Activision, Inc. — 2004 Annual Report (In thousands) % of % of March 31, Publishing March 31, Publishing Increase/ Percent 2004 Net Revenue 2003 Net Revenue (Decrease) Change $20,843 3% $52,722 9% $(31,879) (60%) (In thousands) % of % of March 31, Publishing March 31, Publishing Increase/ Percent 2004 Net Revenue 2003 Net Revenue (Decrease) Change $24,621 4% $44,060 7% $(19,439) (44%) PlayStation Net Revenue Game Boy Advance Net Revenue Net revenue from sales of titles for the Sony PlayStation console system (“PS1”) for the year ended March 31, 2004 decreased 60% from the prior fiscal year, from $52.7 million to $20.8 million. The decrease was expected due to the market transition away from the prior generation of hardware platforms, such as PS1, to the current generation console systems. We expect sales of PS1 products to continue to decline in fiscal 2005. Net revenue from sales of titles for the GBA for the year ended March 31, 2004 decreased 44% from the prior  fiscal year, from $44.1 million to $24.6 million. This is due to a decrease in the number of GBA games released  year-over-year. In fiscal 2003, we released 11 GBA titles, whereas in fiscal 2004 we released 4 GBA titles. We expect the hand-held installed base to grow with the release of the NDS and PSP which are expected to launch  in late calendar year 2004 and early calendar year 2005, respectively. In addition, in fiscal 2005, as the GBA  hardware approaches the peak of its life cycle, we expect to increase our focus on developing GBA games for mass- market consumers. The platform mix of our future publishing net revenues will likely be impacted by a number of factors, including the  ability of hardware manufacturers to continue to increase their installed hardware base, the introduction of new hard- ware platforms, as well as the timing of key product releases from our product release schedule. We expect that net  revenues from console titles will continue to represent the largest component of our publishing net revenues with PS2 having the largest percentage of that business due to its larger installed hardware base. We expect net revenues from hand-held titles to remain the smallest component of our publishing net revenues. However, if the PSP and/or the NDS hand-held devices are introduced in fiscal 2005, we may see an increase in our hand-held business in comparison to prior periods. Our net revenues from PC titles will be primarily driven by our product release schedule. A significant portion of our revenues and profits are derived from a relatively small number of popular titles and brands each year as revenues and profits are significantly affected by our ability to release highly successful or “hit” titles. For example, for the year ended March 31, 2004, 28% of our consolidated net revenues and 40% of worldwide  publishing net revenues were derived from net revenues from our  Tony Hawk’s Underground and  True Crime: Streets  of L.A.  titles. Though many of these titles have substantial production or acquisition costs and marketing budgets, once a title recoups these costs, incremental net revenues directly and positively impact operating profits resulting in a  disproportionate amount of operating income being derived from these select titles. We expect that a limited number of titles and brands will continue to produce a disproportionately large amount of our net revenues and profits. page 24 Management’s Discussion and Analysis of Financial Condition  and Results of Operations