2014

252、;Diablo III:Reaper of SoulsUltimate Evil Edition and Destiny in the third quarter of 2014,and Call of Duty:Advanced Warfare and Skylanders Trap Team in the fourth quarter of 2014.In 2015,we have released multiple expansions or map packs for Destiny and Call of Duty:Advanced Warfare on the next-gener

253、ation consoles along with major new titles including Call of Duty:Black Ops III,Skylanders SuperChargers,and Guitar Hero Live.Net revenues from prior-generation consoles decreased in 2015,as compared to 2014,primarily due to lower revenues from the Call of Duty and Skylanders franchises and from the

254、 transition of players from prior-generation to next-generation platforms.The decreases were partially offset by higher revenues recognized from the Destiny franchise and revenues from Guitar Hero Live.10-K Activision_Master_032416_PrinterMarksAdded.pdf 163/24/16 11:00 PM17 Net revenues from prior-g

255、eneration consoles decreased in 2014,as compared to 2013,primarily due to lower revenues from the Call of Duty and Skylanders franchises.The decreases were partially offset by revenues from Destiny,the recognition of previously deferred revenues from Diablo III for the PS3 and the Xbox 360,which was

256、 released in September 2013,and revenues from the release of Diablo III:Reaper of SoulsUltimate Evil Edition.Net revenues from mobile and ancillary decreased slightly in 2015,as compared to 2014,primarily due to lower revenues from sales of standalone toys and accessories from the Skylanders franchi

257、se.The decrease was partially offset by higher revenues from Hearthstone:Heroes of Warcraft on iOS and Android devices.Net revenues from mobile and ancillary decreased in 2014,as compared to 2013,primarily due to lower revenues from sales of standalone toys and accessories from the Skylanders franch

258、ise and from handheld titles.The decrease was partially offset by an increase in mobile and tablet platform revenues from the release of Hearthstone:Heroes of Warcraft on the iPad and Android tablets in 2014.Deferred revenues recognized for online increased in 2015,as compared to 2014,primarily due

259、to the recognition of deferred revenues from World of Warcraft:Warlords of Draenor and from value-added services revenues for World of Warcraft,including paid character boosts.Deferred revenues recognized for online decreased in 2014,as compared to 2013,primarily due to the deferral of revenues from

260、 World of Warcraft:Warlords of Draenor,the deferral of value-added services revenues primarily from the launch of the World of Warcraft paid character boost,and lower revenues recognized from World of Warcraft:Mists of Pandaria,which was released in September 2012.Deferred revenues recognized for PC

261、 decreased in 2015,as compared to 2014,primarily due to deferral of revenues from StarCraft II:Legacy of the Void,which was released in November 2015,from Heroes of the Storm,and from Hearthstone:Heroes of Warcraft.This was partially offset by the recognition of deferred revenues from Diablo III:Rea

262、per of Souls following its release in March 2014.The decrease in deferred revenues recognized for PC in 2014,as compared to 2013,was due to the deferral of revenues from Hearthstone:Heroes of Warcraft and the higher deferral of revenues from Diablo III:Reaper of Souls,which was released in March 201

263、4,as compared to revenues deferred from StarCraft II:Heart of the Swarm,which was released in March 2013.The increase in deferred revenues recognized for next-generation consoles in 2015,as compared to 2014,was primarily due to the recognition of deferred revenues on Destiny,which was released in Se

264、ptember 2014,without a comparable release in the 2015,and revenues recognized from the Diablo franchise due to the timing of title releases.These increases were partially offset by revenues deferred from the Call of Duty franchise and from the release of Guitar Hero Live in the current year.The decr

265、ease in deferred revenues recognized for next-generation consoles in 2014,as compared to 2013,was due to the higher deferral of revenues from Call of Duty:Advanced Warfare,which was released in November 2014,as compared to revenues deferred from Call of Duty:Ghosts,which was released in November 201

266、3,and the deferral of revenues from Destiny,which was released in September 2014.As discussed above,the PS4 and Xbox One were introduced in the fourth quarter of 2013 and we have since released several titles,which were available on next-generation consoles for the full year in 2014,as compared to a

267、 partial year in 2013.The decrease in deferred revenues recognized for prior-generation consoles in 2015,as compared to 2014,was due to lower deferred revenues recognized from the Call of Duty franchise and the deferral of revenues from the release Guitar Hero Live in 2015.These were partially offse

268、t by recognition of deferred revenues from the Destiny franchise.The decrease in deferred revenues recognized for prior-generation consoles in 2014,as compared to 2013,was due to the deferral of revenues from the launch of Destiny,partially offset by lower deferral of revenues from the Call of Duty

269、franchise and lower deferral of revenues from Diablo III:Reaper of SoulsUltimate Evil Edition,as compared to the deferral of revenues from Diablo III on PS3 and Xbox 360,which was released in 2013.Costs and Expenses Cost of Sales The following tables detail the components of cost of sales in dollars

270、 and as a percentage of total consolidated net revenues for the years ended December 31,2015,2014,and 2013(amounts in millions):10-K Activision_Master_032416_PrinterMarksAdded.pdf 173/24/16 11:00 PM18 Year Ended December 31,2015%of consolidatednet revenues Year Ended December 31,2014%of consolidated

271、net revenues Year Ended December 31,2013%of consolidated net revenues Increase(Decrease)2015 v 2014 Increase(Decrease)2014 v 2013 Product costs.$921 20%$999 23%$1,053 23%$(78)$(54)Online.224 5 232 5 204 4(8)28Software royalties and amortization.412 9 260 6 187 4 15273Intellectual property licenses.2

272、8 34 1 87 2(6)(53)Total cost of sales.$1,585 34%$1,525 35%$1,531 33%$60$(6)Total cost of sales of$1,585 million increased in 2015,as compared to total cost of sales of$1,525 million in 2014,primarily due to higher revenues in 2015.Cost of sales-product costs decreased primarily due to the relative i

273、ncrease in revenues coming from thedigital online channel,which has relatively lower product costs,along with decreased product costs as a result of the decreased revenues from our relatively lower-margin Distribution business.Cost of sales-software royalties and amortization increased primarily due

274、 to higher software amortization from the Destiny franchise and from software costs associated with new Blizzard product releases.Total cost of sales of$1,525 million decreased in 2014,as compared to total cost of sales of$1,531 million in 2013,primarily due to lower revenues in 2014 and the relativ

275、e increase in revenues coming from the digital online channel,which has relatively lowerproduct costs,as compared to retail revenues.Cost of salesproduct costs decreased primarily due to lower retail product sales,partially offset by increased product costs as a result of increased revenues from our

276、 relatively lower-margin Distribution business.Cost of salesonline increased primarily due to higher online revenues and related support costs.Cost of salessoftware royaltiesand amortization increased primarily due to higher software amortization for introduction of new franchises and new product re

277、leases during the year.Cost of salesintellectual property licenses decreased primarily due to the write-down of intellectual propertylicenses in 2013,with no comparable write-downs in 2014,lower amortization of our intangible assets,and a reduction in the number of titles released by our value busin

278、ess in 2014,which are normally based on licensed properties.Product Development(amounts in millions)Year Ended December 31,2015%of consolidated net revenues Year Ended December 31,2014%of consolidated net revenues Year Ended December 31,2013%of consolidated net revenues Increase(Decrease)2015 v 2014

279、 Increase(Decrease)2014 v 2013 Product development.$646 14%$571 13%$584 13%$75$(13)For 2015,product development costs increased,as compared to 2014,primarily due to increased costs to support our future titlereleases and increased Blizzard product development costs,primarily associated with higher p

280、ayroll costs and bonuses to studiopersonnel.For 2014,product development costs decreased,as compared to 2013,primarily due to lower stock-based compensation expenses associated with employees involved in product development as a result of fewer shares granted and fewer shares and options vesteddurin

281、g the year.Sales and Marketing(amounts in millions)Year Ended December 31,2015%of consolidated net revenues Year Ended December 31,2014%of consolidated net revenues Year Ended December 31,2013%of consolidated net revenues Increase(Decrease)2015 v 2014 Increase(Decrease)2014 v 2013 Sales and marketin

282、g.$734 16%$71216%$60613%$22$106Sales and marketing expenses increased in 2015,as compared to 2014,primarily due to increased spending on sales and marketingactivities to support the launch of Guitar Hero Live and Heroes of the Storm during the year.The increase was partially offset by lower media sp

283、ending on the World of Warcraft,Destiny,and Diablo franchises due to the timing of title releases.Sales and marketing expenses increased in 2014,as compared to 2013,primarily due to increased spending on sales and marketingactivities to support the launch of Destiny,Hearthstone:Heroes of Warcraft,an

284、d World of Warcraft:Warlords of Draenor during the year.The increase was partially offset by lower media spending on the Call of Duty and Skylanders franchises.General and Administrative(amounts in millions)Year Ended December 31,2015%of consolidated net revenues Year Ended December 31,2014%of conso

285、lidated net revenues Year Ended December 31,2013%of consolidated net revenues Increase(Decrease)2015 v 2014 Increase(Decrease)2014 v 2013 General and administrative$380 8%$4179%$49011%$(37)$(73)10K_ 6NEW pages 18 37 38 55 59 63_040816.pdf 14/8/16 9:04 PM19 General and administrative expenses decreas

286、ed in 2015,as compared to 2014,primarily due to realized and unrealized gains from our foreign currency derivative contracts and lower stock-based compensation expense.This decrease was partially offset by increased professional service fees incurred,primarily in connection with the King Acquisition

287、.General and administrative expenses decreased in 2014,as compared to 2013,primarily due to the lower bankers and professional fees related to the Purchase Transaction and related debt financings in 2014,as compared to 2013.Interest and Other Expense,Net(amounts in millions)Year Ended December 31,20

288、15%of consolidated net revenues Year Ended December 31,2014%of consolidated net revenues Year Ended December 31,2013%of consolidated net revenues Increase(Decrease)2015 v 2014 Increase(Decrease)2014 v 2013 Interest and other expense,net.$198 4%$202 5%$53 1%$(4)$149 Interest and other expense,net,in

289、2015 was comparable to 2014.Interest and other expense,net,was$202 million in 2014,as compared to$53 million in 2013,reflecting a full year of interest expense incurred from the Notes and the Term Loan,which were issued and drawn,respectively,in October 2013.Interest expense for 2013 reflects intere

290、st from the period in which the Notes and the Term Loan were issued and drawn,respectively,to the end of the year.Income Tax Expense(Benefit)(amounts in millions)Year Ended December 31,2015%of Pretax income Year Ended December 31,2014%of Pretax income Year Ended December 31,2013%of Pretax income Inc

291、rease(Decrease)2015 v 2014 Increase(Decrease)2014 v 2013 Income tax expense.$229 20%$146 15%$309 23%$83$(163)For the year ended December,2015,2014 and 2013,the Companys income before income tax expense was$1,121 million,$981 million,and$1,319 million,respectively,and our income tax expense was$229 m

292、illion(or a 20%effective tax rate),$146 million(or a 15%effective tax rate),and$309 million(or a 23%effective tax rate),respectively.Overall,our effective tax rate differs from the U.S.statutory tax rate of 35%,primarily due to earnings taxed at relatively lower rates in foreign jurisdictions,recogn

293、ition of the California research and development(“R&D”)credits,and recognition of the retroactive reinstatement of the federal R&D tax credit,partially offset by changes in the Companys liability for uncertain tax positions.In 2015 and 2014,our U.S.income before income tax expense was$355 million an

294、d$325 million,respectively,and comprised 32%and 33%,respectively,of our consolidated income before income tax expense.In 2015 and 2014,the foreign income before income tax expense was$766 million and$656 million,respectively,and comprised 68%and 67%,respectively,of our consolidated income before inc

295、ome tax expense.In 2015 and 2014,earnings taxed at lower rates in foreign jurisdictions,as compared to domestic earnings taxed at the U.S.federal statutory tax rate,lowered our effective tax rate by 20%and 25%,respectively.The decrease in the foreign rate differential is due to changes in foreign te

296、mporary differences,as compared to the prior-year.In 2014 and 2013,earnings taxed at lower rates in foreign jurisdictions,as compared to domestic earnings taxed at the U.S.federal statutory tax rate,lowered our effective tax rate by 25%and 13%,respectively.The primary increase in the foreign rate di

297、fferential is due to the proportional increase over the prior-years earnings in foreign jurisdictions taxed at relatively lower rates.In addition,the 2014 foreign tax provision resulted in a benefit due to changes in foreign temporary differences,as compared to the prior-year.Vivendi Games results f

298、or the period January 1,2008 through July 9,2008 are included in the consolidated federal and certain foreign state and local income tax returns filed by Vivendi or its affiliates while Vivendi Games results for the period from July 10,2008 through December 31,2008 are included in the consolidated f

299、ederal and certain foreign,state and local income tax returns filed by Activision Blizzard.Vivendi Games tax year 2008 remains open to examination by the major taxing authorities.In addition,Vivendi Games tax return for the 2008 tax year is before the appeals function of the Internal Revenue Service

300、(“IRS”)and is under examination by several state taxing authorities.Activision Blizzards tax years 2008 through 2014 remain open to examination by the major taxing jurisdictions to which we are subject.The IRS is currently examining the Companys federal tax returns for the 2008 through 2011 tax year

301、s.During the second quarter of 2015,the Company transitioned the review of its transfer pricing methodology from the advanced pricing agreement review process to the IRS examination team.Their review could result in a different allocation of profits and losses under the Companys 10-K Activision_Mast

302、er_032416_PrinterMarksAdded.pdf 193/24/16 11:00 PM20 transfer pricing agreements.Such allocation could have a positive or negative impact on our provision for the period in which such a determination is reached and the relevant periods thereafter.The Company also has several state and non-U.S.audits

303、 pending.The final resolution of the Companys global tax disputes is uncertain.There is significant judgment required in the analysis of disputes,including the probability determination and estimation of the potential exposure.Based on current information,in the opinion of the Companys management,th

304、e ultimate resolution of these matters are not expected to have a material adverse effect on the Companys consolidated financial position,liquidity or results of operations.However,an unfavorable resolution of the Companys global tax disputes could have a material adverse effect on our business and

305、results of operations in the period in which the matters are ultimately resolved.The overall effective income tax rate in future periods will depend on a variety of factors,such as changes in the mix of income by tax jurisdiction,applicable accounting rules,applicable tax laws and regulations,and ru

306、lings and interpretations thereof,developments in tax audits and other matters,and variations in the estimated and actual level of annual pre-tax income or loss.Further,the effective tax rate could fluctuate significantly on a quarterly basis and could be adversely affected by the extent that income

307、(loss)before income tax expenses(benefit)is lower than anticipated in foreign regions where taxes are levied at relatively lower statutory rates and/or higher than anticipated in the United States where taxes are levied at relatively higher statutory rates.A more detailed analysis of the differences

308、 between the U.S.federal statutory rate and the consolidated effective tax rate,as well as other information about our income taxes,is provided in Note 15 of the Notes to Consolidated Financial Statements included in this Annual Report.Foreign Exchange Impact Changes in foreign exchange rates had a

309、negative impact of$242 million,a negative impact of$8 million,and a positive impact of$20 million on Activision Blizzards consolidated operating income in 2015,2014 and 2013,respectively.The change is primarily due to changes in the value of the U.S.dollar relative to the euro and British pound and

310、its impact on our foreign operating income.For the year ended December 31,2014,given that the majority of the Companys GAAP net consolidated operating income is generated in the first half of the fiscal year due to the impact of deferrals,where the euro and British pound strengthened against the U.S

311、 dollar as compared to the same period in 2013,the negative impact from the significant weakening of the euro and British pound relative to U.S.dollar in the later stages of 2014 was largely offset in on the Companys consolidated operating income for the full year 2014.10-K Activision_Master_032416_

312、PrinterMarksAdded.pdf 203/24/16 11:00 PM21 Liquidity and Capital Resources Sources of Liquidity(amounts in millions)For the Years Ended December 31,2015 2014 Increase(Decrease)2015 v 2014 Cash and cash equivalents.$1,823$4,848$(3,025)Short-term investments.8 10(2)$1,831$4,858$(3,027)Percentage of to

313、tal assets.12%33%For the Years Ended December 31,2015 2014 2013 Increase(Decrease)2015 v 2014 Increase(Decrease)2014 v 2013 Cash flows provided by operating activities.$1,192$1,292$1,264$(100)$28 Cash flows(used in)provided by investing activities.(3,716)(84)308(3,632)(392)Cash flows used in financi

314、ng activities.(135)(374)(1,223)239 849 Effect of foreign exchange rate changes.(366)(396)102 30(498)Net(decrease)increase in cash and cash equivalents.$(3,025)$438$451$(3,463)$(13)Cash Flows Provided by Operating Activities The primary drivers of cash flows provided by operating activities typically

315、 include the collection of customer receivables generated by the sale of our products and digital and subscription revenues,partially offset by payments to vendors for the manufacturing,distribution and marketing of our products,payments for customer service support for our players,payments to third

316、-party developers and intellectual property holders,payments for interest on our debt,payments for software development,payments for tax liabilities,and payments to our workforce.Cash flows provided by operating activities were lower for 2015,as compared to 2014,primarily due to changes in operating

317、 assets and liabilities,driven by the prior-year cash flows benefiting from a substantial increase in revenues which were deferred.These are partially offset by a higher net income in 2015 as compared to 2014 and adjustments to net income for non-cash charges,including amortization of capitalized so

318、ftware development costs.Cash flows provided by operating activities for the year ended December 31,2015 included approximately$193 million of interest paid for the Notes and Term Loan,as compared to$201 million in 2014.Cash flows provided by operating activities were slightly higher for 2014,as com

319、pared to 2013,primarily due to a more favorable impact from changes in our working capital accounts,mainly related to cash flows from revenues which were deferred.Cash Flows(Used in)Provided by Investing Activities The primary drivers of cash flows(used in)provided by investing activities typically

320、include the net effect of purchases and sales/maturities of short-term investments,capital expenditures,and changes in restricted cash balances.Cash flows used in investing activities were$3.7 billion in 2015,as compared to cash flows used in investing activities of$84 million in 2014.Increased cash

321、 flows used in investing activities were primarily due to$3.6 billion cash deposited in escrow for the King Acquisition and the cash used to acquire Major League Gaming in the fourth quarter of 2015.Cash flows used in investing activities were$84 million in 2014,as compared to cash flows provided by

322、 investing activities of$308 million in 2013.Lower cash flows from investing activities were primarily due to lower proceeds from the maturity of investments and a higher investment in capital expenditures.In 2014,proceeds from maturities were$21 million,the majority of which consisted of U.S.treasu

323、ry and other government agency securities.Further,capital expenditures during 2014,primarily related to property and equipment,were$107 million.10-K Activision_Master_032416_PrinterMarksAdded.pdf 213/24/16 11:00 PM22 Cash Flows Used in Financing Activities The primary drivers of cash flows used in f

324、inancing activities typically include the proceeds from,and repayments of,our long-term debt,transactions involving our common stock,such as the issuance of shares of common stock to employees,the repurchase of our common stock,and the payment of dividends.Cash flows used in financing activities of$

325、135 million were lower in 2015,as compared to$374 million used in 2014,primarily due to$202 million of proceeds received in the settlement of the litigation related to the Purchase Transaction,and the lower partial repayment of our Term Loan in 2015 of$250 million,as compared to the$375 million part

326、ial repayment of our Term Loan in 2014.These were partially offset by lower proceeds from stock options exercised by our employees and the higher cash dividend payment made during 2015,as compared to 2014.Cash flows used in financing activities of$374 million were lower in 2014,as compared to$1,223

327、million used in 2013,primarily due to the lack of share repurchases in 2014,offset by the$375 million partial repayment of our Term Loan.We also paid$147 million in dividends and related dividend equivalents and$66 million for taxes in connection with the vesting of employees restricted stock rights

328、.Cash flows from financing activities for 2014 reflected proceeds of$175 million from the issuance of shares of our common stock to employees in connection with stock option exercises.Effect of Foreign Exchange Rate Changes Changes in foreign exchange rates had a negative impact of$366 million,a neg

329、ative impact of$396 million and a positive impact of$102 million on our cash and cash equivalents for the years ended December 31,2015,2014,and 2013,respectively.The change is primarily due to changes in the value of the U.S.dollar relative to the euro and British pound.Other Liquidity and Capital R

330、esources Our primary sources of liquidity are typically cash and cash equivalents,investments,and cash flows provided by operating activities.In addition,as described below,we have availability of$250 million,subject to certain restrictions,under a secured revolving credit facility.With our cash and

331、 cash equivalents and short-term investments of$1.8 billion at December 31,2015,and expected cash flows provided by operating activities,we believe that we have sufficient liquidity to meet daily operations in the foreseeable future.We also believe that we have sufficient working capital of$0.8 bill

332、ion at December 31,2015,to finance our operational and financing requirements for at least the next twelve months,including:purchases of inventory and equipment;the development,production,marketing and sale of new products;provision of customer service for our players;acquisition of intellectual pro

333、perty rights for future products from third parties;funding of dividends;and payments related to debt obligations.As of December 31,2015,the amount of cash and cash equivalents held outside of the U.S.by our foreign subsidiaries was$0.5 billion,as compared to$3.6 billion as of December 31,2014.The decrease is due to the requirements under the Transaction Agreement for the King Acquisition,which re