Activision Develops Downloads for "The New Generation"

| About: Activision Blizzard, (ATVI)

On Activision's (NASDAQ:ATVI) Fiscal 1Q conference call,executives discussed the future of game downloads:

Mike Griffith-President and CEO of Activision Publishing

Call of Duty 2 remains the No. 1 selling title on the Xbox 360 since the launch of hardware. In addition, we've been offering downloadable multiplayer maps for a fee on the Xbox 360 that feature new World War II map locations. To date, we've had over 500,000 downloads and we're learning a tremendous amount about this new business model...

Heath Terry - Credit Suisse

Great. Thank you. I was hoping you could talk a little bit about what you're expecting in terms of the attach rate for your online downloads like the ones that you've done with Call of Duty going forward?

Do you think the kind of strong attach rate that you've seen here in this early stage is going to hold up? Can you also talk a little bit about the margins around that business?

Mike Griffith

Well, I think, Keith, in terms of attach rate, the experience we've had so far on Call of Duty, the attach rate's been quite robust. It's been well-ahead of the typical download attach rates we've seen on the PC category. It's been closer to the 40% range. We're going to continue to learn about it, there's tremendous consumer enthusiasm for it, so I think for the right product there's every reason to believe that we can continue to achieve a healthy, robust attach rate.

In terms of the margins, I think what we can say to date is that it looks like it's accretive, and so as the revenue opportunity presents itself, this'll be a key focus area.

Bobby Kotick-CEO and Chairman

And just to give you some of the details. For starters, the Bonus Pack, which is the free downloads, that's the two free maps, that was 334,000 units. The Skirmish Pack, which is essentially 400 points, was 105,000 units generated $368,000 in net revenue. And the Invasion Pack, which was 800 points, was 66,000 units and generated close to $0.5 million in revenue. So when you look at it, it's a very, very profitable endeavor for us.

Now, it's early days, but I think it's one of those things where you're starting to see continued enthusiasm for the franchise. I think one of the reasons why the 360 version of Call of Duty has done to so well and continues to do so well and continues to demand a premium price is that we have infused the audience with new opportunities for game play that they're definitely responding to.

So with 40% attach rate and these kinds of economics, we're excited, but again, you're talking about the No. 1 product on the platform. So before it's going to move the dial, you're going to need to see a much, much bigger installed base of hardware and a lot more people taking advantage of these capabilities.

Heath Terry - Credit Suisse

Based on what you've seen and what you have planned in the product portfolio, should we just assume that nearly every game that you do over the next few years is going to have some kind of downloadable content associated with it?

Bobby Kotick, CEO and Chairman

Yes, that is our intention.

Mike Griffith

For the new generation, yes.