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Revenue Deferral
Revenue Deferral for fiscal year 2012 increased $373 million, or 13 percent, as compared to fiscal year 2011.
This increase was primarily due to (1) a 47 percent increase in our current year digital sales and (2) a higher
percentage of both our publishing and digital sales being deferred and recognized over time, due in part to a
135 percent increase in full-game download sales and a 47 percent increase in micro-transaction sales, of which
both contain an online service component which requires revenue recognition as the service is delivered.
Recognition of Revenue Deferral
The vast majority of our sales are deferred and recognized over a six month period, and therefore, the related
revenue recognized in any fiscal year is primarily due to sales that occurred during the respective twelve months
period ended December 31. The Recognition of Revenue Deferral for fiscal year 2012 increased $569 million, or
22 percent, as compared to fiscal year 2011. This increase was primarily due to increased publishing and digital
sales during the twelve months ended December 31, 2012, and a higher percentage of those sales being
comprised of games sales that have an online service component, as compared to the same period in fiscal year
2011.
Product Revenue and Service and Other Revenue by Revenue Composition
Our product and service and other revenue by revenue composition for the fiscal years 2012 and 2011 was as
follows (in millions):
Year Ended
March 31,
2012
2011
Product revenue:
Publishing and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$2,674
$2,558
Wireless, Internet-derived, and advertising (digital) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
518
409
Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
223
214
Total product revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,415
3,181
Service and other revenue:
Publishing and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
87
74
Wireless, Internet-derived, and advertising (digital) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
641
334
Total service and other revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
728
408
Total net revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$4,143
$3,589
Cost of Revenue
Total cost of revenue for fiscal years 2012 and 2011 was as follows (in millions):
March 31,
2012
% of
Related Net
Revenue
March 31,
2011
% of
Related Net
Revenue
% Change
Change as a
% of Related
Net Revenue
Cost of revenue:
Product . . . . . . . . . . . . . . . . . . . . . . . .
$1,374
40.2%
$1,407
44.2%
(2.3%)
(4.0%)
Service and other . . . . . . . . . . . . . . . .
224
30.8%
92
22.5%
143.5%
8.3%
Total cost of revenue . . . . . . . . . . .
$1,598
38.6%
$1,499
41.8%
6.6%
(3.2%)
Cost of Product Revenue
Cost of product revenue decreased by $33 million, or 2.3 percent in fiscal year 2012, as compared to fiscal year
2011. The decrease was primarily due to a 135 percent increase in full-game downloads that have a lower cost
than our other products in fiscal year 2012 as compared to fiscal year 2011.
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