Activision, Inc. — 2004 Annual Report Production values, the way games look and sound, continue to increase as console technology advances and we expect that the production values of the next generation of console systems will approximate those of movies and TV. In 1981, “ER” and “Jurassic Park” creator Michael Crichton made a movie called “Looker,” about a scheme to replace actors with computer-generated images indistinguishable from real people. It seemed fantasy then, but today’s computer-made imagery does look real enough to fool the casual observer. The technology that makes possible these visual advances (and audio advances, too, which already approximate reality) also allows us to move beyond linear storytelling to player-controlled development of characters and plots. Players will transcend the standard video game quest experience to affect the plot of the story, character behavior, settings and background, and even the nature and degree of interaction itself. We think of it as a shift from re-creating a part in an action movie, to actually taking on the role in a virtual arena, defining and experiencing it through players’ own choices. For the past 25 years, Activision has been at the forefront of the video game industry. Today, our business, the business of creating quality interactive entertainment experiences and distributing them worldwide, spans the most dynamic part of the digital economy with high prospects of continued expansion. Activision’s strength and purpose reside in the shared values that bring so many extra- ordinarily talented employees here and cause them to invest their abilities, artistry and time in our company. We believe that by seeking a broad diversity of talent and ambi- tion, we make ourselves stronger. We carry out this belief inside the company through the way that we hire, promote and compensate our employees and outside the company in our commitment to community building initiatives. This year, our support for community involvement has never been stronger. We forged an alliance with the Tomorrow’s Leaders program which provides more than 4,000 youths with a strong foundation for academic, social and technological success. Many of our employees are involved with the program’s volunteer activities that aim to help participants learn about positive peer interaction, complete their homework and teach them computer skills. As we look ahead, we are determined that Activision will remain focused on innovation, imagination and finding new ways to better serve our customers and reward our employees and shareholders. We will always seek to stand for quality entertainment, and we are more confident than ever that we will meet this responsibility and be tomorrow what we have been for the past 25 years, one of the world’s leading interactive entertainment companies. Sincerely, Ronald Doornink President Brian G. Kelly Co-Chairman Robert A. Kotick Chairman and CEO page 3