<PAGE>
                                        
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                                                                
                                    FORM 10-Q
(Mark one)
                                        
[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                                   ACT OF 1934
                                        
                FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1996
                                        
                                       O R
                                        
    [  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

             For the transition period from __________ to __________
                                        
                                        
                         Commission File Number 0-12699
                                        
                                        
                                ACTIVISION, INC.
             (Exact name of registrant as specified in its charter)
                                        

                                                    DELAWARE  94-2606438
     (State or other jurisdiction of (I.R.S. Employer Identification No.)
     incorporation or organization)


            11601 WILSHIRE BLVD., LOS ANGELES, CA          90025
           (Address of principal executive offices)       (Zip Code)

                                        
                                 (310) 473-9200
              (Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.  Yes [  X  ]  No [     ]


Indicate by check mark whether the registrant has filed all documents and 
reports required to be filed by Section 12, 13 or 15(d) of the Securities 
Exchange Act of 1934 subsequent to the distribution of securities under a plan 
confirmed by a court:  Yes [  X  ]  No [     ]

The number of shares of the registrant's Common Stock outstanding as of November
13, 1996 was 13,918,879.
</PAGE>

<PAGE>
                                        
                                        
                                ACTIVISION, INC.
                                        
                                      INDEX
                                        
                                                                                
                                                                    Page No.


PART I.  FINANCIAL INFORMATION


Item 1.  Financial Statements

        Condensed Consolidated Balance Sheets as of
             September 30, 1996  (unaudited) and March 31, 1996          3

        Condensed Consolidated Statements of Operations for the quarters
        and six months ended September 30, 1996 and 1995 (unaudited)     4

        Condensed Consolidated Statements of Cash Flows for the
        six months ended September 30, 1996 and 1995 (unaudited)         5

        Notes to Condensed Consolidated Financial Statements for the
        quarter and six months ended September 30, 1996 (unaudited)      6



Item 2.  Management's Discussion and Analysis of Financial Condition
                             and Results of Operations                7-12




PART II.   OTHER INFORMATION


Item 1.  Legal Proceedings                                              13


Item 4.  Submission of Matters to a Vote of Security Holders            13


Item 6.  Exhibits and Reports on Form 8-K                               13


SIGNATURES                                                              14
</PAGE>

<PAGE>
                                        

                         PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

<TABLE>
                        ACTIVISION, INC. AND SUBSIDIARIES
                      Condensed Consolidated Balance Sheets
                        (in thousands except share data)

<CAPTION>

                                              September 30,        March 31,
                                                1996                  1996
                                          -------------------   -----------------
                                              (Unaudited)
<S>                                           <C>                  <C>
 ASSETS
     Current assets:
       Cash and cash equivalents                     $17,348           $25,288
     Accounts receivable, net of allowances    
       of $6,939 and $7,005 respectively              23,670            19,909
     Inventories, net                                  3,591             2,975
     Prepaid software and license royalties            6,369             3,652
     Other current assets                              1,483             1,183
     Deferred income taxes                             2,082             1,500  
                                          ------------------     ------------------
       Total current assets                           54,543            54,507

     Property and equipment, net                       4,182             3,326
     Prepaid software and license royalties              872                 -
     Other assets                                        197               200
     Excess purchase price over
        identifiable assets acquired, net             18,939            19,580
                                          ------------------     ------------------

       Total assets                                  $78,733           $77,613
                                          ==================     ==================

LIABILITIES AND SHAREHOLDERS' EQUITY
  Current liabilities:
     Accounts payable                                 $6,001            $4,592
     Accrued expenses                                  9,145             9,688
                                          ------------------     ------------------

       Total current liabilities                      15,146            14,280

     Other liabilities                                   324               334
                                          ------------------     ------------------

       Total liabilities                              15,470            14,614
                                          ------------------     ------------------

  Commitments and contingencies

  Shareholders' equity:
     Common stock, $.000001 par value,
       50,000,000 and 100,000,000 shares
       authorized, 14,406,929 and
       14,250,180 shares issued and
       13,906,929 and 13,750,180
       outstanding , respectively
     Additional paid-in capital                      69,433             67,904
     Retained earnings (accumulated deficit)           (587)               708
     Cumulative foreign currency translation           (305)              (335)
     Less: Treasury stock, 
             cost of 500,000 shares                  (5,278)            (5,278)
                                            ----------------      -----------------

       Total shareholders' equity                    63,263             62,999
                                           ----------------       -----------------

     Total liabilities and 
     shareholders' equity                           $78,733            $77,613
                                           ================       =================
<FN>
     The accompanying notes are an integral part of these condensed consolidated
 financial statements.
</TABLE>

</PAGE>

<PAGE>


<TABLE>

                        ACTIVISION, INC. AND SUBSIDIARIES
                 Condensed Consolidated Statements of Operations
                                        
               (in thousands except income (loss) per share data)
                                        
                                   (Unaudited)


<CAPTION>

                             Quarter ended               Six months ended
                              September 30,                September 30,
                       ------------------------   ------------------------------

                            1996        1995          1996            1995
                       -----------   ----------   ------------   ---------------

<S>                        <C>          <C>            <C>          <C>
Net revenues               $19,175      $18,848        $26,196       $22,167
Cost of goods sold           5,712        6,743          7,221         8,297
                       -----------   ----------   ------------   ---------------

  Gross profit              13,463       12,105         18,975        13,870
                       -----------   ----------   ------------   ---------------

Operating expenses:
  Product development        4,607        4,065          9,154         8,644
  Sales and marketing        5,406        4,197          9,047         6,090
  General and administrative 1,360        1,156          2,589         2,142
  Amortization of 
    intangible assets          321          321            642           642
                       -----------   ----------   ------------   ---------------

     Total operating
       expenses             11,694        9,739         21,432         17,518
                       -----------   ----------   ------------   ---------------


Operating income (loss)      1,769        2,366         (2,457)        (3,648)

Other income:
  Interest, net                244          409            556            934
                       -----------   ----------   ------------   ---------------

Income (loss) before income 
  tax provision (benefit)    2,013        2,775         (1,901)        (2,714)

Income tax provision
  (benefit)                    677           10           (606)            49
                       -----------   ----------   -------------   --------------

Net income (loss)           $1,336       $2,765        $(1,295)       $(2,763)
                       ===========   ==========   =============   ==============


Net income (loss) 
  per share                 $ 0.09        $0.18         $(0.09)      $(0.19)
                       ===========   ==========   =============   =======================
Number of shares used in 
  computingnet income 
  (loss) per share          14,551       15,064         13,844       14,193
                       ===========   ==========   ============   ========================
                                        
</TABLE>


</PAGE>

<PAGE>


<TABLE>
                                        
                        ACTIVISION, INC. AND SUBSIDIARIES
                 Condensed Consolidated Statements of Cash Flows
                     For the six months ended September  30,
                                        
                                 (in thousands)
                                        
                           Increase (Decrease) in Cash
                                        
                                   (UNAUDITED)
<CAPTION>

                                              1996                  1995
                                      --------------      ----------------------
<S>                                          <C>                   <C>

Net cash used in operating activities       $(6,875)              $(5,230)
                                      --------------      ----------------------

Cash flows from investing activities:
  Capital expenditures                       (1,802)               (1,374)
                                      --------------      ----------------------

     Net cash used in investing
       activities                            (1,802)               (1,374)
                                      --------------      ----------------------

Cash flows from financing activities:
  Proceeds from  issuance and exercise
  of common stock options and warrants          707                   126
                                      --------------      ----------------------

     Net cash provided by financing
       activities                               707                   126
                                      --------------      ----------------------


Effect of exchange rate changes
  on cash                                       30                    (53)
                                      --------------      ----------------------

Net decrease in cash and 
  cash equivalents                          (7,940)                (6,531)
                                      --------------      ----------------------

Cash and cash equivalents at
  beginning of period                       25,288                 37,355
                                      --------------      ----------------------

Cash and cash equivalents
  at end of period                         $17,348                $30,824
                                      ==============      ======================



Non-cash investing activities:

  Stock issued in exchange
    for licensing rights                      $822               $      -
                                      ==============      ======================

</TABLE>


</PAGE>

<PAGE>

                                        
                                        
                                        
                                        
                                        
   The accompanying notes are an integral part of these condensed consolidated
                              financial statements.

1.BASIS OF PRESENTATION

  The accompanying condensed consolidated financial statements include the
  accounts of Activision, Inc. and its subsidiaries.  The information furnished
  is unaudited and reflects all adjustments which, in the opinion of
  management, are necessary to provide a fair statement of the results for the
  interim periods presented.  The financial statements should be read in
  conjunction with the financial statements included in the Company's Annual
  Report on Form 10-K for the year ended March 31, 1996.

  Certain amounts in the condensed consolidated financial statements have been
  reclassified to conform with the current period's presentation. These
  reclassifications had no impact on previously reported working capital or
  results of operations.


2.INVENTORIES

<TABLE>
  Inventories, net comprise (amounts in thousands):
<CAPTION>
                                           September  30,         March 31,
                                               1996                  1996
        <S>                                   <C>                   <C>
       Finished goods                         $2,529                $2,099
       Purchased parts and components          1,062                   876
                                              ------                ------
                                              $3,591                $2,975
                                              ======                ======
</TABLE>

3.SOFTWARE DEVELOPMENT COSTS

  Statement of Financial Accounting Standard No. 86, "Accounting for the Costs
  of Computer Software to be Sold, Leased, or Otherwise Marketed," provides for
  the capitalization of certain software development costs once technological
  feasibility is established.  The capitalized costs are then amortized on a
  straight-line basis over the estimated product life, or on the ratio of
  current revenues to total projected revenues, whichever is greater.  The
  software development costs that have been capitalized to date have been
  immaterial.

</PAGE>

<PAGE>


4.   REVENUE RECOGNITION
  
  Product Sales:  The Company recognizes revenues from the sale of its products
  upon shipment.  Subject to certain limitations, the Company permits customers
  to obtain exchanges within certain specified periods and provides price
  protection on certain unsold merchandise.  Revenues from product sales are
  reflected net of the allowance for returns and price protection.
  
  Software Licenses:  For those license agreements which provide the customers
  the right to multiple copies in exchange for guaranteed amounts, revenues are
  recognized at delivery of the product master or the first copy.  Per copy
  royalties on sales which exceed the guarantee are recognized as earned.



5.AMORTIZATION OF INTANGIBLE ASSETS

  Effective April 1, 1992, the Disc Company, Inc. ("TDC"), a Delaware
  corporation and a wholly-owned subsidiary of International Consumer
  Technologies Corporation, was merged with and into the Company, with the
  Company as the surviving corporation.  The excess of the purchase price over
  the estimated fair values of the net assets acquired was recorded as an
  intangible asset in the amount of  $24,417,000.  This intangible asset is
  being amortized on a straight-line basis over a 20 year period.  Amortization
  was approximately $305,000 for each of the quarters ended September 30, 1996
  and 1995 and $610,000 for each of the six month periods ended September 30,
  1996 and 1995.  The Company systematically evaluates current and expected
  cash flow from operations on a non-discounted basis for the purpose of
  assessing the recoverability of recorded intangible assets.  Some of the
  factors considered in this evaluation include operating results, business
  plans, budgets and economic projections.  Should such factors indicate that
  recoverability might be impaired, the Company would appropriately adjust the
  recorded amount of the intangible asset and/or the period over which the
  recorded intangible asset is amortized.
  
6.     COMPUTATION OF NET INCOME (LOSS) PER SHARE

  The net income (loss) per common share and common equivalent shares for the 
  quarter and six month periods ended September 30, 1996 and 1995 have been 
  computed using the weighted average number of common shares and common stock 
  equivalent shares, unless anti-dilutive, outstanding for each period as 
  summarized below (000's omitted):

</PAGE>

<PAGE>

<TABLE>
<CAPTION>
                                Quarter ended                 Six months ended
                                September 30,                   September 30,
                          --------------------------    ---------------------------
     
                               1996          1995           1996           1995
                          -------------    ---------    -----------    --------------

<S>                              <C>          <C>            <C>            <C>

  Weighted average common
    shares outstanding 
    during the period            13,891       14,197         13,844         14,193
 
  Common stock equivalent
    shares                          660          867              -              -

                          -------------    ---------    -----------    --------------

  Shares used in net income
   (loss) per share             
   calculation                   14,551       15,064         13,844         14,193
                          -------------    ---------    -----------    --------------


<FN>
Common stock equivalent shares consist of outstanding stock options and director
warrants.
</TABLE>

  
  


  
</PAGE>

<PAGE>


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
      OF OPERATIONS

           THIS QUARTERLY REPORT ON FORM 10-Q, INCLUDING ITEM 2 ("MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS"),
CONTAINS FORWARD LOOKING STATEMENTS REGARDING FUTURE  EVENTS OR THE FUTURE
FINANCIAL PERFORMANCE OF THE COMPANY THAT INVOLVE CERTAIN RISKS AND
UNCERTAINTIES DISCUSSED IN THE COMPANY'S ANNUAL REPORT ON FORM 10-K UNDER
"CERTAIN CAUTIONARY INFORMATION" ON PAGES 4 TO 8 OF SUCH REPORT. ACTUAL EVENTS
OR THE ACTUAL FUTURE RESULTS OF THE COMPANY MAY DIFFER MATERIALLY FROM ANY
FORWARD LOOKING STATEMENT DUE TO SUCH RISKS AND UNCERTAINTIES.

                                    OVERVIEW

     The Company is a diversified international publisher of interactive
entertainment software.  The Company develops and publishes entertainment
software for a variety of platforms, including both personal computer CD-ROM
desktop systems, such as the Windows 95 operating system, and videogame set-top
hardware systems, such as the Sony PlayStation and  Sega Saturn.  The Company
distributes its products worldwide through its direct sales force and, to a
lesser extent, through third party distributors and licensees.

     For purposes of the presentation set forth below, net revenues from and
cost of goods sold related to set-top systems consist of sales and costs
relating to all entertainment software products designed by the Company for
operation on a hardware device that is connected to a television set and
displayed on a television screen.  Examples of set-top systems include Super
Nintendo Entertainment System ("SNES"), Sega Genesis ("SGS"), Sega Saturn
("Saturn"), Sony PlayStation ("PlayStation"), Atari Jaguar, CD-I and 3DO
Multiplayer.  The Company designs products for operation on many of these
systems, and normally it is required to pay a license fee for the right to
create products for a particular system.  Net revenues from and cost of goods
sold related to desktop systems consist of sales and costs relating to all
entertainment software products designed by the Company for operation through a
personal computer's operating system software and that is displayed on the
computer's monitor.  Examples of computer operating systems include MS-DOS,
Windows and the Macintosh operating systems.  The Company generally is not
obligated to pay an operating system license fee for the right to produce
desktop products.


                              RESULTS OF OPERATIONS

Net Revenues

     Net revenues for the quarter and six months ended September 30, 1996
increased $327,000 or 1.7% and $4,029,000 or 18.2%, respectively,  from the same
periods last year.  These increases in net revenues were primarily due to an
increase in desktop net revenues and OEM net revenues during the current
periods.  The increase in desktop net revenues during the current quarter was
attributable to the initial release of "MechWarrior 2: Mercenaries" (Windows 95
CD), "Muppet Treasure Island" (Windows 95/Mac CD), "Time Commando" (Windows 95
CD) and continuing sales of "MechWarrior 2" (Windows 95/Mac CD) and "Zork
Nemesis" (Windows 95/Mac CD).  The increase in set-top net revenues during the
current quarter was attributable to the release of "Time Commando" (Sony
PlayStation).  The Company expects revenues from set-top systems to grow as a
result of an increase of new releases of CD based set-top products for the
PlayStation and Saturn.
</PAGE>

<PAGE>

     Total OEM and licensing net revenues increased during the current quarter
and six month period due to OEM and licensing revenues related to enhanced 3-D
versions of "MechWarrior 2" (Windows 95 CD/Matrox Mystique, S3 Virge and Power
VR),  "Time Commando" (Windows 95 CD), "Zork Nemesis" (Windows 95 CD) and 
"Spycraft: The Great Game" (Windows 95 CD).


<TABLE>
     Net revenues by territory were as follows (amounts in thousands):
<CAPTION>
                   Quarter Ended September 30,     Six Months Ended September 30, 
               --------------------------------  -----------------------------------
                    1996             1995             1996              1995
               ---------------  ---------------  ---------------   ----------------
 
                       % of Net        % of Net          % of Net          % of Net
                Amount Revenues  Amount Revenues  Amount Revenues   Amount Revenues
<S>             <C>      <C>      <C>     <C>     <C>      <C>      <C>      <C>    
North America   $14,925   77.8%   $14,789  78.5%  $20,469   78.1%   $16,972   76.6%
Europe            2,016   10.5%     1,958  10.4%    2,739   10.5%     2,028    9.1%
Japan               967    5.1%     1,057   5.6%    1,251    4.8%     1,896    8.6%
Australia and
  Pacific Rim   
                  1,267    6.6%     1,044   5.5%    1,737    6.6%     1,271    5.7%
                -------  ------   -------  -----  -------   -----   -------   -----

                $19,175  100.0%   $18,848 100.0%  $26,196  100.0%   $22,167  100.0%
                =======  ======   ======= ======  =======  ======   =======  ======
</TABLE>


<TABLE>
     Net revenues by device/medium  were as follows (amounts in thousands):
<CAPTION>
              Quarter Ended September 30,     Six Months Ended September 30,          
           --------------------------------   ----------------------------------
                1996             1995              1996             1995
           ---------------  ---------------   ---------------  ----------------

                  % of Net         % of Net          % of Net         % of Net
           Amount Revenues  Amount Revenues   Amount Revenues  Amount Revenues
<S>       <C>      <C>     <C>      <C>      <C>      <C>     <C>      <C>
  Set-top $ 2,270    11.8% $ 2,084    11.1%  $ 2,323     8.9% $ 2,769    12.5%
  Desktop  16,905    88.2%  16,764    88.9%   23,873    91.1%  19,398    87.5%
          -------   ------ -------   ------  -------   ------ -------   ------ 
          $19,175   100.0% $18,848   100.0%  $26,196   100.0% $22,167   100.0%
          =======   ====== =======   ======  =======   ====== =======   ======
</TABLE>

</PAGE>

<PAGE>


<TABLE>
              Net revenues by distribution channel were as follows (amounts in
thousands):

<CAPTION>
                      Quarter Ended September 30,     Six Months Ended September 30,        
                   --------------------------------  ----------------------------------

                      1996                1995                1996                    1995
                 ---------------     ---------------      ---------------       ---------------

                        % of Net             % of Net             % of Net              % of Net
               Amount   Revenues    Amount   Revenues    Amount   Revenues     Amount   Revenues
<S>            <C>      <C>         <C>      <C>         <C>      <C>          <C>      <C>
  
Retailer/ 
  Reseller     $15,847     82.6%    $15,583     82.7%    $18,461     70.5%    $18,306      82.6%  
OEM              2,799     14.6%        936      4.9%      6,292     24.0%      1,005       4.5%
On-line,
  licensing 
  and other        529      2.8%      2,329     12.4%      1,443      5.5%      2,856    12.9%
               -------    ------    -------    ------    -------    ------    -------   ------
               $19,175    100.0%    $18,848    100.0%    $26,196    100.0%    $22,167   100.0%
               =======    ======    =======    ======    =======    ======    =======   ======
</TABLE>



Cost of Goods Sold

     Cost of goods sold related to set-top, desktop and OEM revenues represent
the manufacturing and related costs of computer software and video games.
Manufacturers of the Company's computer software are located in the United
States and Europe and are readily available.  Set-top cartridges and CDs are
manufactured by the respective video game console manufacturers, such as Sony,
Nintendo and Sega, who require significant lead time to fulfill the Company's
orders.

     Also included in cost of goods sold is royalty expense related to amounts
due to developers, title owners or other royalty participants based on product
sales.  Various contracts are maintained with developers, product title owners
or other royalty participants which state a royalty rate and term of agreement,
among other items.  Cost of goods sold as a percentage of net revenues decreased
to 29.8% for the quarter ended September 30, 1996 compared to 35.8% for the 
quarter ended September 30, 1995.  The six month comparative figures also show a
decrease in cost of goods sold as a percentage of net revenues to 27.6% for the
six month period ended September 30, 1996 compared to 37.4% for the six month 
period ended September 30, 1995.  These decreases are a result of the increase 
in the percentage of net revenues attributable to CD-based products and the 
increase in OEM net revenues, each of which generate higher gross profit margins
than cartridge based set-top products.


</PAGE>

<PAGE>

Gross Profit

     For the quarter ended September 30, 1996, gross profit as a percentage of
net revenues was 70.2% compared to 64.2% for the quarter ended September 30,
1995. Gross profit as a percentage of net revenues increased to 72.4% for the
six months ended September 30, 1996 from 62.6% for the six months ended
September 30, 1995. The increase in gross profit as a percentage of net revenues
during both the current quarter and six month period was due to the increase in
the percentage of net revenues attributable to CD-based products and the
increase in OEM net revenues, each of which generate higher gross profit margins
than cartridge based set-top products.


<TABLE>
Operating Expenses
<CAPTION>
                          Quarter Ended September 30,      Six Months Ended September 30,        
                       -------------------------------  --------------------------------

                            1996             1995            1996             1995                             
                       ---------------  --------------  ---------------  ---------------
                               % of Net        % of Net         % of Net         % of Net
                        Amount Revenues Amount Revenues Amount  Revenues  Amount Revenues
<S>                     <C>     <C>    <C>      <C>    <C>        <C>     <C>     <C>
Product development    $ 4,607   24.0%  $4,065   21.6%  $ 9,154   34.9%  $ 8,644   38.9%
Sales and marketing      5,406   28.2%   4,197   22.3%    9,047   34.5%    6,090   27.5%
General and 
  administrative         1,360    7.1%   1,156    6.1%    2,589    9.9%    2,142   9.7%
Amortization of
  intangible assets        321    1.7%     321    1.7%      642    2.5%      642   2.9%
                       -------   -----  ------   -----  -------   -----  -------  -----
                       $11,694   61.0%  $9,739   51.7%  $21,432   81.8%  $17,518  79.0%
                       =======   =====  ======   =====  =======   =====  =======  =====
</TABLE>


     The increase in product development expenses for the quarter and six months
ended September 30, 1996 was due to an overall increase in the number of
products in development, an increase in production costs associated with 3-D
programming technology and continued investment in development for new CD
platforms.  Sales and marketing expenses also increased both in amount and as a
percentage of revenues as a result of a worldwide expansion of the sales and
marketing organization needed to manage the Company's increased product release
schedule later in the fiscal year.  General and administrative expenses
increased due to an increase in head count related expenses as compared to the
same periods in the prior year.

Other Income (Expense)

     Interest income was approximately $244,000 and $556,000 for the quarter and
six months ended September 30, 1996, respectively, compared to approximately
$409,000 and $934,000 for the quarter and six months ended September 30, 1995,
respectively.  The decreases were due to a decrease in cash and cash equivalents
during the current fiscal quarter and six month period as compared to the same
periods in the prior year.

</PAGE>

<PAGE>

Income Tax Provision (Benefit)

     The income tax provision (benefit) of approximately $677,000 and ($606,000)
for the quarter and six months ended September 30, 1996, respectively, reflects
the Company's expected effective income tax rate for the fiscal year ending
March 31, 1997.  The income tax benefit was recorded based on recent operating
history as well as a current assessment that operations will  generate taxable
income for the fiscal year.  The Company did not record an income tax provision 
benefit for the six months ended September 30, 1995 due to the fact that as of 
such date, the Company had not yet generated taxable income.  Income taxes for
the quarter and six months ended September 30, 1995 represent foreign taxes 
withheld, which may be available in the future as tax credits against future tax
liability.

Net Income (Loss)

     For the reasons noted above, net income decreased to $1,336,000 for the
quarter ended September 30, 1996 from a net income of $2,765,000 for the same
period of the prior fiscal year.  For the six months ended September 30, 1996,
net loss decreased to $1,295,000 from a net loss of $2,763,000 for the same
period of the prior fiscal year.

                                        
                                   SEASONALITY

     The Company's quarterly operating results have in the past varied
significantly and will likely in the future vary significantly depending on many
factors, some of which are not under the Company's control.  For example, net
revenues may be higher during the fourth calendar quarter as a result of
increased demand for consumer software during the year-end holiday buying
season.  Net revenues in other quarters can vary significantly as a result of
the timing of new product introductions.

     Products are generally shipped as orders are received, and consequently the
Company operates with little or no backlog.  Net revenues in any quarter are
therefore substantially dependent on orders booked and shipped in that quarter.
The Company's expense levels are based in large part on the Company's product
development and marketing budgets.  The majority of product development and
marketing costs are expensed as incurred, which is often before a product ever
is released.  As the Company increases its development and marketing activities,
current expenses will increase and, if sales from previously released products
are below expectations, net income is likely to be disproportionately affected.
Due to all of the foregoing, revenues and operating results for any future
quarter are not predictable with any significant degree of accuracy.
Accordingly, the Company believes that period-to-period comparisons of operating
results are not necessarily meaningful and should not be relied upon as
indications of future performance.

</PAGE>

<PAGE>

                         LIQUIDITY AND CAPITAL RESOURCES

     The Company's working capital decreased $0.8 million from March 31, 1996 to
September 30, 1996 as a result of the funding of the Company's expanding
operations and additional capital expenditures.  At September 30, 1996, net
accounts receivable and inventories were $27.3 million, an increase of $4.4
million from $22.9 million as of March 31, 1996.  The increase is due primarily
to an increase in receivables due from OEM customers.  Prepaid royalties
increased as a result of an increase in the number of products being developed
by third party developers as well as an increase in the acquisition of third
party intellectual property rights.

     As of September 30, 1996, total accounts payable and accrued liabilities
were approximately $15.1 million versus $14.3 million at March 31, 1996.  The
increase at September 30, 1996 is primarily related to the increase in
inventories.

     During the six months ended September 30, 1996, the Company invested
approximately $1.8 million in  computer  hardware and software purchases
required to support the Company's product development efforts and new management
information systems. During fiscal 1997, the Company expects to incur additional
capital expenditures relating to the development of its products and the general
operation of its business.  The Company also plans on moving its Los Angeles
headquarters to a new facility early in fiscal 1998.

     The Company's principal source of liquidity is $17.3 million in cash and
cash equivalents.  The Company uses its working capital to finance ongoing
operations, including acquisitions of inventory and equipment, to fund the
development, production, marketing and selling of new products, and to obtain
intellectual property rights for future products from third parties.  Management
believes that the Company's existing capital resources are sufficient to meet
its current operational requirements for the foreseeable future.

     The Company's management currently believes that inflation has not had a
material impact on continuing operations.




P
ART II. - OTHER INFORMATION


Item 1.  Legal Proceedings

     The Company is party to routine claims and suits brought against it in the
     ordinary course of business including disputes arising over the ownership
     of intellectual property rights and collection matters.  In the opinion of
     management, the outcome of such routine claims will not have a material
     adverse effect on the Company's business, financial condition or results of
     operations.
</PAGE>

<PAGE>


Item 4.   Submission of Matters to a Vote of Security Holders

     The Company held its 1996 Annual Meeting of Stockholders on August 22, 1996
     in Los Angeles, California.  Four items were submitted to a vote of the
     stockholders:
     
            1.  The election of five directors to hold office for one year
       terms and until their respective successors are elected and have
       qualified.  All five nominees were recommended by the Board of Directors
       and all were elected.  Set forth below are the results of the voting for
       each director.
          
 
<TABLE>
 <CAPTION>
                                         For          Withheld
     
     
               <S>                      <C>             <C>
               Robert A. Kotick      12,017,146       112,753
               Howard E. Marks       12,018,103       111,796
               Brian G. Kelly        12,017,697       112,202
               Barbara S. Isgur      12,018,130       111,769
               Steven T. Mayer       12,017,137       112,762
</TABLE>

     
                        2.  The adoption of an amendment to the Company's 1991
       Stock Option and Stock Award Plan to increase the number of shares of
       the Company's Common Stock reserved for issuance thereunder from
       4,066,667 to 6,066,667 shares.  This proposal was adopted by a vote of
       6,828,004 in favor, 2,113,862 against, and 7,177 abstentions.
       
                        3.  The adoption of the Company's Employee Stock
       Purchase Plan and the reservation of 200,000 shares of the Company's
       Common Stock for issuance thereunder.  This proposal was adopted by a
       vote of 9,036,396 in favor, 48,937 against, and 7,929 abstentions.
       
                        4.  An amendment to the Company's Amended and Restated
       Certificate of Incorporation to decrease the Company's authorized
       capital stock from 110,000,000 shares, consisting of 100,000,000 shares
       of Common Stock and 10,000,000 shares of Preferred Stock, to 55,000,000
       shares, consisting of  50,000,000 shares of Common Stock and 5,000,000
       shares of Preferred Stock.  This proposal was adopted by a vote of
       9,114,015 in favor, 19,829 against, and 8,834 abstentions.


Item 6.   Exhibits and Reports on Form 8-K

     (a)  Exhibits

       None
         
     (b)   Reports on Form 8-K
        
       None

</PAGE>

<PAGE>





     

                                   SIGNATURES





Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.


Date:  November 13, 1996

ACTIVISION, INC.


  
      -------------------
      (Robert A. Kotick)     Chairman, Chief Executive         November 13, 1996
                             Officer (Principal Executive
                             Officer), President and Director



      -------------------                 
      (Brian G. Kelly)       Chief Financial and Operating     November 13, 1996
                             Officer and Director
                             (Principal Financial Officer)




       ------------------
       (Barry J. Plaga)      Chief Accounting Officer          November 13, 1996
                             (Principal Accounting Officer)


</PAGE>








<TABLE> <S> <C>

<ARTICLE> 5
       
<S>                             <C>
<PERIOD-TYPE>                   3-MOS
<FISCAL-YEAR-END>                          MAR-31-1997
<PERIOD-END>                               SEP-30-1996
<CASH>                                          17,348
<SECURITIES>                                         0
<RECEIVABLES>                                   30,609
<ALLOWANCES>                                   (6,939)
<INVENTORY>                                      3,591
<CURRENT-ASSETS>                                54,543
<PP&E>                                           7,789
<DEPRECIATION>                                 (3,607)
<TOTAL-ASSETS>                                  78,733
<CURRENT-LIABILITIES>                           15,146
<BONDS>                                              0
<PREFERRED-MANDATORY>                                0
<PREFERRED>                                          0
<COMMON>                                             0
<OTHER-SE>                                      63,263
<TOTAL-LIABILITY-AND-EQUITY>                    78,733
<SALES>                                         19,175
<TOTAL-REVENUES>                                19,175
<CGS>                                            5,712
<TOTAL-COSTS>                                    5,712
<OTHER-EXPENSES>                                11,694
<LOSS-PROVISION>                                     0
<INTEREST-EXPENSE>                                   0
<INCOME-PRETAX>                                  2,013
<INCOME-TAX>                                       677
<INCOME-CONTINUING>                              1,336
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                                     1,336
<EPS-PRIMARY>                                      .09
<EPS-DILUTED>                                      .09
        

</TABLE>