Kristin Mulvihill Southey - Former Vice President of Investor Relations Robert A. Kotick - Chief Executive Officer, President and Director Dennis Durkin - Chief Financial Officer Eric Hirshberg - Chief Executive Officer of Publishing Unit Michael Morhaime - Chief Executive Officer of Blizzard Entertainment and President Blizzard Entertainment

Edward S. Williams - BMO Capital Markets U.S. Neil A. Doshi - Citigroup Inc, Research Division Colin A. Sebastian - Robert W. Baird & Co. Incorporated, Research Division Eric O. Handler - MKM Partners LLC, Research Division Brian Karimzad - Goldman Sachs Group Inc., Research Division Douglas Creutz - Cowen and Company, LLC, Research Division

Good day, ladies and gentlemen, and welcome to the Activision Blizzard's Q1 2012 Results Conference Call. Today's call is being recorded. At this time for opening remarks and introductions, I'd like to turn the conference over to the Senior Vice President of Investor Relations, Ms. Kristin Southey. Please go ahead, Kristin.

Good afternoon, and thank you for joining us today for Activision Blizzard's First Quarter 2012 Conference Call. With me today are Bobby Kotick, CEO of Activision Blizzard; Thomas Tippl, COO of Activision Blizzard; Dennis Durkin, CFO of Activision Blizzard; Eric Hirshberg, CEO of Activision Publishing; and Mike Morhaime, CEO of Blizzard Entertainment. I would like to remind everyone that during this call we will be making statements that are not historical facts. These forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties. As indicated in the slide that is showing, a number of important factors could cause the company's actual future results and other future circumstances to differ materially from those expressed in any forward-looking statements. Such factors include, without limitation, sales levels; the increasing concentration of titles; shifts in consumer spending trends; current macroeconomic and industry conditions and conditions within the video game industry; our ability to predict consumer preferences among competing genres and hardware platforms; the seasonal and cyclical nature of our industry; changing business models, including digital delivery of content; competition, including from used games; possible declines in pricing; product returns; price protection; product delays; adoption rate and availability of new hardware and related software; rapid changes in technology and industry standards; litigation and associated costs; protection of proprietary rights; maintenance of key relationships, including the ability to attract, retain and develop key personnel and developers that can create high-quality hit titles; counterparty risks; economic, financial and political conditions and policies; foreign exchange and tax rates; identification of acquisition opportunities; and potential challenges associated with geographic expansion. These important factors and other factors that potentially could affect the company's financial results are described in the company's annual report on Form 10-K for the period ended December 31, 2011 and in the company's other SEC filings. The company may change its intentions, beliefs or expectations made at any time and without notice, based upon any changes in such factors in the company's assumptions or otherwise. The company undertakes no obligation to release publicly any revision to any forward-looking statements to reflect events or circumstances after today, May 9, 2012, or to reflect the occurrence of unanticipated events. I would also like to note that certain numbers we will be presenting today will be made on a non-GAAP basis, excluding the impact of the change in deferred net revenues and related cost of sales with respect to certain of our online-enabled games; expenses related to stock-based compensation; expenses related to the restructuring; the amortization of intangibles and impairment of intangible assets and goodwill; and the associated tax benefit. Please refer to our earnings release, which is posted at www.activisionblizzard.com for a full GAAP to GAAP -- non-GAAP reconciliation and further explanations. There's also a PowerPoint overview which you can access with the webcast, and which will be posted to the website following the call. In addition, we will also be posting a 12-quarter financial overview highlighting both GAAP and non-GAAP results and a one page summary sheet. And now, I'd like to introduce our CEO, Bobby Kotick. Robert A. Kotick: Thank you, Kristin, and good afternoon. We're pleased to announce that Activision Blizzard delivered another quarter of better-than-expected financial results, driven by the remarkable talent of our employees, strong partnerships and our continued ability to develop and build large franchises with highly engaged communities. This ability developed over the 21 years we've been leading this business is illustrated by our portfolio of leading franchises and the industry's best development teams. Building billion-dollar franchises takes many years and requires significant financial, creative, technical, distribution, marketing and customer service resources, as well as management continuity and discipline. Our strong cash flow, significant capital resources and long-term view of our business provide us the unique ability to thoughtfully invest in major new growth and margin expansion opportunities like Skylanders. We continue to build a portfolio of mega franchises. In 2012, we expect to have at least 4 franchises that generate significant operating margins and contribute meaningfully to our company's profitability. In looking beyond 2012, we have the strongest pipeline of new potential mega franchises in our history, including Bungie's New Universe and Blizzard's new MMORPG, as well as an expansion of Call of Duty to China. We continue to focus our resources on our largest and most promising opportunities, a formula that has produced strong results over the long term and which we expect will continue to do so in the future. Our pipeline includes some of the most ambitious titles we've ever developed, including such highly anticipated games as Blizzard Entertainment's Diablo III, World of Warcraft: Mists of Pandaria and StarCraft II: The Heart of the Swarm, as well as Activision Publishing Skylanders Giants and Call of Duty: Black Ops 2, each of which we hope will set new benchmarks for quality, immersion, innovation and great game play. All 5 franchises have built large, loyal communities with demanding expectations. And we believe that by attracting and retaining the industry's best talent, anticipating trends and understanding our audiences' needs locally, as well as globally, we'll be able to create new entertainment experiences that continue to set the quality standards in all of entertainment as we have for more than 2 decades. We're leading the year with Blizzard Entertainment's Diablo III, which features an innovative auction house that allows players to trade objects using real-world currency. Consumer feedback from the beta test has been remarkable, and pre-orders have already set a new record for Blizzard. Blizzard has also been hosting a large-scale beta test for World of Warcraft: Mists of Pandaria, which will add a tremendous amount of new content and innovation to the unmatched World of Warcraft experience. We expect that the new features, storylines and game play mechanics will be embraced by the WoW community worldwide. Later in the call, Mike will outline the progress made on both titles and the others in development like StarCraft II: Heart of the Swarm. Activision Publishing is celebrating the extraordinary success of Skylanders Spyro's Adventure. Based on our current internal estimates, we believe that Skylanders toy sales in Q1 exceeded those of Star Wars' toys, which had been the #1 action figure line. And to further build on the Skylanders' momentum, this fall we'll launch Skylanders Giants, which expands the breakthrough play experience that brings toys to life. Skylanders: Spyro's Adventure has been our biggest ever new IP launch and is on track to deliver an outstanding return on one of our biggest investments. Later in the call, Eric will share with you some of our plans for Giants, which brings a new level of innovation to the game, the toys and our marketing and retail strategies. Similarly, we believe that the recently announced Call of Duty: Black Ops II will redefine the Call of Duty franchise through new levels of innovation in game play. We believe that it has the potential to be the best Call of Duty ever. Along with our retailers, we hope to make Call of Duty the biggest entertainment experience of the year. We continue to heavily invest in our large franchises in order to further widen the moats that surround these successful properties. The value of these investments is demonstrated by our unique ability to create immersive online experiences that aggregate large and vibrant player communities around our brands and keep them connected in a 24/7 world. Today, we have substantial resources dedicated to online product developments and services that allow our players to communicate and collaborate with each other, while also giving us a way to interact with and supports our players. We have approximately 50 million monthly active users across all of our franchises. And through high-margin online offerings like subscription and membership-paid services, digital downloads and value-added services, we are already able to deliver more value and choice to consumers than ever before. Blizzard's upgraded Battle.net platform connects over 10 million players across the entire Blizzard portfolio, and this is expected to increase with the upcoming launch of Diablo III. Activision's Call of Duty Elite is already one of the fastest-growing entertainment services ever and continues to grow with over 2 million premium annual paid members and a total of over 10 million registered users. We expect that in the future, by continuing to offer innovative connected entertainment experiences, we'll further grow our player communities and our services and not just through Battle.net and Call of Duty Elite, but also through Call of Duty: Black Ops II multiplayer game play, our upcoming Call of Duty micro-transaction game for China, the new Skylanders web world, Blizzard's Mists of Pandaria and the upcoming StarCraft II: Heart of the Swarm and our 2 largest online opportunities for the future, Bungie's genre-defining new intellectual property and Blizzard's new MMORPG. In addition to building our player communities and service platforms for the benefit of our shareholders, I'm pleased to say that we've again strengthened our leadership team with the employment of Dennis Durkin as our new CFO. Thomas has been serving as both our CFO and COO since 2010 and he'll now be putting all of his efforts into the COO role, for which we are very grateful. Our 2012 and future product and service pipelines have never been stronger. Looking ahead, while there are many risks to our business especially as we continue to compete with other forms of entertainment for players' leisure time and dollars, our leadership in digital, our strong franchise portfolio and platform capabilities, our long-term business strategies and our solid financial foundation should enable us to deliver another year of record earnings and extend our track record of long-term growth and shareholder value creation. Now I'd like to turn the call over to our Chief Financial Officer, Dennis Durkin, who will review our financial performance. Dennis?

Thanks, Bobby. Good afternoon, everyone. It is a pleasure to be joining you for my first earnings call. I know many of you from my previous roles at Microsoft, and I look forward to building relationships with those of you who I have not yet met. Before I'd get into the financials, I'd like to take a moment to say how pleased I am to be part of the Activision Blizzard team, a team which has an incredible track record of creating franchises and platforms with enduring value for shareholders. I have long admired their relentless focus and drive for innovation, their commitment to excellence and their ability to build immersive consumer experiences in connected communities. These are the ingredients I believe are key to the long-term success in value creation in our industry, and were key to the turnaround that we had while I was part of the great leadership team at Xbox. Thank you, Bobby, Brian, the board and the entire leadership team for the warm welcome you have given me in my short time here. It is greatly appreciated. I am personally thrilled to be part of the team here at Activision Blizzard. So now on to the March quarter results followed by a review of our outlook for 2012. Please refer to our earnings release for full GAAP to non-GAAP reconciliations. For the quarter, on a GAAP basis, we generated better-than-expected results with revenues of $1.17 billion and operating margin of 44% and EPS of $0.33. As expected, our results were down versus the prior year due to tough comps and lower subscribers for Blizzard's World of Warcraft; lower sales of Call of Duty, including fewer and later à la carte DLC releases and the impact of revenue recognition for Elite, as well as increased sales and marketing spend for our new IP end services. On a non-GAAP basis for the quarter, we generated better-than-expected results with revenues of $587 million and operating margin in excess of 15% and EPS of $0.06. Our performance for the quarter was driven by our products with breakthrough innovation, online integration and digital revenue streams, including Blizzard's World of Warcraft, Activision's Call of Duty and our newest IP, Skylanders. Turning to the specific P&L line items, please note all percentages are based on revenues except for the tax rate. For the quarter, GAAP product costs were 27%, operating expenses were 29%, and our tax rate was 25%. Non-GAAP product costs were 34%, in line with our outlook, and non-GAAP operating expenses were 51%, lower than our prior outlook primarily due to revenue outperformance. Finally, our tax rate came in as expected at 27%. Now turning to the balance sheet. On March 31, we had no debt and $3.5 billion in cash or nearly $3 per share in cash and investments. During the quarter, we generated operating cash flow of $153 million, and we repurchased 22 million shares for $261 million. The strength of our balance sheet and the consistency of our cash flows are major competitive advantages for us. They afford us the ability to invest for future growth in internal opportunities with the highest return on invested capital like Skylanders, Call of Duty China or Blizzard's new MMO. They also allow us the ability to invest for future growth through attractive external opportunities such as our 10-year exclusive arrangement with Bungie and finally, they allow us to return value to shareholders in the form of dividends and share repurchases. We began 2012 which financial strength, strong market fundamentals for digital and an expanding portfolio of category-leading franchises and unique online service capabilities that offer expansion opportunities for the long term. We remain focused on strengthening our operations at retail, expanding our digital footprint and adding innovation and new business models to each of our properties to continue to drive growth. As previously discussed, we have 3 key priorities for 2012. First, we expect growth from Blizzard, driven by the expected launch of at least 2 titles this year including Diablo III, which we'll launch next week with this real money auction house. Second, Activision Publishing is focused on this year's new Call of Duty title, Black Ops II on Call of Duty Elite and on continuing to expand the scale of the Skylanders franchise. Then finally, we plan to continue expanding operating margins. In 2012, margins should benefit from an increasing mix of higher margin revenues, including above-average margin for Skylanders toys and a high-margin Blizzard product slate. In addition, we remain focused on productivity improvements across multiple areas of operating expenses. Now let's move on to our outlook. For calendar year 2012, on a GAAP basis, we are raising our outlook modestly and now expect net revenues of $4.2 billion, up $50 million from our prior outlook. We expect product costs of 28%, and operating expenses of 48%. We expect a tax rate of 26%, a diluted share count of about 1.15 billion and GAAP EPS of $0.65. As a reminder, our GAAP results are expected to be down versus the prior year due to significantly larger deferrals from 2012 into 2013, driven by Blizzard's slate and Call of Duty Elite. For 2012, we now expect non-GAAP net revenues of $4.53 billion, a $30 million increase from our prior outlook and up versus the prior year. This year, we continue to expect non-GAAP revenues growth from Blizzard and from the core Activision Publishing business, primarily offset by a reduction in revenues from our distribution and affiliate businesses and negative FX assumptions year-over-year. We now expect 2012 non-GAAP product cost of 27% and operating expenses of about 40%. We expect a tax rate of 27% and a diluted share count of about 1.15 billion, both of which can be used in all quarters. We now expect non-GAAP EPS of $0.95, a new record. Now moving on to the June quarter. On a GAAP basis, we expect net revenues of $950 million, product costs of 29% and operating expenses of 50%. The tax rate and share count are the same as the full year. Finally, we expect GAAP earnings per share of $0.13. For the June quarter, on a non-GAAP basis, we expect record revenues of $805 million driven by our large line-up, including Activision Publishing's PROTOTYPE 2 and the -- as well as the Amazing Spider-Man and most importantly, Blizzard's highly-anticipated Diablo III. We expect non-GAAP product costs for the quarter of 27% and operating expenses of 54%. Operating expenses are expected to be higher than the prior year due primarily to increased investment in sales and marketing for our large Q2 line-up and continued support of Skylanders. For the quarter, we expect non-GAAP EPS of $0.10. So in summary, Activision Blizzard delivered strong financial performance in Q1, and we expect record non-GAAP revenues in Q2. And although we have the vast majority of our product launches in front of us, we believe that the quality we are seeing in our titles and our strength in retail and digital, combined with our ability to create new revenue streams in our ongoing cost-containment efforts position us in 2012 for another year of margin expansion and record EPS. So now let me hand it over to Eric to discuss our Activision Publishing business.

Thanks, Dennis, and hello, everyone. Today, I'm going to start with a few brief industry comments, and then I'll get into our slate. In its totality, the global market fundamentals for interactive entertainment remains strong driven by the largest installed base ever, which is still growing, and the continued growth in digital, especially in Asia and the fact that consumers are spending more time playing games than ever before. These positive dynamics further expand what are already significant global opportunities for games with large passionate audiences. Our objective is to continue building our strong and growing global player communities, and we remain focused on 5 key areas that are well aligned against the market fundamentals that we believe will drive growth over the next few years. They include: one, expanding Call of Duty through continued momentum with the franchise, as well as a both geographic and platform expansion; two, enhancing the growing -- and growing the Call of Duty Elite online service platform; three, building on the momentum of Skylanders; four, laying the foundation for the new Bungie universe; and five, investing in high potential new IP, technology, platforms and business model. We're pursuing each initiative aggressively, while also investing in our current slate of games. First, with respect to Call of Duty, as of March 31, the Call of Duty franchise had approximately 40 million monthly active users. In 2011, Call of Duty: Modern Warfare 3 was the #1 best-selling title in the U.S. and Europe and today remains, by far, the most played console game. In addition, gamers are playing Modern Warfare 3 more often, and to date have logged more than 2 billion total online game sessions, which is a 19% increase over Black Ops for the comparable period. With respect to our new online service, Call of Duty Elite now has over 10 million registered members, including more than 2 million premium members at the end of April, representing a very strong start. Engagement with Elite is increasing since January. We have seen a 33% increase in premium memberships. Additionally, our multiple screen 24/7 strategy is working. We've launched a lead on the PC, TV and mobile devices. We're also expanding features such as HD streaming Elite TV to our console apps and plan to continue extending this accessibility via the rapidly growing smart devices such as tablets. Finally, clans are a huge hit. The consumer-related clan features have taken off with our players, with over 850,000 user-created clans or teams created within Elite today. These clans are extremely active, sticky and social, with millions of members participating in our proprietary Elite playing competitions. Although we're pleased with our progress to date, we still have a lot to do. Building a service of this kind in addition to launching our content à la carte takes time, effort and input from our players. Going forward, we'll continue to refine our service and give our players the best overall value and experience. On November 13, we expect to further expand the franchise and the Elite service with the launch of Call of Duty: Black Ops II, the sequel to the best-selling console game of all time, Call of Duty: Black Ops. Today, player engagement for the original Call of Duty: Black Ops remains incredibly high more than 17 months after the launch. Black Ops II is hands-down our most ambitious Call of Duty game to date and pushes the franchises' boundaries more than ever before. Treyarch is challenging assumptions on every front with meaningful innovations in single player campaign, multiplayer, zombies, facial animation and graphics technology. They've created an authentic fiction rooted in credible, near-future conflicts. The game features advanced weaponry, robotics and grown warfare, many of which are either already in the arsenals of today's super powers or are being prototyped as we speak, as well as advanced graphics technology that will drive the stunning cinematic action to new heights. In addition, in running in a multiplayer engine for the first time, Zombies gives players a bigger and more diverse set of game play experiences, as well as entirely new ways to wage war with the undead. In a multiplayer, they're embracing all levels and play styles to give players more ways to engage in what will be hands down the most visually-enhanced multiplayer experience ever on a console. We are all in on this game, and we believe Black Ops II could redefine the franchise and be the best Call of Duty game we've ever made. To date, Black Ops II has exceeded every internal milestone and the initial external media feedback has also been incredible. After just our first reveal, the official PlayStation magazine said, Black Ops II was "the most innovative Call of Duty in years." Destructoid said Black Ops II was "impossibly beautiful" and for G4tv, Black Ops II is "the most ambitious Call of Duty game ever." We've also been extremely pleased with early consumer response and engagement. The Black Ops II revealed trailer was the most watched video of the day on YouTube and views were up 82% compared to the reveal trailer for Modern Warfare 3. During our launch, we had 5 of the top 9 U.S. top-trending topics on Twitter at the same time. And Facebook traffic is 43% higher than the prior year. And finally, although it's very early, we're also incredibly pleased with the pre-orders, which in the first week since reveal are tracking ahead of the record-breaking pace set by Call of Duty: Modern Warfare 3. Overall, we think this game and the move to the near future setting is the biggest step for franchise since leaving World War 2 and bringing Call of Duty into the modern era. We look forward to sharing more details with you in the upcoming months. In addition to focusing tremendous time and effort on expanding the Call of Duty franchise this year, we're also focused on driving the momentum of Skylanders, which is expected to easily cross the $500 million mark in life-to-date sales in 2012. This year, Skylanders offers us multiple expansion opportunities. First is simply catching up with toy demand for our best-selling family franchise Skylanders: Spyro's Adventure. Skylanders: Spyro's Adventure was the #3 best-selling video game in Q1 and for our internal estimates, we believe it was also the best-selling action figure line, outpacing even Star Wars. To put our performance in perspective, Skylanders had over $100 million of sales in the first quarter alone, which exceeded what Rovio, the developer of Angry Birds, reported in total company revenues for all of 2011. The stronger starts we've have, the global toy industry is an $80 billion opportunity and Skylanders still has plenty of room to grow. Even after shipping over 20 million toys in 2011, demand was so high following the holidays, we were out-of-stock for much of the first quarter. We substantially increased capacity and believe that we'll now be in a better position to meet demand going forward. We also continue to build the brand beyond the game. Today, we have more than 1 million registered web world users, and we expect to increase that number by offering more content and feature, some of which will be monetized. In early April, we launched our first mobile Skylanders game, Skylanders Cloud Patrol, which quickly became a top-selling iOS game and has received strong 5-star quality reviews. Cloud Patrol continues our progression into mobile gaming where we can pursue new business models and opportunities for our existing franchises, as well as our large portfolio of catalog profits. We also have a comprehensive licensing program underway for the franchise and we announced partnerships with Frito-Lay, as well as opportunities in apparel, back-to-school, plush toys and more. And later this fall, we'll be bringing Skylanders Giants to market. Giants will build on Skylanders breakthrough innovation with 8 supersized Giants figures and 8 all new Light Core characters. Jerry Storch, the CEO of Toys "R" Us, who joined us for the launch of Skylanders Giants at New York Toy Fair said "He expects Skylanders become one of the most successful toy franchises in history." And we believe we have a highly innovative product pipeline, as well as the supply chain, retail and marketing capabilities to live up to this promise. Looking beyond this year, we continue to develop, plan and prepare for 2 of our largest growth opportunities: Bungie genre-defining new IP and our new free-to-play micro-transaction Call of Duty game for the large and rapidly growing Chinese market. Development on both these large-scale projects is progressing very well, and we look forward to sharing additional details on their game play mechanics and business models in the future. In summary, our slate this year, our future pipeline and our expanding service platforms are well aligned with the market opportunities and the passions of our players. I'm looking forward to updating you on our plans and performance as the year unfolds and we'll also have more details on our upcoming releases to share with you at E3 in early June. With that, I'd like to turn it over to Mike Morhaime who'll provide you with an update on Blizzard.

Thank you, Eric. 2012 is already shaping up to be a busy an exciting year at Blizzard, as we're poised to deliver fresh content to our players in all 4, all of our major franchises. I'll begin discussing our franchise updates with World of Warcraft. At the end of Q1, global subscribership for World of Warcraft remained at 10.2 million. Maintaining our subscriber levels puts us in a great position as we drive toward the launch of Mists of Pandaria later this year. We opened the beta in late March and have rapidly expanded testing through a good portion of our community, including the 1.2 million players who signed up for the World of Warcraft Annual Pass. That program closed at the end of April and was very successful. Thus far, the feedback we've collected from the Mists of Pandaria beta tests have been great and development continues to move with a good pace as we open up more of the expansion content to players. Mists of Pandaria will offer a brand-new continent to explore, a new player class, the monk, and more importantly, new game modes that will help World of Warcraft continue to engage its diverse audience. Scenarios will offer for a more relaxed way of playing at a group that's less structured than traditional dungeons. Challenge modes will give hard-core players and guilds new ways to compete with each other while earning cool rewards. And the pet battle system will offer players a light-hearted diversion from regular questing, vengeance, PvP. On the Diablo front, we are less than a week away from launching. In preparation, we recently conducted an open beta stress test for Diablo III where anyone could download and try out the game. Response we got was huge with more than 2 million people worldwide participating in the open beta. All the testing we've done over the past several months has been critical for us in polishing and preparing Diablo III for launch, particularly in the case with the auction house feature. We believe that having this convenient method for item trading integrated within the game will enhance the overall player experience. Now all that's left is to get the game into the hands of our players. Official midnight launch events for Diablo III have been announced for locations around the world, including the United States, Europe, Korea, Taiwan and Southeast Asia. More than 8,000 retail locations across North America and Europe will also be open at midnight to celebrate the launch. Our players are clearly excited about Diablo III as it's already set a Blizzard record for pre-orders, including those who signed up for the Annual Pass. We look forward to providing a more definite sales update in the coming weeks. Most importantly, I'm proud of all the hard work that the team has put into Diablo III. This game has been a long time in the making, and our community has been supportive of us every step of the way. I'm confident that their patience will be rewarded next week when we launch our best Diablo game yet. Meanwhile, the StarCraft 2 development team continues to forge ahead. The team has begun early testing on the arcade update that will make big improvements to the custom game experience on Battle.net. In fact, the team is already working with map creators in the StarCraft 2 community to update their maps and take full advantage of the new functionality. We're aiming to make the new arcade system live in the next coming months. In addition to the work being done on arcade, development on Heart of the Swarm is going very well. Just a few weeks ago, we announced that we would offer a beta sneak peak of Heart of the Swarm to attend the use of Major League Gaming Spring Championship. The event will take place at Anaheim Convention Center from June 8 to June 10. It won't be too long after the MLG tournament that we'll be ready to announce plans for our beta. We'll also be running our own U.S.A. national finals for our own StarCraft dual championship series event at the same event. This is just one of the many such events that we're running with partners in countries around the world. Our goal is to identify and foster local heroes in various countries and have them compete in the StarCraft II global finals. New developments from Korea also bode well for StarCraft II eSports. Just last week, we announced partnerships with the Korean eSports Association and ON GameNet, the cable-television station, to create new StarCraft 2 leagues in Korea. These new leagues will complement GOMTV's successful global StarCraft II league, providing viewers with even more options for StarCraft II eSports. This news has created tremendous excitement in the StarCraft community as many of the popular pro-gamers from StarCraft I are preparing to compete in StarCraft II. As I mentioned earlier, 2012 is already a busy year at Blizzard. With Diablo III launching next week, Mists of Pandaria well into beta testing and Heart of the Swarm close to beta, we are well positioned to deliver multiple titles in the coming year, which means Battle.net is going to be an even more exciting place to be for online gamers. Thanks, and I'll turn the call back over to Kristin.

Thanks, Mike. Operator, we'll open it up for questions.

[Operator Instructions] We'll take our first question from Edward Williams with BMO Capital. Edward S. Williams - BMO Capital Markets U.S.: Just a quick question on Skylanders. Can you comment a little bit about what supply is like? Obviously, it was running thin through much of the quarter. If you can comment on how supply is at the moment and then as we look through the year as a whole, how much of the Skylanders' revenue should we see this year is coming from toys versus coming from games?

Well in terms of supply, despite some pretty optimistic and aggressive planning, we, as I said, we were out of supply for much of the quarter, but we've increased our capacity greatly, and we think we're catching up to supply now, which one great growth opportunity in and of itself. And we've also increased capacity for the holiday and for the launch of Giants.

Yes. And just on the split between games and toys, at this point we're not providing revenue or sort of future guidance as it relates to the 2 of those. Although as Eric points out, we have seen some channel normalization over the last few months. The one point we would make, though, is attach rates are extremely strong on the toys.

And we'll take our next question from Neil Doshi, Citigroup. Neil A. Doshi - Citigroup Inc, Research Division: Two really quick questions. One, it seems like some publishers are now starting to spend money on Gen 4 R&D. Just wanted to know if that is something that you guys are planning to do? And then secondly, it looks like Blizzard Op margins grew sequentially, which is nice. Just wanted to know when you might think that we'll return to kind of that 40% or even 50% operating margin range for Blizzard? Robert A. Kotick: Well with respect to our next-generation development, we're not going to comment on that. And who wants to...

On Blizzard operating margins, was that the second part of your question? Neil? Neil A. Doshi - Citigroup Inc, Research Division: Yes. Yes, it was.

Okay. So we talked about the -- on the last earnings call, we're very optimistic about the prospects of the Blizzard's profitability. They have the strongest slate ahead of them that they had in a long time. And as you know, we are in a scale business. Blizzard in particular is a PC online business, which is above average margins because obviously, getting a lot of parties participating in the PC platform as a revenue stream. So we would expect to see continued improvement in Blizzard margins as the slate rolls out over the next couple of quarters.

And we'll go next to Colin Sebastian with Robert Baird & Company. Colin A. Sebastian - Robert W. Baird & Co. Incorporated, Research Division: Dennis, first congratulations on your position. Mike I want to follow-up on World of Warcraft. If you look at engagement levels and use of levels in World of Warcraft to date, would it be fair to say that the game has stabilized at this point and can you comment if subscriber levels changed at all since the end of the quarter?

So we don’t provide intraquarter updates on subscribership. What I can say is that we made a large content update towards the end of Q4, each did help us out a lot on player engagement. And we expect to see increased engagement with the launch of Mists of Pandaria.

We'll go next to Eric Handler with MKM Partners. Eric O. Handler - MKM Partners LLC, Research Division: With regard to Modern Warfare and then -- Modern Warfare 3 comparing it to Black Ops, you said sales of packaged goods are down. And I know it's not quite apples-to-apples in terms of comparing your digital this year versus last year. But just for your full year, do you think with the digital options that you have, should the total Modern Warfare 3 revenue be up versus Black Ops?

Yes, so you're right. Just to kind of ease your question apart a little bit, based on the life-to-date numbers, we feel very good about where Modern Warfare 3 is relative to Black Ops. It was more front-end loaded, which obviously is very good for us as a business in terms of getting more of the frontline pricing. So but light-to-date on the HD platforms, they're roughly equivalent, if not slightly up for Modern Warfare 3. The digital business year-over-year is not comparable. As you point out, relative to what's mentioned in the previous conference call about not only the timing of the map packs, but obviously with Elite launching of the great success that I think we have with 2 million subscribers of Elite. On a full year basis, I think we feel good about that business, where that will end up relative to where we were the past year. So we feel again, with the launch last week of the new trailer, we're very excited about the future for Black Ops II.

[Operator Instructions] We'll go next to Brian Karimzad with Goldman Sachs. Brian Karimzad - Goldman Sachs Group Inc., Research Division: I guess first question is with the continuing growth of Call of Duty online playtime, and my assumption is that's translated over to the 360 platform and Xbox LIVE subscriptions. Any thoughts on how you might better capture the economics that Microsoft is receiving there? And then the other would be on your capital allocation, any consideration on the way you think about dividends versus buybacks now as you do establish some more of these steady cash flow streams?

Yes, Brian I think the performance on Call of Duty online continues to be stellar. I think we built this business working together with our partners, both on the Xbox platform, as well as the PlayStation platform. We don't see that changing. We both bring unique capabilities to build in this business, and I think that's played out for everybody involved in a very economically attractive way. And we don't see that changing going forward.

Relating to the second point that you, I guess, the second question was around capital allocations. I think you know the board buyback that was approved in, I guess, the April time frame or sort of just before that, so the board has authorized that and obviously the dividend went -- we went ex-dividend in March and that will be payable here in the coming months, yes, actually next week. So those are board level decisions but I think directionally from those, you can see a strong proclivity to get cash back to shareholders through either of those avenues. Brian Karimzad - Goldman Sachs Group Inc., Research Division: Okay, if I may just pop one more in on Skylanders, just given the strength of the attach rates, any consideration to adjusting the opening price point for it in the fall to induce up some of the addressable market?

We haven't made any decisions yet on what the pricing is going to be for the fall. In the meantime, I think we have a great opportunity even running up to the holidays promoting existing Skylanders products, which continue to sell well. We had a great Easter holiday with tremendous amount of retail support. We are expanding the shelf space even ahead of the holiday because it's one of the best-selling products in toys and for kids in video games full stop. So we're not waiting for the holidays to continue to drive the installed base and we'll make our holiday decisions, including pricing and the support we're going to put behind it in due time.

Operator?

And we'll go next to the Doug Creutz with Cowen and Company. Douglas Creutz - Cowen and Company, LLC, Research Division: Obviously, people are excited about the Diablo III launch. I was wondering if you could comment about what plans you may have to bring Diablo III to China? There's been a fair amount of silence about that, but I assume it's a market that you're targeting.

So we are excited about the potential for China, but our focus really has been on executing a smooth launch for the Rest of the World following the launch and we'll turn our attention to China and work on putting some plans together there. But nothing to announce at this stage.

And ladies and gentlemen, this does conclude today's question-and-answer session. I'd like to turn the conference back to your speakers for any additional or closing remarks.

Well, thank you, everyone. On behalf of Activision Blizzard, we appreciate your time and consideration and look forward to seeing many of you at May 30. Thank you.

Ladies and gentlemen, this does conclude today's conference. We do appreciate your participation. You may now disconnect at this time.