Welcome to the Electronic Arts first quarter fiscal year 2008 earnings conference call. Today's call is being recorded. For opening remarks and introductions I would like to turn the call over to Ms. Tricia Gugler, Director of Investor Relations. Please go ahead, ma'am. Tricia Gugler: Welcome to our first quarter fiscal 2008 earnings call. Today on the call we have John Riccitiello, Chief Executive Officer; Warren Jenson, Chief Financial and Administrative Officer; and Frank Gibeau, President of EA Games. Before we begin, I would like to remind you that you may find copies of our SEC filings, our earnings release and replay of the webcast on our website at investor.EA.com. Shortly after the call we will post a copy of our prepared remarks on our website. Throughout this call, we'll present both GAAP and non-GAAP financial measures. Non-GAAP measures exclude charges and related income tax effects associated with the impact of change in deferred net revenue related to packaged goods and digital content, acquired in-process technology, amortization of intangibles, certain litigation expenses, restructuring charges, and stock-based compensation. In addition, the company's non-GAAP results exclude the impact of certain one-time income tax adjustments. Our earnings release provides a reconciliation of our GAAP to non-GAAP measures. In addition, we include a detailed GAAP to non-GAAP reconciliation on our website. Information regarding our use of non-GAAP measures, along with the schedule demonstrating how we calculate return on invested capital will be included with a copy of today's prepared remarks we post on our website. These non-GAAP measures are not intended to be considered in isolation from, in substitute for, or superior to our GAAP results and we encourage investors to consider all measures before making an investment decision. All comparisons made in the course of this call are against the same period for the prior year unless otherwise stated. We have also included a summary of our financial guidance with our prepared remarks, as well as our trailing 12 months platform series and a supplemental schedule on our website. During the course of this call, we may make forward-looking statements regarding future events and future financial performance of the company. We caution you that actual events and results may differ materially. We refer you to our most recent Form 10-K for a discussion of risk factors that could cause our actual results to differ materially from those discussed today. We make these statements as of August 1, 2007, and disclaim any duty to update them. Now I would like to turn the call over to John. It’s up 65%:

John Riccitiello: Thanks, Tricia. I would like to briefly talk about our Q1 performance, our fall and holiday lineup, and then give an update on our agenda for change in Electronic Arts. We're pleased that our Q1 numbers exceeded our guidance given the strength of our catalog and the solid launch of Harry Potter. We have to say upfront we're not pleased with our year-to-date segment shares. For the first six months of the calendar year, our shares have been in the mid-teens, down 7 points in North America and down 6 points in Europe. While anticipated, this is not acceptable. For the remainder of our fiscal year you should see our quarterly share performance improve to the low and mid-20's given the breadth and quality of our lineup. Looking ahead, we have a strong slate. Make no mistake, the competition will be out in full force, but we will be too. In addition to EA Sports and blockbusters like Need For Speed, The Simpsons, and Medal of Honor, we'll launch ten new properties. That's more new titles than we've launched in recent memory and includes highly-anticipated games like Skate, Army of 2, Rock Band as well as Boogie and Playground for the Nintendo Wii. I am particularly impressed with how our studios are addressing accessibility, innovation and the new platforms. Boogie from EA Montreal is right where we need to be: it is on the Wii, it is innovative and perfect for the casual consumer. EA Sports, this fall our Wii Sports titles will include a family play mode, making the games even more accessible to a broader audience. Parents now have a chance when playing against their kids. SimCity Societies on the PC is a fresh take on a popular franchise, and proof that sequels can be as…

Thanks John. Good afternoon. Before getting to the specifics, let me remind everyone that effective this quarter we no longer charge for hosting as it relates to certain online-enabled package goods titles. This change, as you know, requires the deferral of significant revenue which is materially impacting our GAAP results. Now a few highlights: Our first quarter performance exceeded our guidance both on the top and bottom line. GAAP revenue was $395 million down $18 million year-over-year, driven by a $36 million sequential increase in net deferred revenue. Revenue ex deferral was $431 million, up 4% from a year ago. Excluding the impact of foreign exchange revenue ex deferral was roughly flat. GAAP diluted loss per share was $0.42 vs. $0.26 a year ago. Non-GAAP diluted loss per share was $0.22 vs. $0.12 a year ago. During this light release quarter, several titles stood out. Harry Potter and The Order of the Phoenix sold 2 million copies in just one week. Command and Conquer 3 Tiberium Wars continues to do well with the introduction of the Xbox 360 SKU. Life to date, this title has sold over 2 million copies on the PC and Xbox 360. The Sims franchise had another great quarter with four titles launching, including Sims 2 Celebration Stuff, Sims 2 H&M Fashion, Sims Pets Stories and Sims 2 Deluxe. In total the Sims franchise sold over 3 million copies up 18% with over 65% sold internationally. Finally, our catalog continued to perform. In the quarter, our digital revenue ex deferral was $39 million, up 40% year-over-year. Pogo revenue was $24 million up 57%. Today, this business is monetized with every business model, including advertising, subscriptions, digital downloads and micro-transactions. Since launching Gems last fall, subscribers have purchased $6.7 million worth of Gems with each buyer purchasing…

Our first question is from Mike Hickey - Janco Partners. Mike Hickey - Janco Partners: Thanks, guys, great quarter. John, you mentioned as part of your strategy to look at acquisitions, and we heard about EA's philosophy in the past, but can you let us know your philosophy and what you look for in a potential acquisition target? Secondly, do your label heads have specific cost reduction goals at this point or will they, and is this something that is supposed to be material or just kind of a light cleaning of the house? John Riccitiello: In terms of M&A, the priorities I think remain largely consistent what they've been historically. When it comes to additions to our core business, what we'd be talking about is content acquisitions where we get new intellectual property, strong studios and additional scale. From a strategic perspective, we would also be looking at opportunities to expand our casual platform in particular areas like mobile or PC game area or investments to further expand our plant in Asia. I think it is largely consistent, so I don't know if that adds a lot to your understanding. In terms of the label heads and their targets for cost reduction, the label heads, three out of four them are here, one is just about to arrive. We are focusing them on margin growth, and I am talking net margin including all the costs. It is not specifically at this point on cost reduction targets we're able to share with you. As you would expect, we're looking for the right combination of top line growth and bottom line growth with broad expansion of the bottom line. We've got big ambitions there, but we're not ready to spell out and specifically on the cost side and quarters and years ahead beyond the guidance we already provided.

Your next question comes from Edward Williams - BMO Capital Markets. Edward Williams - BMO Capital Markets: Good afternoon, John. Just to follow up on Mike's question a little bit, can you talk a little bit about your philosophies with regard to capital structure and as you look at your balance sheet with the significant amount of cash have you on hand, how much do you feel as though the business really needs to operate and what could you do with some of the excess cash, if anything, at this point?

Ed, I would tell that you our philosophy remains unchanged and first of all, what we would like to do is put the cash we have on our balance sheet to the most productive use possible to grow our business. Clearly with all of the changes that are happening globally, we hopefully believe there may be some opportunities out there for us to productively use that cash in the form of either partnerships or through acquisitions. To the extent that does not transpire in the coming years, I don't think there is any hesitancy and as a matter of fact is something we review, both John and I regularly with our board, the possibility of return of that capital directly back to the shareholders if in fact we can't put it to better use.

Your next question comes from Todd Greenwald - Nollenberger. Todd Greenwald - Nollenberger: A lot of people very excited about Rock Band, as am I. I was wondering if you can talk about what you learned so far about the supply chain for the hardware peripherals across multiple platforms there, how hard it has been getting all the different instruments out on two platforms and just how prepared and confident you are for the November launch on both the 360 and PS3 for Rock Band?

We're very confident about our fall release plans with Rock Band. Clearly it is a complicated launch from the standpoint of the supply chain across multiple peripherals with manufacturing overseas. The good news is we have great partnerships with Harmonics, MTV and others that have really helped us design and build the right supply chain to deliver the product for this fall, so we're very confident at this point. Clearly the game is doing very well from a demand standpoint. It was a multiple award winner at E3, including Best of Show, so at this point in time we feel very good and very confident about the launch of Rock Band.

Your next question comes from Evan Wilson - Pacific Crest. Evan Wilson - Pacific Crest Securities: First, don't know if you saw Disney's acquisition of Club Penguin this afternoon. Sounds like that's an area you're looking at investing in. Is that something you looked at and on the casual game side do you expect to see more and more competition from large media companies like Disney and Fox? Can you also talk about the mobile business? It was flat year over year versus the industry growing north of 30%. Can you talk about changes in strategy you can do there to possibly resume growth? Thanks. John Riccitiello: First off, we did see the Club Penguin acquisition. It definitely is a strong business. It is in an area that we would be interested in otherwise competing. I would not get into specifics of companies that we've either looked at or considered. It would seem an inappropriate conversation outside of our boardroom. In terms of more competition from various media companies, I think we've long been in competition and cooperation with various media companies. People with whom we've been great partners over the years, most of them have videogame businesses and/or mobile game businesses and casual businesses and have for years, and I don't expect that to change. Really not a lot to add there. For Disney, we certainly understand the strategic rationale for Club Penguin. We know they made further announcements about increasing their investment on that front. We expect them to do so and we will continue to prosecute our strategy.

I will take the mobile question. My head line would be one quarter does not a year make or a trend make, and so I think we've had a tremendous amount of success at JAMDAT. The second thing that I would point out relative to our Q1 results is Q1 at least in North America was a very weak quarter for handset sales which did impact us. The second thing that happened was we over indexed a bit at Motorola, and obviously they had some level of difficulty. The flip side of that is we're beating our plan in Europe, but it is obviously a small part of our business. Finally, when I look ahead, recognize in Q1 we had five SKUs, Q2 we have eight, and in the back part of the year we have 10 and I believe 11 in Q4, so relatively even though releases don't entirely drive this business, our release schedule is tilted towards the back part of the year.

Your next question comes from Eric Handler - Lehman Brothers. Eric Handler - Lehman Brothers: When I look at your second quarter guidance, there is a pretty big disparity between the low end and high-end of your net revenue outlook. Is there any specific factors that would cause you to think what would come in at 465 versus something really hits that would come in at 570?

I will go ahead and take that question, and I will focus a little bit more on the non-GAAP numbers pre the deferral because I think the thing you have to recognize is there is going to be a meaningful deferral of revenue out of Q2 given the fact that most, if not all, of the sports titles are online enabled, so you could be looking at a $350 million revenue deferral. That's one of the things you have to take into account. Looking at our non-GAAP range for Q2, the range we just thought was appropriate given the size of the quarter, and we honestly felt it was a little bit silly to have a $400 million quarter and have a $50 million range and then look at $1 billion quarter and say that the same $50 million range was applicable, so we tried to look at the ups and downs and the pluses and minuses and felt that our range of revenue guidance was pretty much what it should be.

Our next question is from Jeetil Patel - Deutsche Bank. Jeetil Patel - Deutsche Bank: Looks like your video game publishing operations had about 5% operating margin versus about 20% in the same period in the last cycle. Can you discuss, John, as you dug into the business a bit more, do you think that driving margins in the cycle is going to be a function of increasing unit scales to drive leverage or do you think it is a combination of unit scale and headcount and cost reductions? John Riccitiello: The answer is obviously both. In terms of we have to manage the cost lines, we have to manage the top line. I tell you point-blank that this cycle is developing quite differently than the last cycle, the next gen hardware build is going slowly and the last cycle, probably the biggest delta this to last is that we are riding the right wave. We were out on PS 2 in a gigantic way and that turned out to be the lead platform in the market. This time, we've obviously got unexpected strength with the Wii and the PS3 hasn't yet performed as well as we expect it to. That's probably had a bigger impact than any other factor in our margins. Beyond that, you have increased costs cycle over cycle, and that we have to manage by doing two things really well: One, driving unit volumes so you can get that R&D, if you will, the bang part, really right, and then making sure that you've got your costs aligned. We have to be very careful in managing our costs per title as we work through the balance of the cycle. In terms of specific cost reduction numbers, we are not providing further guidance on that at this…

We'll take our next question from Ben Schacter - UBS. Ben Schacter - UBS: John, wondering if at a high level you could talk about one of the key benefits that EA's scale and EA's personnel brings to the casual initiatives? What do you guys have that's going to make it a success for you? The second question is about advertising. I wonder if you can discuss what the key factors that you look for in partners that you may look to help you monetize particularly Pogo.com? John Riccitiello: In terms of what we bring to the table in casual, I think we bring a number of things. To start with, casual is a pretty complicated business from sort of traditional perspectives. When you look at the console business, it is typically three platform where you look or two platforms historically. Casual is everything from what goes in Xbox Live Arcade to the mobile business. It is a variety of different business models, handhelds, mobile phones, et cetera. Frankly I think the first thing we bring to the business is to the breadth of our ability to bring intellectual property to market across a large range of platforms. Frankly we don't have a single competitor with the same breadth both geographically and platform-wise as we do, by organizing our sales into a casual label we're able to prosecute intellectual property across all of those platforms, and I think we're singularly capable of doing that today in the game industry. Beyond that, we bring focus and capital and a long history of creating intellectual property that is successful and interactive. I feel very strongly about those. Two areas in particular that represent points of differentiation, one is mobile where we have the strongest platform in the industry on a global basis…

We're not in a position today to announce pricing on Rock Band.

Your next question comes from Justin Post - Merrill Lynch. Justin Post - Merrill Lynch: First, it looks like you're raising the year. Why are you doing that? With PlayStation 3 sales potentially tracking a little behind where we were a quarter ago, are you confident in that raise? Secondly, I think you gave some help with how the football titles were doing last year on this call. Can you talk a little bit about pre orders for Madden or how NCA is doing at this point?

I will take the first part and Frank can take the second part. We felt like it was the right thing to do when we looked at all of the ins and outs of the year. Obviously, we're ahead on the top line in Q1 and if you had to point to one thing looking ahead to Q3 and even into Q4, as Rock Band looks very, very strong. So we felt pretty comfortable taking up our top line range by the $50 million that we did. The other corollary to this is obviously we did not do the same on the bottom line, and as I mentioned in the call script, we really felt it was too early to modify the lower end of our bottom line guidance. John Riccitiello: Adding to that, if you recall, Rock Band is a different business model for us. The lion's share of that $50 million is associated with Rock Band, lesser portion of that top line drops through, so it wasn't a meaningful adjustment for us in the bottom line.

In terms of how preorders are tracking with Madden, we're about two weeks out from our street date, and we're feeling really good about the momentum behind the title and the launch. We believe the product quality is extremely high and the buzz right now based on how we're reading the market is tremendous. We won Best Sports Game at E-3 which we think will help give us a boost over the finish line here. We're on track to deliver well north of over half a million preorders, and we don't get too specific on the exact total. We feel really good about that number and it is going to be the biggest launch of the year so far. With regards to NC2A, we're in the market. We're doing very well on next gen platforms, quality of the game is very high. We had a little competition in the market and it looks like we're significantly out selling them. In terms of how the product is doing across the board, like I said, the next gen platforms are selling nicely. We have a little softness on the PS 2. We think potentially that will be a pricing issue we will address and look at longer term. While I am talking about football, I would like to talk a little about sports. We recently launched NASCAR which is up double-digits against expectations in the market. It is off to a tremendous started, and we've got FIFA, MBA and NHL staged to have very good launches as we finish up the quarter. I would point out one thing that's new for EA Sports across the board this year is we added a family play feature that John mentioned in the script. We can that's going to really help us drive share on the Wii because it really opens up the accessibility of those franchises to the new customer.

We'll take our next question from Tony Gikas - Piper Jaffray. Tony Gikas - Piper Jaffray: John, you talked a little about restructuring efforts. I was wondering if you can focus a little more on the product development group. Should we expect some headcount changes in that group or compensation plan changes over the course of the coming months? Longer term, where would you like to be with respect to comp there? Second question, with Halo and Grand Theft Auto coming over the next few months, has that impacted your release plan? Do you feel pretty confident about your product launches around those two significant launches? My last question, are you expecting growth with the Madden franchise this year given that we're in kind of a questionable transition period? John Riccitiello: A lot of stuff. We can spend a good amount of time on these questions. First off, what we announced is a reorganization in labels which gives us a much stronger focus on the product development side, essentially aligning four executives against tracks previously assigned to one. We think that focus is going to pay dividends for us in a big way, and to be clear we did not announce a restructuring. I think there they're somewhere close to each other in the dictionary but not exactly the same thing. Secondly in terms of compensation system, we in fact do plan to make some adjustments in our compensation systems. Our head of HR, myself, and the rest of the executive team are working through this. We think there is an opportunity to better align the incentives with our studio and label personnel for the profitability in the franchises. We think there is upside for the teams, and we think it will get the kind of focus we need on…

Madden does very well and we anticipate that we're going to grow that business this year, and we have all the indicators are in line for us to be able to do that.

We'll take our next question from Heath Terry - Credit Suisse. Heath Terry - Credit Suisse: You mentioned the 2 million units that you sold with Harry Potter. Can you give us an idea of what the mix is like there, particularly relative to the Wii title that I know you did some extra promotion around? You also talked about how or over the next few quarters, you have an out sized release schedule relative to what's normal for a variety of reasons. When you look out at the product lineup longer term, how long do you think that outside schedule lasts before we return back to kind of what you at least see as being the normal SKU count for a given year?

Right now the Wii version is doing extremely well for us as you cited. We did do dedicated marketing and focused media on that, and we're seeing a very strong sell through on the Wii version of Harry Potter both in North America and in Europe.

I am half guessing what you're referring to in terms of outside SKU plan. You might be referring to the fact that there is approximately 130 SKUs in EA's title plan this year and in the past we've been in the 105 to 110 range. If that's what you're asking about I would make a couple of observations. One is, you tend to see SKU count rise when you're in the midst of transition because you're covering some old platforms and in new platforms, and frankly that's precisely where we are. The second factor that tends to bleed into this is something that I said jokingly in the past, which is we went into the transition with three platforms and came out with 10. The reality is that there are three valid next gen platforms we develop against. It has typically been 2. Handheld is a much more meaningful business than it has been in the past. The Nintendo DS is strong; additionally, the PSP and the GBA are real businesses. In general you are seeing us push more platforms for title, and if you tease out our P&L you will discover as the cycle progresses that's actually a very profitable strategy for us.

Your next question comes from Arvind Bhatia - Sterne, Agee and Leach. Arvind Bhatia - Sterne Agee & Leach: I just wanted to understand Sims a little bit better. I think you mentioned 65% international. I think you indicated that franchise continues to grow. Anything going on that's more internationally compared to last year? You did $0.21 in EPS last year on 12% lower revenue and guidance this year is $0.10 to $0.20. Wondering if you can provide more color kind of how the top line is not giving us as much leverage. If you could take a shot at the new revenue streams a few years out, what they could represent for you top line and bottom line? John Riccitiello: Tackling the first one and I will turn it over to Warren for the second part of that. In terms of the Sims, it has long been a franchise that performed particularly well internationally which is something very pleasing to us. One of the things to remember about Sims is it is mostly a PC business. Europe has a higher percentage of its total business on the PC than North America does. North America is more of a console business. Probably the biggest drive factor for why the Sims performed better internationally than domestically is it tilts towards the PC. The second key issue that I believe lives with Europe, it hasn't been as much in North America, is the way products get introduced in Europe. The marketplace outside of the UK is largely a retail-driven business where merchandising at point-of-sale are a huge point of differentiation. For three years now, European retailers have merchandising the Sims as a section onto itself where North American retailers tend to look at the Sims as a collection of individual titles being merchandised in the launch window. One of the reasons we're getting such strong Sims catalog in Europe is that exact merchandising presentation that's so strong in Europe. What's great about our label focus is Nancy Smith is bringing that exact focus to North America. She has been across our major retailers, gained positive reception to the Sims section for North America, so we're pleased that it's stronger internationally. It is mostly platform mix driven. It is secondarily merchandising driven, and the merchandising kicker we're getting in Europe we're now going to get in North America as we push that strategy here.

Arvind, I think it is pretty straightforward and John talked about this in the opening. We need to get more leverage out of our cost structure. At the end of the day why is our earnings down? Our costs are up. It is going to be our ability to drive productivity and throughput that will change that. Arvind Bhatia - Sterne Agee & Leach: And new revenue streams?

I think we're pretty optimistic on what we're seeing on new revenue streams. Just to add a little bit of color to the discussion that was had on advertising, we've said this year that our digital revenue streams should pass through $175 million for the year. That's up from $127 million. If you look at both static and dynamic advertising for EA this year, that could be upwards of $30 million to $35 million, and if you were to include all advertising, including that which we're doing on Pogo, we're pushing a $60 million business. John Riccitiello: Add to that Warhammer which is a subscription business, the strength we're seeing with FIFA Online in Korea, which we're pushing to China; the other titles as Warren mentioned in the script are pushing there that are micro transaction driven. The fact that we're selling $27 per person that participates even in the Gem, buying precious jewels online as represented in pixels, we are very pleased in terms of its margin structure. Lots of growth in lots of different areas. Unfortunately, we don't actually manage them as a single revenue stream. We manage the Pogo business independently from managing the FIFA business. I think in general we're seeing more robustness in people paying for content than any other part of our secondary or new revenue streams. That bodes well for us because we're a content company. We make differentiated content.

We'll take our next question from Doug Creutz - Cowen and Co. Doug Creutz - Cowen & Co.: Can you talk a little bit about how development of Spore is coming along? Is that a title you still feel good about for Q1 fiscal '09? Thanks. John Riccitiello: Frank and I are both dying to take the question because we're both playing and enjoying the product a great deal, so I would say the great news is what we've got now is coming together as one of those breakthrough products that might come across from the industry every three, five, seven years. Something so distinct, so compelling with a sweep broadly across game play and the underlying and intellectual property that you rarely, rarely see, so we could not be more bullish about the potential for the franchise than we are right now. Right now, as we mentioned in our call the last time, it is sort of squarely targeted against March, April, May of next year. Intellectual properties like this and games like these are so large and so complex that we chose not to put it in our fiscal year guidance because these things are pretty hard to predict, and the outcomes can be volatile. We will make the choice of shipping a better game than an on-time game given the high potential for this franchise. So our best guess right now is Q1 of next fiscal, but we're not actually providing guidance for next fiscal at this point.

Operator, I will make one comment and we'll take one last question today. The comment I would like to make for everyone, I think a lot of you have been asking us about our plans and communication. We do intend later this year to host an analyst meeting. We will get back to you in the course of the coming weeks with the specifics of the date. We have not locked on date and location yet, but we wanted to make you aware we would be hosting a meeting later this year. With that, we will take one last question.

Our final question will come from John Taylor - Arcadia Investments. John Taylor - Arcadia Investments: Hi. I have a couple of questions if I can. Just two.

We're not surprised. John Taylor - Arcadia Investments: Frank, I want to follow up on your comment about NC2A and PS2 a little bit. If there is a little bit of weakness in demand on PS2 and you're looking at price, talk about how that increases the complexity of trying to plan launches as you go into the meaty part of the season by platform? I am wondering if you're playing with any new variables on that front as a result of what you're seeing. That's the first question. What do you think the gross addition to deferred revenue is going to be over the course of fiscal '08 and how much are you going to bring back in to result in those net numbers that you've given us? Thanks.

The issue on NC2A, we're really isolating on the $39 versus the $49 price point and talking to retailers about how best to position that product against which price point and obviously we take the feedback and weave that into the rest of the launch this is year. We're tracking a lot of variables with regards to our launches this fall, everything from product quality to marketing budget to release windows to competitive. I just think we're looking at a very complex set of variables. In the case of NC2A, price is always one we look at. This happens to inform us a little more carefully this early on that platform on PS2. John Taylor - Arcadia Investments: Does the weakness on PS2 suggest maybe as you look into launch plans for October/November releases that you might shift some of the SKU mix towards one of the next gen machines or elsewhere?

I don't think we'll shift the mix too much. I think in this case we're looking at a market that $49 has held on that platform for a very long time, and held longer than most people thought, and I think what you're seeing is that killer front line titles like Madden and Gods of War and those types of product hold $49 and it is probably more of a judgment call on other titles. John Taylor - Arcadia Investments: So you're going to mess with price more than mix?

We always use price as a weapon in terms of how we think about the marketplace. That's about all I can say at this point.

I don't have the detail of the gross additions by quarter on deferred revenue, but would be happy to pull it up and give it to you. We're basically, I would say, within our guidance of $3.50 to $4.50 net for the year. I can answer the question, however, indirectly a couple of ways. First, recognize that we amortize the revenue typically over six months, so the month following, we begin amortization and whatever is deferred starts the next month and is amortized over six months. The second part of the question, which I think everyone is aware is that every dollar we defer impacts our bottom line $1. John Taylor - Arcadia Investments: Yes. I understand that. When did you start deferring? Remind me of that maybe and when do you bring in dollar one off of the balance sheet?

For anything that happens in a given month, we sell a title in August. We begin amortizing the revenue, we begin deferral or amortizing the revenue into our income statement the following month, amortized over a six-month period. There is technically a month following the date of sale. Recognize that can change for micro transactions and things like that that may have longer deferral periods, it could be shorter depending on the length of the service obligation, but for the big nugget here, meaning the packaged goods, it starts the month after the date of sale, and amortized on average in six months. John Riccitiello: And of course we're just kicking the system in. After 12, 18 months into the process, every month or every quarter will be a combination of ins and outs and won't feel so dramatic. Right now it feels dramatic because we're phasing it in. As we get into Q4 of this year, it is going to feel a lot more natural to us, and it won't feel like it is such a one-way slough. John Taylor - Arcadia Investments: Your revenue guidance increased by 100, but the deferred only by 50. Is there an implicit revenue mix shift in that away from online enabled games to maybe a non-online enabled platform?

There is a mix shift, and what I would call it as opposed it a shift is just continually refining this. I think the meta point which is one that John made is that this is the first quarter in which we've been dealing with this. Now as we move into Q2, we're really into it big time because of the sports title, and I would look at it as it is just going to be an ongoing process of refining what that estimate is, but you are absolutely correct in saying that one of the things that will move that number is mix, and your estimate for unit sales on those platforms. John Taylor - Arcadia Investments: Right. So implicit is this a higher mix of handheld?

I just won't get into that level of detail. Again, I am going to call it a refinement and in the context of a $350 million to $400 million net deferral. There are going to be $50 million movements up and down just in the normal course of doing business and in the normal course of our making estimates. Thanks, everyone for your time today and thanks for joining us. It’s up 65%: