F-
                         SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K
 (Mark one)
[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934
                                        
                    FOR THE FISCAL YEAR ENDED MARCH 31, 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)
                                        
       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:  (310) 473-9200

     SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:  None

           SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
                   Common Stock, par value $.000001 per share
                                (Title of Class)

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 if the disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form  10-K.  [ X ]

The aggregate market value of the Common Stock of the registrant held by non-
affiliates of the registrant on July 2, 1996 was $152,768,000.

Indicate by a 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 July 2,
1996 was 13,854,745.

                       DOCUMENT INCORPORATED BY REFERENCE
Portions of the registrant's definitive Proxy Statement, to be filed with the
Securities and Exchange Commission within 120 days after the end of the fiscal
year covered by this Form 10-K, with respect to the Annual Meeting of
Shareholders to be held on August 22, 1996 are incorporated by reference into

Part III of this Annual Report.
                                        
                                        
                                      INDEX
                                        
                                        
                                                         Page No.
PART I.

     Item 1.Business                                         3

     Item 2.Properties                                      16

     Item 3.Legal Proceedings                               16

     Item 4.Submission of Matters to a Vote of Security
      Holders                                               16

PART II.

     Item 5.Market for Registrant's Common Equity and
      Related Stockholder Matters                           17

     Item 6.Selected Consolidated Financial Data            19

     Item 7.Management's Discussion and Analysis of
      Financial Condition and Results of Operations         20

     Item 8.Consolidated Financial Statements and
      Supplementary Data                                    26

     Item 9.Changes In and Disagreements with Accountants
      on Accounting and Financial Disclosure                26

PART III.

     Item 10.Directors and Executive Officers of the
      Registrant                                            27

     Item 11.Executive Compensation                         27

     Item 12.Security Ownership of Certain Beneficial
      Owners and Management                                 27

     Item 13.Certain Relationships and Related
      Transactions                                          27

PART IV.

     Item 14.Exhibits, Financial Statement Schedules,
      and Reports on Form 8-K                               28

SIGNATURES                                                  31


                                        
                                        

                                     PART I



Item 1.   BUSINESS

     (a)  General

          Activision, Inc. (together with its subsidiaries, the "Company") is a
     diversified international publisher and developer of interactive
     entertainment software in a wide variety of formats. The Company was
     incorporated in California in 1979.  In December 1992, the Company
     reincorporated in Delaware.
     
     (b)  Financial Information About Industry Segments
     
          The Company operates in one industry segment: publishing floppy-disk,
     cartridge and CD-based entertainment software.  See the Consolidated
     Financial Statements and Notes thereto included in Item 8 of this Annual
     Report on Form 10-K for certain financial information required by Item 1.
     
     (c)  Narrative Description of Business

     INDUSTRY BACKGROUND
     
          The interactive entertainment software market is composed of two
     markets: the desktop systems market -- software created for use on personal
     computers ("PCs"), including PCs utilizing the MS-DOS, Windows 3.1 and
     Windows 95 operating systems as well as Apple Macintosh computers; and the
     set-top systems market -- software created for dedicated game consoles that
     use the television as a display, including the Sony Playstation, Sega
     Saturn and Super Nintendo Entertainment Systems.
     
          Desktop Systems.  According to IDC/LINK, 40% of U.S. households had at
     least one PC at the end of 1995.  IDC/LINK is projecting this installed
     base to grow to 44% by the end of 1996.  This increase in PC ownership
     appears to be spurred by lower-cost Pentium-based multimedia PCs ("MPCs")
     which incorporate higher-speed CD-ROM drives, modems and increasingly
     sophisticated graphics capabilities, as well as by the continued growth and
     interest in the Internet.  IDC/LINK reports that MPC shipments to the home
     reached 8.9 million units in 1995 and are expected to increase to 11.2
     million units in 1996, bringing the total installed base of MPC units to 25
     million by the end of 1996.  The improved functionality and ease-of-use
     provided by Windows 95, the continued production of compelling
     entertainment and education applications, and increasingly favorable price
     to performance ratios for PCs also appear to be major contributing factors
     to the increased growth in this industry.
     
          As a result of all these factors, demand is growing for PC-based
     entertainment software, as evidenced by increases in the sale of
     entertainment software titles.  According to IDC/LINK, North American sales
     of entertainment software grew from $930 million in 1994 to $1.2 billion in
     1995.  IDC/LINK further expects 1996 sales to increase to $1.4 billion.
     The Company believes that the continued growth of the interactive
     entertainment market in the future will be dependent upon the development
     of increasingly sophisticated software incorporating advanced graphics and
     sound, compelling story lines and rewarding game play.
     
          Set-top Systems.  The set-top systems market currently is finishing
     the transition from 16-bit systems to 32 and 64-bit systems ("next
     generation systems").  Next generation 32-bit systems have experienced
     healthy growth following their introduction in 1995 and have begun to
     establish significant installed bases.  Sony's PlayStation has been
     particularly strong, establishing an installed base of approximately one
     million units in North America.  The Company currently believes that the
     PlayStation will continue to enjoy major growth through 1996.
     
          According to IDC/LINK, the U.S. installed base of next generation
     systems at the end of 1995 was approximately 1.5 million units and will
     reach approximately 3.6 million units by the end of 1996.  IDC/LINK
     projects further growth in the installed base of next generation systems to
     approximately 6.2 million units by the end of 1997.  The Company believes
     that the continued success of these systems will be dependent upon the
     ability of hardware manufacturers to lower prices to a level that will
     allow for mass market penetration and a consistent supply of increasingly
     sophisticated software for the consumer.
     
          Distribution.  The distribution channels for entertainment software
     have expanded significantly in recent years.  During the 1980s, set-top
     entertainment software was sold primarily through mass merchants and toy
     stores.  Desktop entertainment software typically was sold through
     specialty software stores.  The distribution of desktop software is now
     expanding into traditional set-top channels such as mass merchants,
     specialty retailers and warehouse stores, while set-top software has begun
     to penetrate specialty software stores and other traditional desktop
     outlets.  Although the number of distribution channels for entertainment
     software has increased overall, an abundance of new software titles has
     forced retailers to be highly selective when allocating shelf space.
     Competition for shelf space has intensified as retailers, especially mass
     merchants, continue to carry only products that are expected to sell in
     high volumes.
     
           To be successful in this more competitive distribution environment,
     companies must demonstrate to retailers that their products have broad
     appeal and can become best sellers.  In order to achieve broad appeal,
     companies must utilize the enhanced capabilities of MPCs and next
     generation systems to create sophisticated products with high production
     values and appealing game play. Since this approach results in higher
     development budgets, companies that can institute disciplined development
     processes to lower cost overruns and innovative marketing campaigns that
     increase consumer awareness will be in the best position to maximize their
     return on product investments.
     
     CERTAIN CAUTIONARY INFORMATION
     
          In connection with the Private Securities Litigation Reform Act of
     1995 (the "Litigation Reform Act"), the Company is hereby disclosing
     certain cautionary information to be used in connection with written
     materials (including this Annual Report on Form 10-K) and oral statements
     made by or on behalf of its employees and representatives that may contain
     Oforward-looking statementsO within the meaning of the Litigation Reform
     Act.  Such statements consist of any statement other than a recitation of
     historical fact and can be identified by the use of forward-looking
     terminology such as "may," "expect," "anticipate," "estimate" or "continue"
     or the negative thereof or other variations thereon or comparable
     terminology.  The listener or reader is cautioned that all forward-looking
     statements are necessarily speculative and there are numerous risks and
     uncertainties that could cause actual events or results to differ
     materially from those referred to in such forward-looking statements.  The
     discussion below highlights some of the more important risks identified by
     management, but should not be assumed to be the only factors that could
     affect future performance.  The reader or listener is cautioned that the
     Company does not have a policy of updating or revising forward-looking
     statements and thus he or she should not assume that silence by management
     over time means that actual events are bearing out as estimated in such
     forward-looking statements.
     
         Fluctuations In Quarterly Results; Future Operating Results Uncertain;
     Seasonality.  The Company's quarterly operating results have in the past
     varied significantly and will likely in the future vary significantly
     depending on a variety of factors, many of which are not under the
     Company's control.  Such factors include, but are not limited to, demand
     for the Company's products and those of its competitors, the size and rate
     of growth of the interactive entertainment software market, development and
     promotional expenses relating to the introduction of new products, changes
     in computing platforms, product returns, the timing of orders from major
     customers, delays in shipment, the level of price competition, the timing
     of product introduction by the Company and its competitors, product life
     cycles, software defects and other product quality problems, the level of
     the Company's international revenues, and personnel changes.  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 expenses are based in large part on the Company's product
     development and marketing budgets.  Product development and marketing costs
     are expensed as incurred, which is often long before a product ever is
     released.  In addition, a large portion of the Company's expenses are
     fixed.  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 its
     operating results are not necessarily meaningful and should not be relied
     upon as indications of future performance.
     
         The Company's business has experienced and is expected to continue to
     experience significant seasonality, in part due to consumer buying
     patterns.  Net revenues are typically significantly higher during the
     fourth calendar quarter, due primarily to the increased demand for consumer
     software during the year-end holiday buying season.  Net revenues in other
     quarters are generally lower and vary significantly as a result of new
     product introductions and other factors.  For example, the Company's net
     revenues in its last five quarters were $6.6 million for the quarter ended
     March 31, 1995, $3.3 million for the quarter ended June 30, 1995, $18.8 for
     the quarter ended September 30, 1995, $17.6 million for the quarter ended
     December 31, 1995 and $21.6 million for the quarter ended March 31, 1996.
     The Company expects its net revenues and operating results to continue to
     reflect significant seasonality.
     
         Dependence On New Product Development; Product Delays.  The Company's
     future success depends on the timely introduction of successful new
     products to replace declining revenues from older products.  If, for any
     reason, revenues from new products were to fail to replace declining
     revenues from older products, the Company's business, operating results and
     financial condition would be materially and adversely affected.  In
     addition, the Company believes that the competitive factors in the
     interactive entertainment software marketplace create the need for higher
     quality, distinctive products that incorporate increasingly sophisticated
     effects and the need to support product releases with increased marketing,
     resulting in higher development and marketing costs.  The lack of market
     acceptance or significant delay in the introduction of, or the presence of
     a defect in, one or more products could have material adverse effect on the
     Company's business, operating results and financial condition, particularly
     in view of the seasonality of the Company's business.  Further, because a
     large portion of a product's revenue is generally associated with initial
     shipments, the delay of a product introduction expected near the end of a
     fiscal quarter may have a material adverse affect on operating results for
     that quarter.
     
         The Company has, in the past, experienced significant delays in the
     introduction of certain new products.  The timing and success of
     interactive entertainment products remain unpredictable due to the
     complexity of product development, including the uncertainty associated
     with technological developments.  Although the Company has implemented
     substantial development controls, there will likely be delays in developing
     and introducing new products in the future.  There can be no assurance that
     new products will be introduced on schedule, or at all, or that they will
     achieve market acceptance or generate significant revenues.
     
         From time to time, the Company utilizes independent contractors for
     certain aspects of product development and production.  The Company has
     less control over the scheduling and the quality of work by independent
     contractors than that of its own employees.  A delay in the work performed
     by independent contractors or a lack of quality in such work may result in
     product delays.  Although the Company intends to focus on internal product
     development, the Company's business and future operating results will
     depend, in part, on the Company's continued ability to maintain
     relationships with skilled independent contractors.  There can be no
     assurance that the Company will be able to maintain such relationships.
     
         Uncertainty Of Market Acceptance; Short Product Life Cycles.  The
     market for entertainment systems and software has been characterized by
     shifts in consumer preferences and short product life cycles.  Consumer
     preferences for entertainment software products are difficult to predict
     and few entertainment software products achieve sustained market
     acceptance.  There can be no assurance that new products introduced by the
     Company will achieve any significant degree of market acceptance, that such
     acceptance will be sustained for any significant period, or that product
     life cycles will be sufficient to permit the Company to recoup development,
     marketing and other associated costs.  In addition, if market acceptance is
     not achieved, the Company could be forced to accept substantial product
     returns to maintain its relationships with retailers and its access to
     distribution channels.  Failure of new products to achieve or sustain
     market acceptance or product returns in excess of the Company's
     expectations would have a material adverse effect on the Company's
     business, operating results and financial condition.
     
         Product Concentration; Dependence On Hit Products.  A key aspect of the
     Company's strategy is to focus its development efforts on selected, high
     quality software entertainment products. The Company derives a significant
     portion of its revenues from a select number of high quality entertainment
     software products released each year, and many of these products have
     substantial production and marketing budgets.  Due to this dependence on a
     limited number of products, the Company may be adversely affected if one or
     more principal entertainment software products fail to achieve anticipated
     results.  During fiscal 1995, approximately 59% of the Company's net
     revenues were derived from one title.  During fiscal 1996, approximately
     49% of the Company's net revenues were derived from one other title.
     
         Industry Competition; Competition For Shelf Space.  The interactive
     entertainment software industry is intensely competitive.  Competition in
     the industry is principally based on product quality and features, the
     compatibility of products with popular platforms, company or product line
     brand name recognition, access to distribution channels, marketing
     effectiveness, reliability and ease of use, price and technical support.
     Significant financial resources also have become a competitive factor in
     the entertainment software industry, principally due to the substantial
     cost of product development and marketing that is needed for best-selling
     titles.  In addition, competitors with large product lines and popular
     titles typically have greater leverage with distributors and other
     customers who may be willing to promote titles with less consumer appeal in
     return for access to such competitor's most popular titles.
     
         The Company's competitors range from small companies with limited
     resources to large companies with substantially greater financial,
     technical and marketing resources than those of the Company.  The Company's
     competitors currently include Electronic Arts, Inc., Lucas Arts
     Entertainment Company, Microsoft Corporation ("Microsoft"), Sega, Nintendo,
     Sierra On-Line, Inc., Good Times Interactive, Inc., Interplay, Inc. and
     Maxis, Inc., among many others.  In addition, the Company believes that new
     competitors, including large divisions of major media and communications
     companies such as Viacom, Inc., Time Warner, Inc., The Walt Disney Company
     and Dreamworks SKG, are entering the market or are increasing their focus
     on the entertainment software market, resulting in greater competition for
     the Company.
     
         As competition increases, significant price competition, increased
     production costs and reduced profit margins may result.  In addition,
     competition from new technologies, such as on-line or networked games, may
     reduce demand in markets in which the Company has traditionally competed.
     Prolonged price competition or reduced demand would have a material adverse
     effect on the Company's business, operating results and financial
     condition.  There can be no assurance that the Company will be able to
     compete successfully against current or future competitors or that
     competitive pressures faced by the Company will not have a material adverse
     affect on its business, operating results and financial condition.
     
         Retailers typically have a limited amount of shelf space, and there is
     intense competition among entertainment software producers for adequate
     levels of shelf space and promotional support from retailers.  As the
     number of entertainment software products increase, the competition for
     shelf space has intensified resulting in greater leverage for retailers and
     distributors in negotiating terms of sale, including price discounts and
     product return policies.  The Company's products constitute a relatively
     small percentage of a retailer's sale volume, and there can be no assurance
     that retailers will continue to purchase the Company's products or promote
     the Company's products with adequate levels of shelf space and promotional
     support.
     
         Changes In Technology And Industry Standards.  The consumer software
     industry is undergoing rapid changes, including evolving industry
     standards, frequent new platform introductions and changes in consumer
     requirements and preferences.  The introduction of new technologies,
     including operating systems such as Microsoft's Windows 95 and media
     formats such as on-line delivery, could render the Company's previously
     released products obsolete or unmarketable.  The development cycle for
     products utilizing new operating systems, microprocessors or formats may be
     significantly longer than the Company's current development cycle for
     products on existing operating systems, microprocessors and formats and may
     require the Company to invest resources in products that may not become
     profitable.  There can be no assurance that the mix of the Company's future
     product offerings will keep pace with technological changes or satisfy
     evolving consumer preferences or that the Company will be successful in
     developing and marketing products for any future operating system or
     format.  Failure to develop and introduce new products and product
     enhancements in a timely fashion could result in significant product
     returns and inventory obsolescence and could have a material adverse effect
     on the Company's business, operating results and financial condition.
     
         Limited Protection Of Intellectual Property And Proprietary Rights;
     Risk Of Litigation.  The Company holds copyrights on its products, manuals,
     advertising and other materials and maintains trademark rights in the
     Company name, the Activision logo, and the names of products published by
     the Company.  The Company regards its software as proprietary and relies
     primarily on a combination of trademark, copyright and trade secret laws,
     employee and third-party nondisclosure agreements, and other methods to
     protect its proprietary rights.  Unauthorized copying is common within the
     software industry, and if a significant amount of unauthorized copying of
     the Company's products were to occur, the Company's business, operating
     results and financial condition could be adversely affected.  There can be
     no assurance that third parties will not assert infringement claims against
     the Company in the future with respect to current or future products.  As
     is common in the industry, from time to time the Company receives notices
     from third parties claiming infringement of intellectual property rights of
     such parties.  The Company investigates these claims and responds as it
     deems appropriate.  Policing unauthorized use of the Company's products is
     difficult, and while the Company is unable to determine the extent to which
     piracy of its software products exists, software piracy can be expected to
     be a persistent problem.  In selling its products, the Company relies
     primarily on "shrink wrap" licenses that are not signed by licensees and,
     therefore, may be unenforceable under the laws of certain jurisdictions.
     Further, the Company enters into transactions in countries where
     intellectual property laws are not well developed or are poorly enforced.
     Legal protections of the Company's rights may be ineffective in such
     countries.  Any claims or litigation, with or without merit, could be
     costly and could result in a diversion of management's attention, which
     could have a material adverse effect on the Company's business, operating
     results and financial condition.  Adverse determinations in such claims or
     litigation could also have a material adverse effect on the Company's
     business, operating results and financial condition.
     
         Dependence On Key Personnel.  The Company's success depends to a
     significant extent on the performance and continued service of its senior
     management and certain key employees.  In particular, the loss of the
     services of Robert A. Kotick, Brian G. Kelly or Howard E. Marks could have
     a material adverse effect on the Company.  The Company maintains life
     insurance policies only on Messrs. Kotick, Kelly and Marks.  Competition
     for highly skilled employees with technical, management, marketing, sales,
     product development and other specialized training is intense, and there
     can be no assurance that the Company will be successful in attracting and
     retaining such personnel.  Specifically, the Company may experience
     increased costs in order to attract and retain skilled employees.  Although
     the Company generally enters into term employment agreements with its
     skilled employees and other key personnel, there can be no assurance that
     such employees will not leave the Company or compete against the Company.
     The Company's failure to attract additional qualified employees or to
     retain the services of key personnel could have a material adverse affect
     on the Company's business, operating results and financial condition.
     
         Dependence On Distributors; Risk Of Customer Business Failure; Product
     Returns.  Certain mass market retailers have established exclusive buying
     relationships under which such retailers will buy consumer software only
     from one or two intermediaries.  In such instances, the price or other
     terms on which the Company sells to such retailers may be adversely
     affected by the terms imposed by such intermediaries, or the Company may be
     unable to sell to such retailers on terms which the Company deems
     acceptable.  The loss of, or significant reduction in sales attributable
     to, any of the Company's principal distributors or retailers could
     materially adversely affect the Company's business, operating results and
     financial condition.  Distributors and retailers in the computer industry
     have from time to time experienced significant fluctuations in their
     businesses and there have been a number of business failures among these
     entities.  The insolvency or business failure of any significant
     distributor or retailer of the Company's products could have a material
     adverse effect on the Company's business, operating results and financial
     condition.  Sales are typically made on credit, with terms that vary
     depending upon the customer and the nature of the product. The Company does
     not hold collateral to secure payment.  Although the Company maintains a
     reserve for uncollectible receivables that it believes to be adequate, a
     payment default by a significant customer could have a material adverse
     affect on the Company's business, operating results and financial
     condition.
     
         The Company also is exposed to the risk of product returns from
     distributors and retailers.  Although the Company provides reserves for
     returns that it believes are adequate, and although the Company's
     agreements with certain of its customers place certain limits on product
     returns, the Company could be forced to accept substantial product returns
     to maintain its relationships with retailers and its access to distribution
     channels.  Product returns that exceed the Company's reserves could have a
     material adverse effect on the Company's business, operating results and
     financial condition.
     
         Risks Associated With International Operations.  International sales
     and licensing accounted for 24%, 28% and 23% of the Company's total
     revenues in the fiscal years 1994, 1995 and 1996, respectively.  The
     Company intends to continue to expand its direct and indirect sales and
     marketing activities worldwide.  Such expansion will require significant
     management time and attention and financial resources in order to develop
     adequate international sales and support channels.  There can be no
     assurance, however, that the Company will be able to maintain or increase
     international market demand for its products.  International sales are
     subject to inherent risks, including the impact of possible recessionary
     environments in economies outside the United States, the costs of
     transferring and localizing products for foreign markets, longer receivable
     collection periods and greater difficulty in accounts receivable
     collection, unexpected changes in regulatory requirements, difficulties and
     costs of staffing and managing foreign operations, and political and
     economic instability.  There can be no assurance that the Company will be
     able to sustain or increase international revenues or that the foregoing
     factors will not have a material adverse effect on the Company's future
     international revenues and, consequently, on the Company's business,
     operating results and financial condition.  The Company currently does not
     engage in currency hedging activities.  Although exposure to currency
     fluctuations to date has been insignificant, there can be no assurance that
     fluctuations in currency exchange rates in the future will not have a
     material adverse impact on revenues from international sales and licensing
     and thus the Company's business, operating results and financial condition.
     
         Risk Of Software Defects.  Software products such as those offered by
     the Company frequently contain errors or defects.  Despite extensive
     product testing, in the past the Company has released products with defects
     and has discovered software errors in certain of its product offerings
     after their introduction.  In particular, the personal computer hardware
     environment is characterized by a wide variety of non-standard peripherals
     (such as sound cards and graphics cards) and configurations that make
     pre-release testing for programming or compatibility errors very difficult
     and time-consuming.  There can be no assurance that, despite testing by the
     Company, errors will not be found in new products or releases after
     commencement of commercial shipments, resulting in a loss of or delay in
     market acceptance, which could have a material adverse effect on the
     Company's business, operating results and financial condition.
     
     STRATEGY
     
          The Company's objective is to be a worldwide leader in the development
     and delivery of exceptional and innovative interactive entertainment
     software designed for a range of platforms, appealing to existing and new
     audiences for entertainment software products, and incorporating
     sophisticated graphics, sound, video, compelling story lines and game
     experiences.  The Company's strategy includes the following elements:
     
          Develop best-selling titles.  The Company believes that competitive
     factors in the interactive entertainment software marketplace create the
     need for higher quality, distinctive products that provide superior gaming
     experiences.  Accordingly, the Company intends to focus on a select number
     of major new titles each year. Several of these titles will be based on
     existing franchises, while others will be based on new concepts.  The
     Company intends to support the development, production and marketing of
     these titles with the resources necessary to create best selling products.
     In order to reduce the financial risks associated with the higher budgets
     required for this strategy, the Company may from time to time pre-sell
     various rights, including ancillary rights and rights with respect to
     delivery platforms which the Company does not intend to support itself, in
     selected geographical territories.
     
          Leverage and enhance franchise properties.  The Company seeks to
     develop product franchises that have sustainable consumer appeal and brand
     recognition.  Through its long history in personal computer and video
     gaming, the Company has accumulated a rich backlist of titles, several of
     which were best-sellers when originally released.  The Company has
     successfully converted a number of these popular titles to franchise
     product lines, including its Zork, Shanghai and Pitfall series.  For
     example, the Company has released seven versions of Zork since the
     introduction in 1982 of the original Zork title, including, Return to Zork,
     which has sold over one million copies since its introduction in 1993, and
     the recently released Zork Nemesis.  The Company intends to create
     additional franchises from its broad library of content and from new,
     original concepts.
     
          Disciplined product development and production processes.  The Company
     recently has implemented product development and production processes that
     are designed to limit cost and schedule overruns within an environment that
     fosters creativity.  Such processes enable the Company to identify and
     address the majority of the technical and creative risks before the Company
     commences production of the title.  The Company has also implemented a
     series of defined, measurable milestones throughout development and
     production in order to increase its ability to maintain control over these
     processes.
     
          Utilize studio model.  The Company develops and produces products
     using a studio model, in which a core group of creative, production,
     technical, marketing and financial professionals at the Company have
     overall responsibility for the entire development and production processes
     and for the supervision and coordination of internal and external
     resources.  The Company believes that this studio model allows the Company
     to supplement internal expertise with top quality external resources on an
     as needed basis.
     
          Focus on CD-ROM based systems and other popular platforms.  The
     Company seeks to capitalize on the popularity of platforms as they are
     adopted by consumers.  The Company's current focus is on CD-ROM products to
     be used with MPCs.  During the fiscal year ended March 31, 1996,
     approximately 91% of the Company's revenues were from CD-ROM products to be
     used with MPCs.  The Company also believes that the next generation systems
     will become popular platforms in the future and, accordingly, it currently
     is developing certain of its existing titles, as well as several new
     titles, for these platforms.  In order to maintain platform flexibility,
     the Company has developed proprietary development and production processes
     and cross-platform authoring tools that enable it to develop products that
     can be adapted to multiple platforms efficiently.
     
          Develop and utilize proprietary technologies.  The Company has
     developed proprietary development tools which enable its producers,
     directors, artists and programmers to achieve visual and creative effects
     that differentiate the Company's products.  For example, MechWarrior 2
     utilized specialized real-time 3-D texture mapping and sophisticated
     artificial intelligence.  Zork Nemesis utilized technology allowing for
     true 360 degree movement within an environment.  All of these tools were
     developed by the Company's technology teams.  The Company intends to
     continue to develop and utilize proprietary technologies to create products
     that provide innovative interactive experiences.
     
          Expand distribution channels.  The Company's strategy is to continue
     to expand its independent, direct distribution of its products.  Through
     its internal sales force, the Company sells its software products directly
     to major computer and software retailing organizations, consumer electronic
     stores, discount warehouses and mail order companies in North America.  For
     the fiscal year ended March 31, 1996, 61% of the Company's North America
     publishing revenues were direct to these retail organizations.  The Company
     believes that a direct relationship with retail accounts results in more
     effective inventory management, merchandising and communications than would
     be possible through indirect relationships.  The Company seeks to continue
     to increase the number of retail outlets reached through its sales force
     and also is enhancing its current distribution relationships by introducing
     real-time ordering and invoicing links to its major distribution partners.
     In addition, the Company intends to pursue further direct international
     sales and distribution activities.
     
     PRODUCTS
     
          The Company is best known for its action, adventure and
     action/simulation products.  However, it recently has expanded its product
     line into new categories and expects to continue such expansion efforts.
     
          The Company's platform strategy is to capitalize on the popularity of
     hardware platforms as they are adopted by consumers.  Many of the Company's
     products are released in multiple formats for use on more than one desktop
     or set-top systems.  The Company has developed interactive entertainment
     software for a variety of platforms since its founding in 1979.  Throughout
     the 1980s the Company developed over 100 titles for the Apple Macintosh,
     MS-DOS compatible, Amiga and Commodore platforms as well as the Atari
     2600 and 8-bit and 16-bit set-top systems.  The majority of the 
     Company's current titles are being developed for PCs using the Windows 95
     and MS-DOS operating systems.  The Company also expects to introduce
     products for the next generation systems during the fiscal year ending
     March 31, 1997.
     
          The Company's current and future products can be divided into four
     categories:
     
          Franchise Products.  Franchise Products include one or more lines of
     products based on an original best selling title and are then extended to
     sequels and related products.  All Franchise Products are based on
     underlying properties that are owned by the Company.
     
          Licensed Products.  Licensed Products consist of titles based on
     licensed properties.  Some of these products have been extended to series.
     The Company does not consider them Franchise Products, however, as it does
     not control the underlying content.
     
          Original Products.  Original Products consist of releases based on
     original characters or concepts.  Because the underlying properties of
     these titles are owned or controlled by the Company, these titles, if
     successful can become new "franchises."
     
          Catalog Products.  Catalog Products consists of collections of
     backlist or "classic" titles which the Company has been able to compile and
     repackage for current popular platforms.
     
          The Company's focus is on creating new franchises and extending
     franchises through the introduction of new products based on existing
     franchises.  The Company believes that its Original Products will play an
     important role in creating future franchises.  Catalog Products represent a
     relatively small portion of the Company's revenues, but require little
     development investment and in the past have been highly profitable.  From
     time to time the Company also may continue to license properties for new
     Licensed Products.  Licensed Products are expected to comprise a smaller
     portion of the Company's revenues over time, however, as it focuses its
     development effort on Original Products.
     
       Franchise Products.  The Company seeks to create product franchises which
     have sustainable consumer appeal and brand recognition.  Through its long
     history in interactive entertainment software, the Company has accumulated
     a rich backlist of titles, a number of which were best-sellers.  The
     Company has converted three of these titles, Zork, Pitfall and Shanghai, -
     to Franchise Product lines.  For example, the Company has released six
     additional titles in the Zork series since the introduction in 1982 of the
     original Zork title, including most recently Zork Nemesis.  Since April 1,
     1993, the Company has sold more than 3.3 million copies of products based
     on the Zork, Pitfall and Shanghai properties.
           
           ZORK:  Zork is an adventure series in which the player is
           placed into a fantasy world where he must save mankind by
           picking up objects, finding his way through the world, killing
           or avoiding characters and solving puzzles.  The original Zork
           and the next four releases were text-based games released on the
           Apple II, MS-DOS and Atari platforms.  Return to Zork
           incorporated video and graphics for the first time into the Zork
           universe and was released for the MS-DOS and Macintosh
           platforms.  Zork Nemesis, for Windows 95 and MS-DOS, was
           released in March 1996; Zork Nemesis currently is being
           developed for the Macintosh, Playstation and Saturn systems.
           
           PITFALL!:  Pitfall!, an action/adventure game originally
           released on the Atari 2600 system in 1982, was one of the
           industry's best selling video game titles. Throughout the game,
           players must guide Pitfall Harry through a series of settings,
           avoiding traps and evil characters.  The most recent Pitfall
           product, Pitfall: The Mayan Adventure, was released in 1994 and
           is available for use on the Windows 95, SNES, Genesis, Sega 32X
           and Sega CD systems.  The Company's next Pitfall game,
           tentatively titled Pitfall 3-D, currently is under development
           for the Windows 95, Playstation and Saturn systems.
           
           SHANGHAI:  Shanghai is an internationally popular strategy game
           based on the ancient Chinese game of mahjongg, which requires
           players to manipulate intricately designed tiles.  Shanghai
           titles are available on a variety of platforms, including MS-
           DOS, Windows 3.1, Windows 95, Macintosh, Saturn, SNES, 3DO and
           Genesis.
           
           Other Franchise Products.  The Company currently intends to
           publish a sequel to one of its older best selling titles,
           Planetfall, a science fiction text adventure game first
           introduced in 1982.  The Company intends to introduce the
           Planetfall sequel for Windows 95, Playstation and Saturn in
           fiscal 1998.  However, there can be no assurance that such
           product will be released on schedule or at all and, if
           introduced, that it will generate any significant revenues or
           become a successful franchise.
           
       Licensed Products.  The Company selectively licenses from third
     parties intellectual property or other character or story rights,
     including rights associated with motion pictures or literary
     properties, and then develops titles based on these rights.  Certain
     of these products have been extended into series; the Company does not
     consider them Franchise Products, however, since the underlying
     property is not owned and, therefore, controlled by the Company.
     Licensed Products are attractive to the Company because of the proven
     nature of the underlying property and, in certain cases, because they
     enable the Company to enter new areas, such as children's titles, with
     a well known property, thereby reducing risk.  In developing products
     based on licensed intellectual property rights, the Company seeks to
     capitalize on the name recognition, marketing efforts and goodwill
     associated with the underlying property.  Certain of the Company's
     currently available or soon to be released Licensed Products are:
           
           BATTLETECH/MECHWARRIOR -- Since 1987, when the Company released
           the first of the action/adventure games in this series for use
           with the MS-DOS operating system, the Company has released six
           additional titles based on the "Battletech Universe."  The most
           recent of such titles is MechWarrior 2, which was released in
           1995 for the MS-DOS operating system.  In December 1995, the
           Company released an add-on disc to MechWarrior 2 entitled
           MechWarrior 2 Expansion Pack: Ghost Bear's Legacy, as well as a
           version of MechWarrior 2 that operates on the Windows 95
           operating system and allows for head-to-head combat via modem
           and multi-player interaction over a local area network.  Other
           titles in the MechWarrior series previously released by the
           Company include MechWarrior (SNES) and MechWarrior 3050 (SNES).
           During fiscal 1997, the Company expects to release MechWarrior 2
           on the Playstation and Saturn systems.  It also intends to
           introduce a sequel to MechWarrior 2 for the MS-DOS and Windows
           95 systems entitled MechWarrior 2: Mercenaries.  There can be no
           assurance that any such products will be released on schedule or
           at all and, if introduced, that they will generate any
           significant revenues.
           
           EARTHWORM JIM -- A humorous action game, Earthworm Jim is based
           on the set-top game.  In the game, Jim is a simple worm who
           suddenly finds himself endowed with super-human qualities.  The
           Company released this game for the Windows 95 platform in 1995.
           
           MUPPET TREASURE ISLAND -- This desktop children's title under
           development features Kermit the Frog, Miss Piggy, actor Tim
           Curry and a host of other Muppet characters.  The Muppet
           Treasure Island CD-ROM is based on a feature film of the same
           name, which was produced by Jim Henson Productions and released
           by Walt Disney Pictures in February 1996.  The Company currently
           expects to release this title in the fall of 1996.
     
       Catalog Products.  The Company continues to exploit its extensive library
     of content by re-packaging and re-releasing many of its original successful
     products in collection formats.  For example, the Company released seven
     collections of computer text adventures that previously were published
     under the Infocom brand name, including two which were released by the
     Company under the title Lost Treasures of Infocom, three collections of
     Atari 2600 video games under the title Activision's Atari 2600 Action Pack,
     and one collection of Commodore 64 games under the title Activision's
     Commodore 64 15 Pack.  The latter two series of collections have been
     converted for use with one or more of the MS-DOS, Windows 3.1, Windows 95
     and Macintosh operating systems.  The Company intends to continue to
     exploit its library through compilations and re-releases as opportunities
     arise.  Since April 1, 1993, the Company has shipped more than 370,000
     copies of products of this nature.
     
       Original Products.  In addition to exploiting its existing library of
     content, the Company develops and publishes new entertainment software
     products based on original characters or concepts conceived by the
     Company's staff and independent writers and designers.  Because the
     elements of these titles are owned by the Company, these titles, if
     successful, can become new "franchise" properties serving as a basis for
     sequels, adaptations and further ancillary exploitation.  However, there
     can be no assurance that any of these products will be released on schedule
     and, if released, that they will develop into franchise products.  Original
     Products that the Company recently has released or currently is developing
     and producing for Windows 95 and/or the next generation systems include:
     
           SPYCRAFT: THE GREAT GAME -- An espionage thriller, Spycraft:
           The Great Game  teams former adversaries William Colby, ex-CIA
           director, and Oleg Kalugin, former KGB Major General, as
           consultants on the project and actors in the game.  As a CIA
           operative, the player is drawn into the dangerous world of
           international intrigue.  The product was released on the MS-
           DOS, Windows 95 and Macintosh platforms in March 1996.
           
           HYPERBLADE -- A fast-action, real time, 3-D, multiplayer
           sports game, HyperBlade combines the hard-hitting action of
           such sports as hockey, soccer, lacrosse and speed skating and
           pits players against each other in a 3-D virtual arena.
           
           SANTA FE MYSTERIES -- A  role-playing murder mystery series
           set in Sante Fe, New Mexico.
           
           INTERSTATE `76 -- An off-road, 3-D, real time automotive
           combat simulation game, set in the 1970s, in which the player
           drives a 1969 Fairlane Cobra in a race to save America by
           finding and protecting the last oil refinery from the evil
           forces of OPEC.
           
           BLAST CHAMBER -- A unique action game set in a rotatable 3-D
           cube which allows up to four players to challenge each other in
           a pressure-packed race against time.  Players must stay one
           step ahead of their opponents as they maneuver their character
           through an intricate maze of obstacles, obtain control of a
           crystal and place it into the appropriate transmitter before a
           deadly time bomb strapped to their character is triggered.
     
       Affiliated Label Products.  The Company also periodically publishes and
     distributes software products for other developers.  As the Company seeks
     to associate the "Activision" mark only with the highest quality
     interactive entertainment products, it is selective in acquiring publishing
     and distribution rights from third party developers.  All of such products
     are marketed under the Company's name as well as the name of the original
     developer.  The Company believes that this affiliated label business
     enables it to leverage its investment in its marketing and sales forces and
     add a new source of products without incurring all of the risks inherent in
     original product development and production.  Certain of the Company's
     currently available or soon to be released affiliated label products are:

           TIME COMMANDO -- A sophisticated 3-D real-time, action-
           adventure game with vivid pre-rendered backgrounds.  Featuring
           nine distinct time periods, players travel deep into the past
           and are propelled forward into the future as they battle over
           60 historical enemies using over 50 different types of weapons.
           In each world, players face enemies representative of the time
           period, and must master the weapons of that era to defeat
           opponents.
           
            MIGHTY MORPHIN POWER RANGERS COLORING BOOK, MIGHTY MORPHIN
           POWER RANGERS JIGSAW PUZZLES, MIGHTY MORPHIN POWER RANGERS
           PRINT KIT, MIGHTY MORPHIN POWER RANGERS CREATE A MOVIE, MIGHTY
           MORPHIN POWER RANGERS SCREEN SAVER -- These five separate
           titles released in November and December 1995 feature the
           Mighty Morphin Power Rangers, including digitized images from
           the Power Rangers' television series as well as "Mighty Morphin
           Power Rangers: The Movie."

          OPERATING DIVISIONS

     Activision Studios
     
       Activision Studios, the Company's development and production group, is
     responsible for the selection, design, development, production, quality
     assurance and customer support of the Company's interactive entertainment
     software products.  The Company's creative development and production staff
     selects and develops new products, adapts existing products for additional
     hardware platforms, modifies licensed or acquired products and manages the
     external development of products by independent developers.
     
       Product Development.  The Company develops and produces products using a
     studio model, in which a core group of creative, production, technical,
     marketing and financial professionals on staff at the Company have overall
     responsibility for the entire development and production process and for
     the supervision and coordination of internal and external resources.  Each
     project team, which is led by a game producer and includes one or more
     associate producers, game designers, production coordinators, a creative
     executive, a technology executive and a quality assurance manager, all of
     whom are on the Company's staff, assembles the necessary creative elements,
     using where appropriate outside programmers, graphic and other artists,
     animators, musicians and songwriters, sound effects and special effects
     experts, and sound and video studios. The Company believes that this model
     allows the Company to supplement internal expertise with top quality
     external resources on an as needed basis.
     
       The Company has adopted and implemented a rigorous internal procedure for
     the selection, development, production and quality assurance of its
     entertainment software titles.  The process involves a pre-development
     phase, a development phase and a production phase, each of which includes
     various measurable performance milestones.  This procedure is designed to
     enable the Company to manage and control production and development budgets
     and timetables, to identify and address production and technical issues
     quickly, and to coordinate marketing and quality control strategies
     throughout the production and development phases, all in an environment
     that fosters creativity.  Checks and balances are provided through the
     structured interaction of the project team with the Company's creative,
     technical, marketing and quality assurance/customer support personnel, as
     well as the legal, accounting and finance departments.
     
       Before actual development can begin on a new title, the product concept
     is subjected to a preliminary development process designed to ensure that
     there is a clear and sound vision for the product.  At the conclusion of
     this pre-development process, which can last up to six months, management
     will have approved a preliminary design document, a comprehensive
     development budget and schedule and a staffing plan for the development and
     production phases.  A creative executive also will have been assigned to
     the project.  The development phase, which lasts from four to six months
     after pre-development, includes the assignment of the internal project
     team, the identification of external talent and suppliers and the
     preparation of a final design document and a complete plan for the product.
     
       During the production process, which can last six to 18 months after
     conclusion of development, the Company requires regular budget and other
     reviews and reports to enable management to monitor all aspects of the
     production process.  Key elements of the production process include the
     assembling of all creative elements in a manner that maximizes the
     efficiency with which the title can be converted to new platforms and
     translated and localized for new markets, and the planning and
     implementation of the marketing strategy for the product.
     
       Quality Assurance and Customer Support.  The Company's quality assurance
     personnel are involved throughout the development and production processes
     for each title, and products are subjected to extensive testing before
     release.  To support its products after release, the Company provides on-
     line support on a 24-hour basis and operator help lines during regular
     business hours.  The customer support group tracks customer inquiries and
     this data is used to improve the development and production processes.
     
     Marketing
     
       The Company's marketing efforts include on-line activities (such as the
     creation of World Wide Web pages specifically to promote Zork Nemesis,
     Spycraft: The Great Game, The Elk Moon Murder and Muppet Treasure Island),
     public relations, print and broadcast advertising, coordinated in-store and
     industry promotions including merchandising and point of purchase displays
     and participation in cooperative advertising programs, direct response
     vehicles, and product sampling through demonstration software distributed
     through the Internet or on compact discs.  In addition, the Company's most
     recent products contain software that enables customers to Oelectronically
     registerO their purchases with the Company via modem.  Through this
     process, the Company captures electronic mail addresses for its customers
     as well as a variety of additional market research data.  The Company
     intends to increase its on-line marketing activities using these electronic
     mail addresses for direct response promotions, and making its titles and
     upgrades available for sale through on-line services when appropriate.
     
       The Company believes that certain of its franchise properties (such as
     the Zork series) have loyal and devoted audiences who purchase the
     Company's sequels as a result of dedication to the property and
     satisfaction from previous product purchases.  Marketing of these sequels
     is therefore directed both toward the established market as well as broader
     audiences.  In marketing titles based on feature films or other licensed
     properties, the Company believes that it derives marketing synergies and
     related benefits from the marketing and promotional activities of the
     property owners.
     
     Sales and Distribution
     
       Domestic sales and distribution.  The Company's products are domestically
     available for sale or rental in thousands of retail outlets ranging from
     consumer electronics and computer specialty stores to department stores,
     discount chains, video rental stores and toy stores.  The Company's
     customers in these categories include Best Buy, CompUSA, Computer City,
     Neostar, Egghead Discount Software, Electronic Boutique, Sears, WalMart, K-
     Mart, Target, Blockbuster Video and Toys "R" Us.  For the fiscal year ended
     March 31, 1996, sales made to two customers (CompUSA and Best Buy)
     accounted for approximately 6% and 7% of consolidated net revenues of the
     Company, respectively.  The loss of either of such customers could have a
     material adverse impact on the Company's business, operating results and
     financial condition.  The majority of the Company's North American sales
     are made directly to the retailers.  The Company believes that a direct
     relationship with retail accounts results in more effective inventory
     management, merchandising and communications than would be possible through
     indirect relationships.  The Company has implemented EDI linkage with
     several retailers to facilitate the placing and shipment of orders.  The
     Company seeks to continue to increase the number of retail outlets reached
     directly through its internal sales force.  To a lesser extent, the Company
     sells its products through wholesale distributors, such as Ingram Micro,
     Handelman and Merisel.
     
       International Sales and Distribution.  The Company conducts a substantial
     portion of its international sales, licensing and distribution activities
     through its offices in Japan, England and Australia.  At present, the
     Company's office in Australia handles the Company's distribution and
     marketing efforts in Australia, New Zealand, Singapore, and other South
     Pacific Rim countries.  Through its office in Japan, the Company
     facilitates the licensing and distribution of its products in the Japanese
     and certain other Asian markets.  The licensing and distribution of the
     Company's products in Europe is performed through the Company's London
     office.  The Company recently established a sales office in Miami to
     oversee the Company's distribution and marketing efforts in Latin America.
     The Company seeks to broaden the distribution of its products in
     international markets by translating and localizing certain of its products
     into foreign languages.  The Company also currently intends to increase its
     staff in Japan so that new titles can be developed and published directly
     by the Company for the Japanese market.  To this end, the Company may seek
     new development partners in Japan.
     
       OEM Transactions.  The Company seeks to enhance the distribution of its
     products through licensing arrangements with original equipment
     manufacturers ("OEM"s).  Under these arrangements, one or more of the
     CompanyOs titles are ObundledO with hardware or peripheral devices sold and
     distributed by the OEM so that the purchaser of the hardware or device
     obtains the Company's software as part of the purchase or on a discounted
     basis.  Although it is customary for the Company to receive a lower per
     unit price on sales through OEM bundle arrangements, the OEM customer makes
     a high unit volume commitment to the Company and there are no associated
     marketing costs.  In addition, the Company from time to time receives
     substantial advance payments from the OEM customer.  The Company also
     believes that such arrangements can substantially expand the distribution
     of its titles to a broader audience.  Recent OEM partners include
     Microsoft, IBM, Sony, Compaq, Apple and NEC.
     
       Affiliated Developer Business.  The Company periodically licenses or
     acquires from other developers software products for publishing and
     distribution by the Company.  Acquired titles are marketed under the
     CompanyOs name as well as the name of the original developer.  The
     agreements with affiliated developers provide for the grant to the Company
     of exclusive distribution rights for a specific period of time for
     specified platforms and territories.
     
     Licensing and Merchandising Activities
     
        The Company believes that a number of its products have the potential to
     be exploited in ancillary markets and media, such as product merchandising
     and traditional entertainment media. Directly and through third party
     agents, the Company actively is seeking opportunities for the exploitation
     of these ancillary rights.  Potential opportunities include the publication
     of strategy guides for selected titles, the adaptation of titles into comic
     books, novels, television or motion pictures, and the licensing of product
     merchandising rights.  The Company believes that these types of licensing
     activities can provide additional sources of revenue and increase the
     visibility of the title, thereby leading to additional unit sales and
     greater  potential for additional sequels.  There can be no assurance that
     the Company will be successful in exploiting its properties in ancillary
     markets or media.
     
       Similarly, the Company believes that there are opportunities for further
     exploitation of its titles through the Internet, on-line services such as
     America Online, Prodigy, the Microsoft Network and CompuServe, and through
     recently created on-line gaming services such as Dwango, X-Band and MPath.
     The Company has established "900" telephone numbers as hint lines for
     certain of its titles, and has realized revenues from large numbers of
     calls to these numbers.  The Company also is actively exploring the
     establishment of on-line game playing opportunities, on-line hint sites,
     and Internet services as a method for realizing additional revenues from
     its products.  There can be no assurance that the Company will be
     successful in exploiting these opportunities.
     
     HARDWARE LICENSES
     
       The Company's set-top products currently are being developed or published
     for one or more systems owned by Nintendo, Sega or Sony.  Each of the set-
     top systems owned by these companies has unique and proprietary
     configurations.  In order to gain access to the set-top systems that the
     Company currently is supporting, the Company has obtained licenses for each
     of the SNES, Genesis, Sega CD, Saturn and PlayStation systems.  Each
     license allows the Company to create one or more products for the
     applicable system, subject to certain approval rights as to quality which
     are reserved by each licensor.  Each license also requires that the Company
     pay the licensor a per unit license fee from product sales.
     
       In contrast, the Company currently is not required to obtain any license
     for the development and production of desktop products.  Accordingly, the
     Company's per unit manufacturing cost for desktop products is less than the
     per unit manufacturing cost for set-top products.
     
     MANUFACTURING
     
       The Company prepares a set of master program copies, documentation and
     packaging materials for its products for each respective hardware platform
     on which the product will be released.  Except with respect to products for
     use on the Nintendo, Sony and Sega systems, the Company's disk duplication,
     packaging, printing, manufacturing, warehousing, assembly and shipping are
     performed by third party subcontractors.
     
       In the case of products for the Nintendo, Sony and Sega systems, in order
     to maintain protection over their hardware technologies, such hardware
     producers generally specify and/or control the manufacturing and assembly
     of finished products.  The Company delivers the master materials to the
     licensor or its approved replicator which then manufactures finished goods
     and delivers them to the Company for distribution under the Company's
     label.  At the time the Company's product unit orders are filled by the
     manufacturer, the Company becomes responsible for the costs of
     manufacturing and the applicable per unit royalty on such units, even if
     the units do not ultimately sell.
     
       To date, the Company has not experienced any material difficulties or
     delays in the manufacture and assembly of its products or material returns
     due to product defects.

     EMPLOYEES
     
          As of March 31, 1996, the Company had 319 employees, including 220 in
     Activision Studios, 43 in Sales and Marketing, 41 in Finance, Operations
     and Administration, two in Licensing and Merchandising and 11 in its
     offices in Japan, England and Australia.
     
          As of March 31, 1996, 88 of the Company's full-time employees were
     subject to term employment agreements with the Company.  These agreements
     commit such employees to employment terms of between one and three years
     from the commencement of their respective agreements.  Most of the
     employees subject to such agreements are members of either Activision
     Studios or the Company's Sales and Marketing divisions and perform services
     to the Company as directors, producers, associate producers, computer
     programmers, game designers, sales directors and product managers.  The
     execution by the Company of employment agreements with such employees, in
     the Company's experience, significantly reduces the Company's turnover
     during the development and production of its entertainment software
     products and allows the Company to plan more effectively for future
     development activities.
     
          None of the Company's employees are subject to a collective bargaining
     agreement, and the Company has experienced no labor-related work stoppages.

     (d)  Financial Information about Foreign and Domestic Operations and Export
     Sales

          See Note 9 of Notes to Consolidated Financial Statements included in

 
    Item 8.


Item 2.   PROPERTIES

          The Company's principal corporate, administrative, and product
     development offices are located in approximately 57,000 square feet of
     leased space in a building located at 11601 Wilshire Blvd., Los Angeles,
     California.  The lease in Los Angeles was first entered into in November
     1993.  The following is a listing of all premises maintained by the Company
     at March 31, 1996:
     
            Location of
            Principal Facilities    Square Feet    Lease Expiration Date
            -----------------------------------    ---------------------
            Los Angeles, California   19,000          March 31, 1998
            Los Angeles, California   38,000          March 31, 1997
            London, United Kingdom     2,000          February 4, 1997
            Tokyo, Japan                 450          July 31, 1997
            Sydney, Australia            400          Month-to-Month
     
          The Company currently is searching for new premises for its Los
     Angeles offices.  Although management believes that physical facilities
     that meet the Company's requirements are available in the Los Angeles area,
     there can be no assurance that it will be successful in its attempt to find
     such facilities on terms acceptable to the Company.


Item 3.   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.


Item 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
      
     Not applicable.
                                        
                                        

                                     PART II



Item 5.   MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCK-HOLDER
     MATTERS

          From October 22, 1993, through January 25, 1995 the Company's Common
     Stock was quoted on the NASDAQ SmallCap Market.  Since January 26, 1995,
     the Common Stock has been quoted on the NASDAQ National Market.
     
          The table below reflects the range of high ask and low bid closing
     quotations, or high and low reported last sale prices, for each quarterly
     period during the Company's two most recent fiscal years, as discussed
     below.
     
          The following table sets forth the periods indicated at the high and
     low reported closing prices for the Common Stock.
     
                                                         High        Low
                                                      Ask/Sale    Bid/Sale
                                                      --------    --------
     Fiscal 1995
     ------------
            First Quarter ended June 30, 1994         $  7.62     $  5.00
            Second Quarter ended September 30, 1994   $  6.22     $  4.00
            Third Quarter ended December 31, 1994     $  5.75     $  3.25
            Fourth Quarter ended March 31, 1995       $  9.00     $  5.00
     
     Fiscal 1996
     ----------------
            First Quarter ended June 30, 1995         $ 7.18      $  5.75
            Second Quarter ended September 30, 1995   $19.75      $  6.75
            Third Quarter ended December 31, 1995     $18.50      $  8.13
            Fourth Quarter ended March 31, 1996       $15.13      $  8.63
     
     Fiscal 1997
     ----------------
             First Quarter ended June 30, 1996        $15.00       $11.75
             Second Quarter through July 2, 1996      $14.63       $13.00
     
          On July 2, 1996, the reported last sales price for the Common Stock
     was $14.00.  As of March 31, 1996, the Company had approximately 5,500
     stockholders of record, excluding banks, brokers and depository companies
     that are the stockholders of record for the account of beneficial owners.
     
          The Company has never paid cash dividends on its capital stock and
     does not intend to pay cash dividends at any time in the foreseeable
     future.  The Company expects that earnings will be retained for the
     continued growth and development of the Company's business.  Future
     dividends, if any, will depend upon the Company's earnings, financial
     condition, cash requirements, future prospects and other factors deemed
     relevant by the Company's Board of Directors.
     
          During the period from December 11, 1996 to December 14, 1996 the
     Company purchased in open market transactions 500,000 of its shares of
     common stock, at prices ranging from $10.25 to $10.875, aggregating
     approximately $5.3 million.  These purchases were made pursuant to the
     Company's announced share repurchase program.  The company may from time to
     time in the future make additional open market purchases of its common
     stock.
     
          Restriction on Sales and Purchases of the Common Stock by Certain
     Persons.  The Company's Amended and Restated Certificate of Incorporation
     includes provisions that limit transfers of shares of the Company's Common
     Stock, or options, warrants or other securities convertible into or
     exercisable for shares of the Company's Common Stock, to or from persons
     who, before the transfer, own in excess of 4.75% of the outstanding Common
     Stock, or to persons who, after the attempted transfer, would own more than
     4.75% of the outstanding shares of the Company's Common Stock (the
     "Transfer Restrictions").  For purposes of the computation of such
     percentage, all outstanding options, warrants and convertible securities
     are deemed to have been exercised or converted.
     
          The Transfer Restrictions terminate by their terms on the earlier to
     occur of (i) January 10, 1997, (ii) the repeal of Section 382 of the Code
     (which provides for reduction or elimination of certain tax benefits upon a
     change of ownership), or (iii) the beginning of a taxable year of the
     Company to which no Tax Benefits (as defined in the Certificate of
     Incorporation) may be carried forward.  In addition, the Transfer
     Restrictions can be terminated and abandoned, or their imposition deferred
     for a reasonable period, if in the opinion of the Board of Directors such
     action would be in the best interests of the Company and its stockholders.
     On March 27, 1996 the Board of Directors voted to terminate the Transfer
     Restrictions effective on that date.  Therefore, the Transfer Restrictions
     are no longer applicable.
     
          Merger Transfer Restrictions.  In connection with the ICT Merger
     (described in the Notes to Consolidated Financial Statements contained in
     Item 8), certain further restrictions were imposed on the sale or transfer
     of the shares of the Company's common stock held by the former stockholders
     of ICT.  Pursuant to the merger agreement, none of such holders may
     transfer or sell any of their shares of common stock received as a result
     of the merger, without the prior approval of the Company's Board of
     Directors, until after December 31, 1997.  On March 27, 1996, such
     restrictions were terminated by the Company's Board of Directors.




Item 6.   SELECTED CONSOLIDATED FINANCIAL DATA

       The following tables summarize certain selected consolidated financial
data, which should be read in conjunction with the Company's Consolidated 
Financial Statements and with Management's Discussion and Analysis of Financial 
Condition and Results of Operations included elsewhere herein.
The selected consolidated financial data presented below as of and for
each of the  fiscal years in the five-year period ended March 31, 1996
are derived from the consolidated financial statements of the Company,
which financial statements have been audited by Coopers & Lybrand L.L.P.,
independent accountants.  The Consolidated Financial Statements as of
March 31, 1996 and 1995 and for each of the fiscal years in the three-year 
period ended March 31, 1996, and the report thereon, are included elsewhere
in this Form 10-K.
     
<TABLE>
                                        
         (IN THOUSANDS, EXCEPT PER SHARE DATA, RATIOS AND EMPLOYEE DATA)
                                        
<CAPTION>
                                       Fiscal Years Ended March 31,

                            1992 (4)    1993       1994       1995        1996
<S>                         <C>         <C>        <C>        <C>          <C>

STATEMENT OF OPERATIONS DATA:
Net revenues              $9,168     $21,069    $26,604     $40,669    $61,393
Gross profit               4,562       9,535     11,293      19,376     39,644
Operating income (loss)     (985)       (208)    (2,031)     (2,957)     2,532
Income (loss) before 
  provision for income 
  taxes                   (1,508)       (217)    (1,853)     (1,365)     4,239
Net income (loss) from 
  continuing operations   (1,685)       (279)    (1,987)     (1,520)     5,530
Loss from discontinued 
  operations                   -      (1,100)         -           -          -
Net income (loss)         (1,685)     (1,379)    (1,987)     (1,520)     5,530
Accumulated, unpaid 
  preferred dividends          -      (3,163)    (3,296)          -          -
Earnings (loss) per common 
  share from continuing 
  operations (1)          $(1.90)     $(1.01)    $(0.97)     $(0.11)     $0.37
Earnings (loss) per 
  common share (1)         (1.90)      (1.33)     (0.97)      (0.11)      0.37
Weighted average number 
  of shares used in computing 
  net income (loss) per 
  common share (1)           889       3,412      5,432      13,944     14,950
OTHER OPERATING DATA:
Average number of 
  employees                   38          60         62          93        234
Net revenues per 
  employee (in thousands)   $241        $351       $429        $437       $262

   CAPTION                                  As of March 31,
<S>                         <C>          <C>        <C>         <C>        <C>
                            1992        1993       1994        1995       1996
BALANCE SHEET DATA:
Cash and cash equivalents $1,509      $1,851    $38,093     $37,355    $25,288
Working capital             (678)      5,261     41,218      40,648     40,227
Intangible assets            420      23,429     22,146      20,863     19,580
Total assets               2,789      34,580     68,677      68,883     77,613
Long-term debt                 -           -          -           -          -
Redeemable preferred 
  stock (3)                    -      25,200          -           -          -
Preferred shareholders' 
  equity (4)                   -       4,603          -           -          -
Common shareholders' equity   88        (792)    63,985      62,704     62,999
<FN>

(1)  Reflects the Company's 1-for-10 reverse stock split effective August 3,1992
and the 1-for-3 reverse stock split effective October 20, 1993.  Accordingly,
previously reported earnings (loss) per share and common share amount have been
retroactively restated.
(2)  Does not include accrued dividends of $3,163 as of March 31, 1993.
(3)  Represents $5,000 of gross proceeds received from the sale of Series AA
Preferred Stock, less offering expenses and the amount allocated to warrants
sold at the time.  See Note 3 of Notes to Consolidated Financial Statements
included in Item 8.
(4)For purposes of this presentation, the fiscal year ended March 31, 1992
includes the results of the Company from April 1, 1991 to January 8, 1992 (the
"Predecessor Company" results) and the period January 9, 1992, the effective
date of its Plan of Reorganization (the "Plan of Reorganization") under Chapter
11 of Title 11 of the United States Code (the "Bankruptcy Code") to March 31,
1992 (the "Reorganized Activision" results).  Results for the period January 9,
1992 to March 31, 1992 ("Reorganized Activision") include net revenues of 
$2,066, gross profit of $1,309, operating income of $136, income before 
provision for income taxes of $137, net income of $64, earnings per share of 
$0.02, weighted average number of shares used computing net income per common
share of 3,129, average number of employees of 18 and net revenues per employee
of $459.


Item 7.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
     RESULTS OF OPERATIONS

RESULTS OF OPERATIONS - FISCAL YEARS ENDED MARCH 31, 1996 AND 1995

Net Revenues

     Net revenues for the fiscal year ended March 31, 1996 increased by 51% over
the prior year, primarily as a result of an increase in the release of new
desktop titles.  Desktop net revenues increased by 285% over the prior year as a
result of the initial release of MechWarrior 2  (MS-DOS and Windows 95),
MechWarrior 2 Expansion Pack: Ghost Bear's Legacy  (MS-DOS), Zork Nemesis  (MS-
DOS/Windows 95), Spycraft: The Great Game  (MS-DOS/Windows 95 and Macintosh),
Pitfall: The Mayan Adventure  (Windows 95), Earthworm Jim  (Windows 95) and five
Mighty Morphin Power Ranger  titles (MS-DOS and Mac). The Company currently
expects its revenues from desktop products to grow in fiscal 1997, but at a
slower rate than fiscal 1996 growth.

     The decrease in set-top net revenues during the fiscal year was due to the
Company's strategic change in its business emphasis from cartridge-based set-top
systems to CD-based desktop systems. The Company expects revenues from set-top
products to grow as a result of an increase in new releases of CD based set-top
products for the Playstation and Saturn.

      On-line, OEM, licensing and other revenues increased over the prior year
due to the Company's increased commitment to generating additional OEM revenues
and the availability of several additional titles for the OEM market.  OEM and
licensing revenues during the 1996 fiscal year primarily were derived from sales
and licenses of MechWarrior 2  (MS-DOS, Windows 95 and an enhanced 3-D version),
Earthworm Jim  (Windows 95), Pitfall: The Mayan Adventure  (Windows 95) and
Shanghai: Great Moments (MS-DOS and Windows 95).

     North America, Japan and Australia net revenues increased as a result of
the increase in desktop, OEM and licensing revenues discussed above. The Company
expects revenues in each of these territories to grow in fiscal 1997, but at a
slower rate than fiscal 1996 growth.  The decrease in Europe net revenues was
attributable to a change from the publishing by the Company of its products
under an exclusive guaranteed distribution agreement in fiscal 1995 to the
publishing by the Company of its products directly to retailers and resellers in
fiscal 1996, combined with the change of the Company's business emphasis from
cartridge-based set-top systems to CD-based desktop systems.

     Net revenues by territory were as follows (amounts in thousands):

                                  Fiscal Years Ended March 31,
                                   1996                  1995

                                      % of Net              % of Net
                             Amount   Revenues     Amount   Revenues    % Change

            North America   $47,176      76.8%    $29,492      72.5%      60.0%
                   Europe     6,501      10.6%      7,574      18.6%     (14.2%)
                    Japan     4,768       7.8%      2,194       5.4%     117.3%
            Australia and
              Pacific Rim     2,948       4.8%      1,409       3.5%     109.2%
                            -------    -------    -------     ------     ------
                            $61,393     100.0%    $40,669     100.0%      51.0%
                            =======    =======    =======     ======     ======

            Net revenues by platform were as follows (amounts in thousands):

                                  Fiscal Years Ended March 31,
                                   1996                  1995

                                      % of Net              % of Net
                             Amount   Revenues     Amount   Revenues   % Change

                  Set-top    $5,161       8.4%    $26,069      64.1%     (80.2%)
                  Desktop    56,232      91.6%     14,600      35.9%     285.2%
                            ---------------------------------------------------
                            $61,393     100.0%    $40,669     100.0%      51.0%
                            =======     ======    =======     ======      =====

     Net revenues by distribution channel were as follows (amount in thousands):

                                  Fiscal Years Ended March 31,
                                   1996                  1995

                                      % of Net              % of Net
                             Amount   Revenues     Amount   Revenues   % Change

        Retailer/reseller   $46,192      75.2%    $34,706      85.3%       33.1%
                      OEM    10,728      17.5%      2,637       6.5%      306.8%
        On-line licensing
                and other     4,473       7.3%      3,326       8.2%       34.5%
                            ----------------------------------------------------
                            $61,393     100.0%    $40,669     100.0%       51.0%
                            =======     ======    =======     ======       =====

Cost of Goods Sold

     Cost of goods sold related to set-top, desktop and OEM revenues represents
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, 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.  The increase in total cost of goods sold is related to the
increase in desktop and OEM net revenues.

Gross Profit

     Gross profit as a percentage of net revenues increased to 64.6% for the
fiscal year ended March 31, 1996, from 47.6% for fiscal 1995, as a result of an
increase in desktop CD-based net revenues.  Net revenues from CD-based desktop
products generally yield a higher gross profit margin than net revenues from 
set-top products as a result of the lower costs of goods sold attributable to 
such desktop products.  The increase in gross profit also was due to the 
increase in on-line, OEM, licensing and other revenues, which also yield higher 
gross profit margins.

Operating Expenses

     Total operating expenses increased as a percentage of net revenues as a
result of a substantial increase in product development expenses.  This increase
was partially offset, however, by a decrease in sales and marketing expenses and
general and administrative expenses as a percentage of net revenues.  Product
development expenses increased both in amount and as a percentage of net
revenues due to the continued growth of the CompanyOs product development
departments, the increased number of products in product development, and the
increased costs associated with enhanced production content and new technologies
incorporated into such products.  Approximately $5.5 million of product
development expenses for the year ended March 31, 1996 related to products which
will be released in subsequent periods.  Sales and marketing expenses increased
in actual amount, but not as a percentage of net revenues, as a result of the
marketing and promotional activity related to newly released titles.  General
and administrative expenses increased in actual amount, but not as a percentage
of net revenues, due to an increase in headcount related expenses.

</TABLE>


<TABLE>
                                   (Amounts in thousands)
<CAPTION>
                                 Fiscal Years Ended March 31,
                                 1996                   1995

                                     % of Net               % of Net
                             Amount  Revenues     Amount    Revenues    % Change

<S>                           <C>        <C>         <C>       <C>         <C>
       Product development  $17,505     28.5%     $7,274       17.9%      140.7%
       Sales and marketing   13,920     22.7%     10,410       25.6%       33.7%
General and administrative    4,404      7.2       3,366        8.3%       30.8%
Amortization of intangible
                  assets      1,283      2.1%      1,283        3.2%          -
                            -------     -----     ------       -----      ------
  Total operating expenses  $37,112     60.5%     $22,333      55.0%       66.2%
                            =======     =====     =======      =====      ======
</TABLE>

Other Income (Expense)

     Interest income increased to $1,707,000 for the fiscal year ended March 31,
1996, from $1,592,000 for the fiscal year ended March 31, 1995, as a result of
higher yields earned on cash and cash equivalents.  See "Liquidity and Capital
Resources".

Provision for Income Taxes

     During the quarter and year ended March 31, 1996, the Company recognized a
tax benefit of $1.5 million through a reduction in the Company's deferred tax
asset valuation allowance.  This reduction in the valuation allowance resulted
principally from the Company's assessment of the realizability of its deferred 
tax assets, based on recent operating history, as well as an assessment that 
operations will continue to generate taxable income.  Realization of the
deferred tax assets is dependent upon the continued generation of sufficient
taxable income prior to expiration of tax credits and loss carryforwards. 
Although realization is not assured, management believes it is more likely than
not that the net deferred tax asset of $1.5 million will be realized.  The
amount of the deferred tax assets considered realizable, however, could be 
reduced in the future if estimates of future taxable income during the 
carryforward period are reduced.  The income taxes recorded in the provision for
taxes for the year ended March 31, 1995 represents foreign taxes withheld.

RESULTS OF OPERATIONS - FISCAL YEARS ENDED MARCH 31, 1995 AND 1994

Net Revenues

     Net revenues for the fiscal year ended March 31, 1995 increased by 53% over
the prior year, primarily as a result of increased sales of new desktop and set-
top titles as well as continued sales of previously released desktop titles.
Set-top net revenues increased in fiscal 1995 due to net revenues generated from
the initial releases of Pitfall: The Mayan Adventure (SNES, Genesis, and Sega
CD), Radical Rex (SNES, Genesis and Sega CD) and Shanghai: Triple Threat (3DO).
Desktop net revenues for the fiscal year ended March 31, 1995 include revenues
from the initial releases of Activision's Atari 2600 Action Pack (MS-DOS) and
Shanghai: Great Moments (MS-DOS).  Desktop net revenues for fiscal 1995 also
include continuing net revenues from Return to Zork (MS-DOS and Mac).  On-line,
licensing and other net revenues decreased due to the decrease in design
services and design merchandising revenues.  OEM net revenues in fiscal 1995
includes net revenues from Return to Zork (MS-DOS and a Reel Magic MPEG
version).  Licensing net revenues includes net revenues from Return to Zork and
the Shanghai series of products.

     Net revenues by territory were as follows (amounts in thousands):
     
                              Fiscal Years Ended March 31,
                             1995                      1994

                                  % of Net                 % of Net
                       Amount     Revenues       Amount    Revenues   % Change

      North America   $29,492        72.5%      $20,176       75.9%      46.2%
             Europe     7,574        18.6%        4,183       15.7%      81.1%
              Japan     2,194         5.4%        1,362        5.1%      61.1%
      Australia and
        Pacific Rim     1,409         3.5%          883        3.3%      60.0%
                      --------------------------------------------------------
                      $40,669       100.0%      $26,604      100.0%      52.9%
                      =======       ======      =======      ======      =====


Net revenues by platform were as follows (amounts in thousands):

                              Fiscal Years Ended March 31,
                             1995                     1994

                                  % of Net                 % of Net
                       Amount     Revenues      Amount     Revenues   % Change

            Set-top   $26,069        64.1%     $10,637        40.0%     145.1%
            Desktop    14,600        35.9%      13,658        51.3%       6.9%
      Merchandising
    design services         -           -        2,309         8.7%    (100.0%)
                      ----------------------------------------------------------
                      $40,669       100.0%     $26,604       100.0%      52.9%
                      =======       ======     =======       ======      =====

Net revenues by channel were as follows (amount in thousands):

                              Fiscal Years Ended March 31,
                              1995                    1994

                                  % of Net                  % of Net
                       Amount     Revenues      Amount      Revenues   % Change

  Retailer/reseller   $34,706        85.3%     $19,177         72.1%      81.0%
                OEM     2,637         6.5%       2,370          8.9%      11.3%
  On-line licensing
          and other     3,326         8.2%       5,057         19.0%     (34.2%)
                      ---------------------------------------------------------
                      $40,669       100.0%     $26,604        100.0%      52.9%
                      =======       ======     =======        ======      =====

Cost of Goods Sold

     Cost of goods sold related to set-top, desktop and OEM revenues represents
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, 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.  The increase in cost of goods sold is related to the
increase in set-top, desktop and OEM net revenues.

Gross Profit

     Gross profit as a percentage of net revenues increased to 47.6% for the
fiscal year ended March 31, 1995, from 42.4% for fiscal 1994, as a result of an
increase in set-top revenues and the increase in set-top and desktop CD-based
net revenues as a percentage of total net revenues.  CD-based revenues generally
yield a higher gross profit margin than set-top cartridge-based revenues.

Operating Expenses

     Total operating expenses as a percentage of net revenues increased as a
result of an increase in product development expenses and sales and marketing
expenses.  This increase was partially offset, however, by a decrease in general
and administrative expenses as a percentage of net revenues.  Product
development expenses increased both in actual amount and as a percentage of
revenues due to an increase in the number of products put into product
development during the 1995 fiscal year.  Sales and marketing expenses increased
both in amount and as a percentage of revenues as a result of the marketing and
promotional activity related to Pitfall: The Mayan Adventure, which included a
substantial television, radio and print advertising campaign.  In addition,
product development and sales and marketing expenses increased in actual amount
as a result of increased headcount and related expenses.  General and
administrative expenses increased in actual amount, but not as a percentage of
net revenues, due to an increase in headcount related expenses.

<TABLE>
                                   (Amounts in thousands)
<CAPTION>
                                Fiscal Years Ended March 31,
                                 1995                 1994

                                     % of Net             % of Net
                            Amount   Revenues    Amount   Revenues     % Change

<S>                         <C>        <C>          <C>       <C>          <C>
       Product development  $7,274     17.9%      4,380      16.5%        66.1%
       Sales and marketing  10,410     25.6%      5,013      18.8%       107.7%
General and administrative   3,366      8.3%      2,648      10.0%        27.1%
Amortization of intangible
                    assets   1,283      3.2%      1,283       4.8%           -
                           -------     -----    -------      -----       ------
  Total operating expenses $22,333     55.0%    $13,324      50.1%        67.6%
                           =======     =====    =======      =====       ======
</TABLE>


[FN]
Other Income (Expense)

     Interest income increased to $1,592,000 for the fiscal year ended March 31,
1995 from $178,000 for the fiscal year ended March 31, 1994 as a result of the
increase in cash and cash equivalents that resulted from the Common Stock
private placement completed in January 1994.  See "Liquidity and Capital
Resources."

Provision for Income Taxes

     The income taxes recorded in the provision for income taxes of $155,000 and
$134,000 for the years ended March 31, 1995 and 1994, respectively, represent
foreign taxes withheld.  These foreign taxes may be available in the future as
tax credits against future tax liability.  In addition, the Company has
significant net operating losses which may be carried forward against current
and future taxable income for federal, state and foreign tax purposes.

QUARTERLY OPERATING RESULTS

     The Company's quarterly operating results have in the past varied
significantly and will likely in the future vary significantly depending on
numerous factors, several of which are not under the Company's control.
Products generally are shipped as orders are received, and consequently the
Company operates with little or no backlog.  Net revenues in any quarter
therefore are substantially dependent on orders received and shipped in that
quarter.  The Company's expense levels are based in large part on the Company's
product development and marketing budgets.  Product development and marketing
costs are expensed as incurred, which often is long 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 its
operating results are not necessarily meaningful and should not be relied upon
as indications of future performance.

The following table is a comparative breakdown of the Company's quarterly
results for the immediately preceding eight quarters (amounts in thousands):

<TABLE>
<CAPTION>
                                   Quarter ended
                                                                    
                            June 30,  Sept. 30,   Dec. 31,  March 31,   
                              1994       1994       1994       1995       
<S>                         <C>          <C>        <C>       <C>         
Net revenues                 3,249      4,635     26,185      6,600      
Gross profit                 1,440      3,120      9,929      4,887      
Operating income (loss)     (2,211)      (977)       924       (693)     
Net income (loss)           (1,873)      (632)     1,304       (319)    
Earnings (loss) per share    (0.14)     (0.05)      0.09      (0.02)     
</TABLE>


<TABLE>
<CAPTION>
                                   Quarter ended

                             June 30.   Sept.30,  Dec. 31,  March 31,  
                               1995        1995     1995       1996
<S>                             <C>         <C>      <C>        <C>
Net revenues                  3,319      18,848   17,578     21,648
Gross profit                  1,765      12,105   10,477     15,327
Operating income (loss)      (6,014)      2,366    1,573      4,607
Net income (loss)            (5,528)      2,765    1,948      6,345
Earnings (loss) per share     (0.39)       0.18     0.13       0.43
</TABLE>


LIQUIDITY AND CAPITAL RESOURCES


     On January 31, 1994, the Company completed a private placement of
approximately 5,000,000 shares of its Common Stock.  The net proceeds from this
private placement, approximately $39.5 million, together with funds from
operations, have been the Company's primary sources of liquidity for the fiscal
years ended March 31, 1995 and 1996.  At March 31, 1996, the Company had a
balance of approximately $25.3 million of cash and cash equivalents.

     The Company uses its working capital to finance ongoing operations,
including the acquisition of inventory, the development, marketing and
distribution of new products, and the acquisition of intellectual property
rights for future products from third parties.

     Cash flows used in operating activities of $3.8 million primarily was the
result of the increase in accounts receivable and inventories of approximately
$15.3 million to $22.9 million as of March 31, 1996.  This increase partially
was offset by an $8.6 million increase in accounts payable and accrued
liabilities to $14.3 million during this period.  The increase in accounts
receivable and inventories was due to the increase in net revenues during the
quarter and year ended March 31, 1996 as compared to the same periods in the
prior fiscal year, while the increase in accounts payable and accrued
liabilities was due to an increase in cost of goods sold and operating expenses
in such periods.

     The Company's working capital decreased approximately $0.4 million from
March 31, 1995 to March 31, 1996. The decrease in working capital primarily was
attributable to the Company's purchases of shares of its common stock in the
open market in the amount of $5.3 million, and changes in current assets and
liabilities. The cash flows used in financing activities also were attributable
to this purchase of treasury stock.

     Net cash used in investing activities primarily was attributable to capital
expenditures related to the increase in headcount and the number of products in
product development during the fiscal year.  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 by the end of fiscal
1997 and, although a new site has not been finally identified, the Company may
consider a site purchase as opposed to a new lease.

     Management currently believes that the Company's existing capital resources
are sufficient to meet its requirements for the foreseeable future.  Previous
common stock and preferred stock private placements have provided, and will
continue to provide, the Company with resources to enable it to acquire
properties for development, engage in more extensive product development and
expand marketing activities, and increase working capital for operations.

     Management also currently believes that inflation has not had, and will not
have in the foreseeable future, a material impact on continuing operations.

RECENTLY ISSUED ACCOUNTING STANDARDS

     In October 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standard No. 123, "Accounting for Stock-Based
Compensation."  The accounting or disclosure requirements of this statement are
effective for the Company's fiscal year 1997.  The Company has not yet
determined whether it will adopt the accounting requirements of this standard or
whether it will elect only the disclosure requirements and continue to measure
compensation cost using Accounting Principles Board Opinion No. 25.




I
tem 8.  CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                                                       Page

       Report of Independent Accountants                F-1
       
       Consolidated Balance Sheets as of
        March 31, 1996 and 1995                         F-2
       
       Consolidated Statements of Operations for
       the Years ended March 31, 1996, 1995 and 1994    F-3
       
       Consolidated Statements of Changes in
       Shareholders' Equity for the Years Ended
       March 31, 1996, 1995 and 1994                    F-4
       
       Consolidated Statements of Cash Flows for
       the Years Ended March 31, 1996, 1995 and 1994    F-5
       
       Notes to Consolidated Financial Statements       F-6
       
       Schedule II-Valuation and Qualifying Accounts
       and Reserves as of March 31, 1996, 1995
       and 1994                                        F-17
       
       

     All other schedules of the Registrant are omitted because of the absence
     of conditions under which they are required or because the required
     information is included elsewhere in the financial statements or in the
     notes thereto.


Item 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
      FINANCIAL DISCLOSURE

     None.
                                        
                                        

                                    PART III
                                        

Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     The information required by this Item is incorporated by reference to the
     sections of the Company's definitive Proxy Statement for the Annual Meeting
     of Shareholders to be held on August 22, 1996, entitled "Election of
     Directors" and "Executive Officers and Key Employees" to be filed with the
     Securities Exchange Commission within 120 days after the end of the fiscal
     year covered by this Form 10-K.


Item 11. EXECUTIVE COMPENSATION

     The information required by this Item is incorporated by reference to the
     sections of the Company's definitive Proxy Statement for the Annual Meeting
     of Shareholders to be held on August 22, 1996, entitled "Executive
     Compensation" and "Indebtedness of Management" to be filed with the
     Securities Exchange Commission within 120 days after the end of the fiscal
     year covered by this Form 10-K.


Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
     
     The information required by this Item is incorporated by reference to the
     sections of the Company's definitive Proxy Statement for the Annual Meeting
     of Shareholders to be held on August 22, 1996, entitled "Security Ownership
     of Certain Beneficial Owners and Management" to be filed with the
     Securities Exchange Commission within 120 days after the end of the fiscal
     year covered by this Form 10-K.


Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
     
     The information required by this Item is incorporated by reference to the
     sections of the Company's definitive Proxy Statement for the Annual Meeting
     of Shareholders to be held on August 22, 1996, entitled "Certain
     Relationships and Related Transactions" to be filed with the Securities
     Exchange Commission within 120 days after the end of the fiscal year
     covered by this Form 10-K.
                                        
                                        

                                     PART IV


Item 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K


(a)1.        Financial Statements  See Item 8. - Consolidated Financial
             Statements and Supplementary Data Index for Financial  		
          			Statements and Schedule on page 26 herein.

		2.	       	Financial Statement Schedules  See Item 8. -Consolidated 					
             Financial Statements and Supplementary Data Index for
       						Financial Statements and Schedule on  page 26 herein.

		3.       		Exhibits Required by Item 601 of Regulation S-K

				Exhibit
				Number              Exhibit

				2.1 		Plan of Reorganization of the Company, as 
   		 				confirmed by the United States Bankruptcy 
			    			Court for the Northern District of California
			 		   	on November 25, 1991 (incorporated by 
		 			   	reference to Exhibit 28.2 of the Company's
	 				   	Current Report on Form 8-K dated October 4,
    						1991).

				2.2 		Plan and Agreement of Merger, dated March 30,
   	 					1992, among the Company, Disc Company, Inc.
			    			and International Consumer Technologies 
		 				   Corporation (incorporated by reference to 
 			   			Exhibit 28.1 of the Company's Curren Report on
	 					   Form 8-K dated March 31, 1992).

				2.3 		Agreement and Plan of Merger between
   			 			Activision, Inc., a California corporation,
			    			and Activision, Inc., a Delaware corporation,
				 	   	filed with the Secretary of State of the 
			 		   	State of Delaware (incorporated by reference to
		 			   	Exhibit 4.7 of Amendment No. 1 to the 
	 				   	Company's Form S-8, Registration No. 33-48411
    						filed on June 1, 1993).

				2.4  	Plan and Agreement of Merger, dated October28,
   		 				1994, among the Company, ACTV Acquisition, 
			    			Inc. and International Consumer Technologies
			 		   	Corporation (incorporated by reference to 
		 	   			Exhibit 2.4 of the Company's Quarterly Report
	 				   	on Form 10-Q for the period ended December 31,
 					   	1994).

				3.1	 	Amended and Restated Articles of Incorporation
    						of Activision, Inc., dated October 15, 1992
		 	   			(incorporated by reference to Exhibit 4.5 of 
	 				   	Amendment No. 1 to the Company's Form S-8, 
 				   		Registration No. 33-48411 filed on June 1, 1993).

				3.2	 	Bylaws of Activision, Inc. (incorporated by 
    						reference to Exhibit 4.6 of Amendment No. 1 to
	 		   			the Company's Form S-8, Registration No. 33-48411
 						   filed on June 1, 1993).

				4.1 		Certificate of Designations, Preferences and 
   		 				Rights of Series AA Preferred Stock, $.000001 par
			    			value, of Activision, Inc., as filed with the
			 			   Delaware Secretary of State on March 29, 1993
		 	   			(incorporated by reference to Exhibit 28.2 of the
	 					   Company's Current Report on Form 8-K dated April
 					   	19, 1993).

				10.1	 Warrant Certificate for the purchase of
   	 		 		21,000,000 shares of Common Stock, issued to 
			     		International Consumer Technologies Corporation
		 				   pursuant to the merger transaction (incorporated
	 				   	by reference to Exhibit 28.4 of the Company's
    						Current Report on Form 8-K dated March 31, 1992).

				10.2	 Purchase Agreement, dated as of March 29, 1993,
			 		   	between Activision, Inc. and the Purchasers
		 		   		listed therein (incorporated by reference to
	 				   	Exhibit 28.1 of the Company's Current Report on
 				   		Form 8-K dated April 19, 1993).

				10.3 	Form of Private Placement Warrant Certificate
    						(incorporated by reference to Exhibit 28.3 of the
	 		   			Company's Current Report on Form 8-K dated April
    						19, 1993).

				10.4	 Agreement, dated as of March 31, 1993, among
   	 					International Consumer Technologies Corporation,
			 		   	Activision, Inc. and the Purchasers listed 
		 		   		therein (incorporated by reference to Exhibit
    						28.4 of the Company's Current Report on Form 8-K
 			   			dated April 19, 1993).

				10.5	 Agreement, dated as of March 31, 1993, among the
    						stockholders listed therein and Activision, Inc.
		 			   	(incorporated by reference to Exhibit 28.5 of the
	 				   	Company's Current Report on Form 8-K dated April
 					   	19, 1993).

				10.	 	Letter Agreement, dated April 14, 1993 among
			 		   	Activision, Inc. and the Purchasers listed
	    					therein (incorporated by reference to Exhibit
	 			   		28.6 of the Company's Current Report on Form
 					   	8-K dated April 19, 1993).

				10.7	 Mediagenic 1991 Stock Option and Stock Award
		    				Plan, as amended (incorporated by reference to
	    					Exhibit 4.1 to the Company's Registration
	 			   		Statement on Form S-8, Registration No. 33-63638,
 					   	filed on December 8, 1995).

				10.8	 Mediagenic 1991 Director Warrant Plan as amended
			 	   		(incorporated by reference to Exhibit 28.2 to the
		 			   	Company's Registration Statement on Form S-8, 
	    					Registration No. 33-63638, filed on June 1, 1993)
	
				10.9 	Purchase Agreement, dated as of January 24, 1994,
			 		   	the Company and each purchaser who is a
 					   	signatory thereto (incorporated by reference to
	 					   Exhibit 28.1 of the Company's Form 8-K filed
   					 	February 9, 1994).

				10.10 Registration Rights Agreement, dated as of
					    	January 31, 1994, among the Company and each
					    	purchaser who is a signatory thereto
						    (incorporated by reference to Exhibit 28.2 of the
						    Company's Form 8-K filed February 9, 1994).

				10.11	Share Exchange and Recapitalization
			    			Agreement, dated as of January 14, 1994, among
						    the Company, International Consumer Technologies
						    Corporation, Steven Wynn, J.F. Shea Co., Inc. as
						    Nominee 1993-6 and ESL Partners, L.P.
    						(incorporated by reference to Exhibit 28.3 of the
				    		Company's Form 8-K filed February 9, 1994).

				10.12	Registration Rights Agreement, dated as of
	    					January 31, 1994, among the Company, 
					    	International Consumer Technologies Corporation,
    						Steven Wynn, J.F. Shea Co., Inc. as Nominee 
				    		1993-6 and ESL Partners, L.P. (incorporated by
    						reference to Exhibit 28.4 of the Company's Form
				    		8-K filed February 9, 1994).

				10.13	Lease Agreement, as amended, dated as of
    						November 29, 1993, among the Company and 11601
				    		Wilshire Associates (incorporated by reference to
    						Exhibit 10.14 of the Company's Form 10-K for the
				    		year ended March 31, 1994).

				11. 		Statement regarding computation of per share
					    	earnings.

				21. 		Principal Subsidiaries of the Company.

				23. 		Consent of Independent Accountants.

           (b)		Reports on Form 8-K

				None.



                                   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: July 2, 1996

ACTIVISION, INC.


By:/s/  Robert A. Kotick
 (Robert A. Kotick)
 Chairman and Chief
 Executive Officer


Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.


/s/  Robert A. Kotick    Chairman, Chief Executive       July 2, 1996
  (Robert A. Kotick)      Officer (Principal Executive
                         Officer), President and Director


/s/  Howard E. Marks     Executive Vice President        July 2, 1996
  (Howard E. Marks)       and Director


/s/  Brian G. Kelly      Chief Financial and Operating   July 2, 1996
  (Brian G. Kelly)      Officer and Director
                         (Principal Financial Officer)


/s/  Barry J. Plaga      Chief Accounting Officer        July 2, 1996
  (Barry J. Plaga)       (Principal Accounting Officer)


/s/  Barbara S. Isgur    Director                        July 2, 1996
  (Barbara S. Isgur)


/s/  Steven T. Mayer     Director                        July 2, 1996
  (Steven T. Mayer)



                        REPORT OF INDEPENDENT ACCOUNTANTS



To the Shareholders of ACTIVISION, INC. and Subsidiaries.

We have audited the consolidated financial statements and the financial
statement schedule of ACTIVISION, INC. and Subsidiaries listed in the index
on page 26 of this Form 10-K.  These financial statements and financial
statement schedule are the responsibility of the Company's management.  Our
responsibility is to express an opinion on these financial statements and
financial statement schedule based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards.  Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free
of material misstatement.  An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements.  An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation.  We believe that our audits
provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of
ACTIVISION, INC. and Subsidiaries as of March 31, 1996 and 1995, and the
consolidated results of their operations and cash flows for each of the
three years in the period ended March 31, 1996,  in conformity with
generally accepted accounting principles.  In addition, in our opinion, the
financial statement schedule referred to above, when considered in relation
to the basic financial statements taken as a whole, present fairly, in all
material respects, the information required to be included therein.

COOPERS & LYBRAND L.L.P.



Los Angeles, California
May 15, 1996

                                        
                        ACTIVISION, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                                        
                        (In thousands except share data)
                                        
                                              March 31,        March 31,
                                                1996              1995
                                             -------------      --------
ASSETS
      Current assets:
        Cash and cash equivalents                  $25,288       $37,355
        Accounts receivable, net                    19,909         5,566
        Inventories, net                             2,975         1,972
        Prepaid software and license royalties       3,652         1,082
        Other assets                                 1,183           342
        Deferred income taxes                        1,500             -
                                              ------------       -------
               Total current assets                 54,507        46,317

        Property and equipment, net                  3,326         1,643
        Other assets                                   200            60
        Excess purchase price over identifiable
          assets acquired, net                      19,580        20,863
                                              ------------      --------
               Total assets                        $77,613       $68,883
                                              ============      ========

LIABILITIES AND SHAREHOLDERS' EQUITY
     Current liabilities:
       Accounts payable                             $4,592        $2,516
       Accrued expenses                              9,688         3,153
                                                 ---------       -------
               Total current liabilities            14,280         5,669

    Other liabilities                                  334           510
                                                 ---------       -------
         Total liabilities                          14,614         6,179
                                                 ---------       -------

  Commitments and contingencies

  Shareholders' equity:
    Common stock, $.000001 par value, 100,000,000
    shares authorized, 14,250,180 and 14,183,594
    shares issued and 13,750,180 and 14,183,594
    outstanding, respectively                           -             -
    Additional paid-in capital                     67,904        67,667
    Retained earnings (accumulated deficit)           708       (4,822)
    Cumulative foreign currency translation         (335)         (141)
    Less: Treasury stock, cost of 500,000 shares  (5,278)             -
                                                 --------       -------
         Total shareholders' equity                62,999        62,704
                                                 --------       -------
    Total liabilities and shareholders' equity    $77,613       $68,883
                                                 ========       =======


                                        

<TABLE>
                        ACTIVISION, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
<CAPTION>
                      (in thousands except per share data)
                                        
                                                   For the years ended March 31,
                                                     1996      1995       1994
                                               ---------------------------------
<S>                                                     <C>     <C>      <C>
Net revenues                                      $61,393   $40,669    $26,604

Cost of goods sold                                 21,749    21,293     15,311
                                               ---------------------------------
   Gross profit                                    39,644    19,376     11,293
                                               ---------------------------------
Operating expenses:
   Product development                             17,505     7,274      4,380
   Sales and marketing                             13,920    10,410      5,013
   General and administrative                       4,404     3,366      2,648
   Amortization of intangible assets                1,283     1,283      1,283
                                               ---------------------------------
      Total operating expenses                     37,112    22,333     13,324
                                               ---------------------------------
Operating income (loss)                             2,532    (2,957)   (2,031)
Other income:
   Interest, net                                    1,707     1,592       178
                                               ---------------------------------
Income (loss) before income tax provision (benefit) 4,239    (1,365)    (1,853)
Income tax provision (benefit)                     (1,291)      155        134
                                               ---------------------------------
Net income (loss)                                  $5,530   $(1,520)   $(1,987)
                                                   ======   ========   ========

Net income (loss) available to common shareholders:
   Net income (loss)                               $5,530   $(1,520)   $(1,987)
   Less: Accumulated, unpaid preferred stock dividends  -         -     (3,296)
                                               ---------------------------------
      Net income (loss) available to common
       shareholders                                $5,530   $(1,520)   $(5,283)
                                                   ======   ========   ========

Net income (loss) per common share                  $0.37    $(0.11)    $(0.97)
                                                   ======    =======    =======
Number of shares used in computing
   net income (loss) per common share              14,950    13,944      5,432
                                                   ======    ======      =====
                                        
</TABLE>


<TABLE>

                        ACTIVISION, INC. AND SUBSIDIARIES
      CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)
<CAPTION>
                                 (In thousands)
                                        
                                                                          
                                                            Additional  Retained
                         Common Stock      Common Stock      Paid-in    Earnings
                       Shares  Amount   Warrants    Amount   Capital   (Deficit)
                       --------------   -------------------  --------  ---------
<S>                       <C>     <C>        <C>       <C>       <C>        <C>
Balance March 31, 1993  3,747  $    -      1,367      $34     $4,696    $(1,315)

Exercise of common stock 
  warrants pursuant
  to restructuring      1,100       -     (1,100)    (225)       225          -

Conversion of series A
  preferred stock pursuant 
  to restructuring      3,630       -          -        -     25,200          - 

Conversion of series AA
 preferred stock pursuant
 to restructuring         366       -          -        -          -          -

Redemption of series AA 
  preferred stock pursuant
  to restructuring          -       -          -        -     (2,153)         -

Issuance of common stock 
  pursuant to common stock 
  private placement     5,003       -          -        -     39,384          -

Issuance of common stock 
 pursuant to employee 
 stock purchase plan        3       -          -        -          4          -

Net loss for the year       -       -          -        -          -     (1,987)

Foreign currency 
 translation adjustment     -       -          -        -          -          -
                       ------  ------     ------   ------     ------    -------
 
Balance March 31, 1994 13,849       -        267      120     67,356     (3,302)

Exercise of common
 stock warrants           267       -       (267)    (120)       200          -

Issuance of common stock 
 pursuant to employee 
 stock purchase plan       59       -          -        -         99          -

Issuance of common stock 
 pursuant to directors 
 stock purchase plan        8       -          -        -         12          -

Net loss for the year       -       -          -        -          -     (1,520)

Foreign currency
 translation adjustment     -       -          -        -          -          -
                        -----   -----     ------   ------      -----     ------
Balance March 31, 1995 14,183       -          -        -     67,667     (4,822)

Issuance of common stock 
 pursuant to employee
 stock purchase plan       50       -          -        -        224          -

Issuance of common stock 
 pursuant to directors
 stock purchase plan       17       -          -        -         13          -

Purchase of 
  treasury stock            -       -          -        -          -          -

Net income for the year     -       -          -        -          -      5,530

Foreign currency 
 translation adjustment     -       -          -        -          -          -
                        -----  ------     ------ --------    -------    -------

Balance March 31, 1996 14,250  $    -          - $      -    $67,904       $708
                       ======  ======     ====== ========    =======    =======
</TABLE>



<TABLE>
                        ACTIVISON, INC. AND SUBSIDIARIES
            CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                                 (in thousands)

<S>                                     <C>       <C>      <C>            <C> 
                                 Cumulative
                                  Foreign                         
                                  Currency      Treasury Stock     Shareholders'
                                 Translation   Shares    Amount       Equity

Balances March 31, 1993                $85          -         -          $3,811

   Exercise of common stock           
     warrants pursuant to 
     restructuring                       -          -         -               -

   Conversion of series A 
     preferred stock pursuant
     to restructuring                    -          -         -          25,200

   Conversion of series AA
     preferred stock pursuant
     to restructuring                    -          -         -               -

   Redemption of series AA 
     preferred stock pursuant 
     to restructuring                    -          -         -          (2,153)

   Issuance of common stock
     pursuant to common stock
     private placement                   -          -         -          39,384 

   Issuance of common stock
     pursuant to employee
     stock purchase plan                 -          -         -               4

   Net loss for the year                 -          -         -          (1,987)

   Foreign currency 
     translation adjustment           (274)         -         -            (274)
                                      -----      -----    ------        --------

Balances March 31, 1994               (189)         -         -          63,985

   Exercise of common 
     stock warrants                      -          -         -              80 

   Issuance of common stock 
     pursuant to employee 
     stock purchase plan                 -          -         -              99

   Issuance of common stock 
     pursuant to directors 
     stock purchase plan                 -          -         -              12

   Net loss for the year                 -          -         -          (1,520)

   Foreign currency
     translation adjustment             48          -         -              48 
                                      -----      -----    ------        --------

Balances March 31, 1995               (141)         -         -          62,704 

   Issuance of common stock 
     pursuant to employee 
     stock purchase plan                 -          -         -             224

   Issuance of common stock 
     pursuant to directors 
     stock purchase plan                 -          -         -              13

   Purchase of treasury stock            -        500    (5,278)         (5,278)

   Net income for the year               -          -         -           5,530

   Foreign currency
     translation adjustment           (194)         -         -            (194)
                                      -----      -----    ------        --------

Balances March 31, 1996               (335)       500    (5,278)         62,999
                                      =====      =====   =======        ========

</TABLE>
                                        

<TABLE>
                        ACTIVISION, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                        
<CAPTION>
                                 (In thousands)
                                        
                                               For the years ended March 31,
                                            1996           1995            1994
                                     -------------------------------------------
<S>                                          <C>            <C>             <C>
Cash flows from operating activities:
    Net income (loss)                     $5,530        $(1,520)        $(1,987)
    Adjustments to reconcile net 
       income (loss) to net cash used
       in operating activities:
        Deferred income taxes             (1,500)             -               -
        Depreciation and amortization      2,646          1,942           1,665
    Change in assets and liabilities:
        Accounts receivable              (14,343)        (3,641)           (166)
        Inventories                       (1,003)           551          (1,580)
        Prepaid software and license 
          royalties                       (2,570)          (202)           (360)
        Other current assets                (841)           126            (104)
        Other assets                        (140)            37              67
        Accounts payable                   2,076            587            (551)
        Accrued liabilities                6,535            911             264
        Due to affiliate                       -              -            (454)
        Other                               (176)           (11)            128
                                   ---------------------------------------------
        Net cash used in 
          operating activities            (3,786)        (1,220)         (3,078)
                                   ---------------------------------------------
Cash flows from investing activities:
    Capital expenditures                  (3,045)        (1,256)           (877)
    Restricted cash                            -          1,500          (1,500)
                                   ---------------------------------------------
    Net cash provided by (used in) 
      investing activities                (3,045)           244          (2,377)
                                   ---------------------------------------------
Cash flows from financing activities:
    Proceeds from issuance and 
       exercise of common stock 
       options and warrants                  237            191               -
    Proceeds from common stock 
       private placement                       -              -          39,384
    Collection of offering 
       proceeds receivable                     -              -           5,000
    Redemption of preferred stock              -              -          (2,153)
    Payments under line-of-credit agreements   -         (4,695)         (9,631)
    Borrowings under line-of-credit agreements -          4,695           9,367
    Other                                      -             (1)              4
    Purchase of treasury stock            (5,278)             -               -
                                   ---------------------------------------------
    Net cash provided (used) by 
      financing activities                (5,041)           190          41,971
                                   ---------------------------------------------
    Effect of exchange rate 
      changes on cash                       (195)            48            (274)
                                   ---------------------------------------------
Net increase (decrease) in cash 
  and cash equivalents                   (12,067)          (738)         36,242
                                   ---------------------------------------------
Cash and cash equivalents at 
  beginning of period                     37,355         38,093           1,851
                                         --------       --------         -------
Cash and cash equivalents at
  end of period                          $25,288        $37,355         $38,093
                                        =========      =========       =========
</TABLE>

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

   Business

   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, including the Windows 95 operating system, and video game
   set-top hardware systems such as the Sega Saturn ("Saturn") and Sony
   Playstation ("Playstation").  The Company distributes its products worldwide
   primarily through its direct sales force and, to a lesser extent through
   third party distributors and licensees.

   Principles of Consolidation

   The consolidated financial statements include the accounts of Activision,
   Inc., a Delaware corporation, and its wholly-owned subsidiaries.  All
   intercompany accounts and transactions have been eliminated.

   Cash and Cash Equivalents and Cash Flows

   Cash and cash equivalents include cash and short-term investments with
   original maturities of not more than 90 days.  The Company paid interest of
   approximately $20,000, $18,000 and $108,000 for the years ended March 31,
   1996, 1995 and 1994, respectively.  In addition, the Company paid income
   taxes for such years of approximately $124,000, $193,000 and $129,000,
   respectively, primarily for state and foreign income taxes.

   Concentration of Credit Risk

   Financial instruments which potentially subject the Company to concentration
   of credit risk consist principally of temporary cash investments and
   accounts receivable.  The Company places its temporary cash investments with
   quality financial institutions.  At various times during the fiscal years
   ended March 31, 1996, 1995 and 1994, the Company had deposits in excess of
   the $100,000 Federal Deposit Insurance Corporation ("FDIC") limit at these
   financial institutions.  At March 31, 1996, the Company had approximately
   $23.9 million invested in short-term United States government backed
   securities.  The Company's customer base includes retail outlets and
   distributors including consumer electronics and computer specialty stores,
   discount chains, video rental stores and toy stores in the United States and
   countries worldwide.  The Company performs ongoing credit evaluation of its
   customers and maintains allowances for potential credit losses.  The Company
   generally does not require collateral or other security from its customers.

   Capitalized Software Development Costs

   Statement of Financial Accounting Standards 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.

   Prepaid Software and Licensed Property Royalties

   Prepaid royalties represent prepayments made to independent software
   developers under development agreements.  Prepaid royalties are expensed at
   the contractual royalty rate as cost of goods sold based on actual net
   product sales.  Management evaluates the future realization of prepaid
   royalties quarterly, and charges to cost of goods sold any amounts that
   management deems unlikely to be amortized at the contract royalty rate
   through product sales.

   Capitalized Reorganization Expenses

   The Company capitalized approximately $310,000 in reorganization expenses as
   of January 9, 1992.  This amount is being amortized over five years, using
   the straight-line method.  Amortization for the years ended March 31, 1996
   and 1995 and 1994 was approximately $62,000 for each period.

   Revenue Recognition

   Product Sales:  The Company recognizes revenue 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.  Revenue from product sales
   is 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, revenue is
   recognized at delivery of the product master or the first copy.  Per copy
   royalties on sales which exceed the guarantee are recognized as earned.

   Advertising Expenses

   The Company expenses advertising and the related costs as incurred.
   Advertising expenses for the years ended March 31, 1996, 1995 and 1994 were
   approximately $1,940,000, $3,564,000 and $558,000, respectively.

   Income Taxes

   The Company follows the liability method of accounting for income taxes
   pursuant to Statement of Financial Accounting Standards No. 109, "Accounting
   for Income Taxes."

   Foreign Currency Translation

   The Company's foreign subsidiaries maintain their accounting records in
   their local currency.  The currencies are then converted to United States
   dollars and the effect of the foreign currency translation is reflected as a
   component of shareholders' equity in accordance with Statement of Financial
   Accounting Standards No. 52, "Foreign Currency Translation."

   Net Income (loss) Per Common Share

   Net income (loss) per common share is computed using the weighted average
   number of common and, when dilutive, common equivalent shares outstanding
   during the period.  For the year ended March 31, 1994, the net loss in the
   computation is increased by approximately $3,296,000 in accumulated but
   undeclared preferred stock dividends.  As described in Note 2 - Common Stock
   Private Placement and Recapitalization, all outstanding shares of preferred
   stock were converted or redeemed in January 1994.  Prior to such conversion,
   accumulated unpaid dividends on preferred stock were included in computation
   of net loss available to common shareholders.  If the preferred stock had
   been converted or redeemed on April 1, 1993, net loss per common share for
   the fiscal year ended March 31, 1994 would have been $0.37 per share.

   Reverse Stock Splits

   The accompanying financial statements reflect the Company's 1-for-10 and 1-
   for-3 reverse stock splits effective August 3, 1992 and October 20, 1993,
   respectively.  Accordingly, previously reported loss per share and common
   share amounts have been retroactively restated.
   
   Estimates
   
   The preparation of financial statements in conformity with generally
   accepted accounting principles requires management to make estimates and
   assumptions that affect the reported amounts of assets and liabilities at
   the date of the financial statements and the reported amounts of revenues
   and expenses during the reporting period.  Actual results could differ from
   those estimates.

   Recently Issued Accounting Standards

   In October 1995, the Financial Accounting Standards Board issued Statement
   of Financial Accounting Standard No. 123, "Accounting for Stock-Based
   Compensation."  The accounting or disclosure requirements of this statement
   are effective for the Company's fiscal year 1997.  The Company has not yet
   determined whether it will adopt the accounting requirements of this
   standard or whether it will elect only the disclosure requirements and
   continue to measure compensation cost using Accounting Principles Board
   Opinion No. 25.

   Reclassifications

   Certain amounts in the Consolidated Financial Statements have been
   reclassified to conform with the current year's presentation.

2. COMMON STOCK PRIVATE PLACEMENT AND RECAPITALIZATION
     
   Common Stock Private Placement

   On January 31, 1994, the Company completed a private placement (the "Common
   Stock Private Placement") of 5,003,006 shares of the Company's common stock,
   $.000001 par value per share ("Common Stock"), at a price of $8.50 per
   share. As a result of the Common Stock Private Placement, the Company
   received net proceeds of approximately $39.5 million.

   In connection with the Common Stock Private Placement, the Company granted
   certain registration rights to the purchasers (the "Common Stock
   Purchasers") of the Common Stock offered in the Common Stock Private
   Placement.

   Recapitalization

   Concurrently with the closing of the Common Stock Private Placement, the
   Company effected a recapitalization (the "Recapitalization"), resulting in
   the exchange of substantially all of its outstanding preferred stock for
   Common Stock and the acquisition by the Company of 2,000 shares of the
   outstanding Series AA Non-redeemable Cumulative Preferred Stock (OSeries AA
   StockO) for approximately $2.2 million in cash.
   
   On January 14, 1994, the Company entered into a Share Exchange and
   Recapitalization Agreement (the "Recapitalization Agreement") with the
   holder of its Series A Redeemable Cumulative Preferred Stock (OSeries A
   StockO) and the holders of the Series AA Stock.  Pursuant to the terms of
   the Recapitalization Agreement, on January 31, 1994: (1) 700,000 common
   stock warrants with an exercise price of $.60 per share were exercised,
   using 33,838 shares ($420,000 liquidation value) of the Series A Stock to
   pay the exercise price thereof; (2) 400,000 common stock warrants with an
   exercise price of $.30 per share were exercised, using 111 shares ($120,000
   liquidation value) of the Series AA Stock to pay the exercise price thereof;
   (3) the remaining Series A Stock, with a liquidation preference of
   approximately $30.9 million, including accrued and unpaid dividends through
   January 28, 1994 (after exercise of 700,000 common stock warrants), was
   exchanged for 3,630,368 shares of Common Stock; (4) Series AA Stock with a
   liquidation preference of approximately $3.1 million, including accrued and
   unpaid dividends through January 28, 1994 (after exercise of 400,000 common
   stock warrants), was exchanged for 365,792 shares of Common Stock; and (5)
   the Company purchased the remaining 2,000 shares of Series AA Stock for an
   aggregate purchase price of $2,152,822, which was equal to the aggregate
   liquidation preference of such Series AA Stock, including accrued and unpaid
   dividends through January 28, 1994.
   
   In connection with the Recapitalization, the Company granted certain
   registration rights to the holder of the Series A Stock and the holders of
   the Series AA Stock who exchanged their Series AA Stock for Common Stock,
   the terms of which were substantially similar to the registration rights
   granted by the Company to the Common Stock Purchasers in the Common Stock
   Private Placement.
     
   As a result of this Recapitalization, in which the Company issued 5,096,160
   shares of Common Stock, the Company has no issued and outstanding preferred
   stock or any other securities senior in right or preference to the Common
   Stock.  In addition, other than common stock options and warrants granted to
   officers, directors and employees, the total number of shares of Common
   Stock issuable upon exercise of outstanding warrants was reduced to 266,667.
   All of such Common Stock warrants were exercised in January 1995.

3. PREFERRED PRIVATE PLACEMENT
   
   As of March 31, 1993, the Company consummated a private placement ("the
   Preferred Private Placement") of 5,000 shares of newly created Series AA
   Stock and warrants (the "Private Placement Warrants") to purchase 666,667
   shares of the Company's Common Stock.  The Company received $5.0 million of
   gross proceeds from the transaction.  As of March 31, 1993, the $5.0 million
   gross proceeds were recorded as offering proceeds receivable and were
   subsequently received in April 1993.
   
   The Series AA Stock ranked senior to all other equity securities of the
   Company, was not redeemable and was entitled to a liquidation preference of
   $1,000 per share, plus accumulated unpaid dividends.  Dividends accrued
   quarterly at a compounded rate of 9% per annum and were payable quarterly,
   as and when declared by the Board of Directors, after March 31, 1993.  The
   Private Placement Warrants were exercisable until June 30, 1998, at an
   exercise price of $.30 per share, subject to customary anti-dilution
   adjustments.  As a result of the Common Stock Private Placement and
   Recapitalization (See Note 2), the Series AA Stock is no longer outstanding
   and Private Placement Warrants to purchase only 266,667 shares of Common
   Stock remained outstanding until they were exercised in full in January
   1995.

4. MERGERS WITH DISC COMPANY, INC. AND INTERNATIONAL CONSUMER
   TECHNOLOGIES

   Effective April 1, 1992, Disc Company, Inc. ("TDC"), a Delaware corporation
   and a wholly-owned subsidiary of International Consumer Technologies
   ("ICT"), was merged with and into the Company, with the Company as the
   surviving corporation (the "Merger").  TDC was a Los Angeles based company
   engaged in marketing, distributing, localizing and publishing computer
   software products with its primary focus on ObundlingO software for major
   hardware manufacturers.

   Pursuant to the terms of the Merger Agreement, in exchange for all shares of
   the outstanding capital stock of TDC, the Company issued to ICT, as the sole
   shareholder of TDC: (1) warrants (the "Merger Warrants") to purchase 700,000
   shares of Company Common Stock, (2) 2,520,000 shares of newly created Series
   A Stock and (3) 1,855,700 shares of newly created Series B Convertible
   Preferred Stock (the "Series B Stock").  The Merger Warrants had a term of
   five years and were exercisable after October 1, 1992, at an exercise price
   equal to $.60 per share.  The Series A Stock had a liquidation preference of
   $10.00 per share, was entitled to cumulative, compounding dividends at the
   rate of 12% per annum for the first two years it was outstanding and 14% per
   annum thereafter, and was required to be redeemed after five years.  On
   October 14, 1992, ICT converted all of the 1,855,700 issued and outstanding
   shares of the Series B Stock, receiving 618,576 shares of Common Stock.  As
   a result of the Company's Common Stock Private Placement and
   Recapitalization (See Note 2), the Series A Stock and Merger Warrants are no
   longer outstanding.

   The Company's merger with TDC was accounted for by the purchase method of
   accounting, and accordingly, the purchase price was allocated to the assets
   acquired and the liabilities assumed based on estimated fair values, which
   was not materially different from their carrying values as of the effective
   date.  The purchase price of $25,468,000 exceeded the fair value of net
   assets acquired of $1,051,000 resulting in an intangible asset of
   approximately $24,417,000.  This intangible asset is being amortized on a
   straight-line basis over a 20 year period.  Amortization for each of the
   years ended March 31, 1996, 1995 and 1994 was approximately $1,221,000.  The
   Company systematically evaluates current and expected cash flow for the
   purpose of assessing the recoverability of recorded goodwill.  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.

   Effective January 1, 1995, ICT was merged with and into a wholly owned
   subsidiary of the Company, with ICT as the surviving corporation.  ICT's
   sole asset at the time of the merger was 5,429,600 shares of the Company's
   Common Stock. As a result of the merger, the shares of the Company's Common
   Stock previously held by ICT were distributed to the shareholders of ICT in
   exchange for their shares of ICT common stock.  No other assets or
   liabilities were acquired or assumed by the Company as a result of the
   merger.

5. ACCOUNTS RECEIVABLE

   Accounts receivable, net of reserves were as follows (amounts in thousands):

                                         March 31, 1996    March 31, 1995

         Accounts receivable               $ 26,914          $ 10,035
         Less:
           Allowance for doubtful accounts    (688)             (528)
           Allowance for sales returns and
               price protection             (6,317)           (3,941)
                                         ----------        ----------
            Accounts receivable, net       $ 19,909         $   5,566
                                             ======            ======

   Reserves for doubtful accounts, sales returns and price protection are
   established based upon historical experience and management's estimates as
   shipments are made.  Bad debt expense for the years ended March 31, 1996,
   1995 and 1994 was approximately $319,000, $191,000 and $430,000,
   respectively.

6. INVENTORIES

   Inventories are valued at the lower of cost (first-in, first-out) or market.
   Inventories at March 31, 1996 and 1995 reflect an adjustment to net
   realizable value of approximately $145,000 and $357,000, respectively.  The
   provisions for net realizable value for the years ended March 31, 1996, 1995
   and 1994 were approximately $744,000, $134,000 and $337,000, respectively.
   Inventories were as follows, net of reserves (amounts in thousands):

                                        March 31, 1996     March 31, 1995

         Purchased parts and components   $     876         $     203
         Finished goods                       2,099             1,769
                                         ----------        ----------
                                           $  2,975          $  1,972
                                             ======            ======

   Included in finished goods at March 31, 1996 and 1995 are expected inventory
   returns at a net realizable value of $427,000 and $311,000, respectively.

7. PROPERTY AND EQUIPMENT

   Equipment, furniture and leasehold improvements are recorded at cost.
   Depreciation and amortization are provided using the straight-line method
   over estimated useful lives ranging from three to five years.  Property and
   equipment, stated at cost, were as follows (amounts in thousands):

                                        March 31, 1996     March 31, 1995

         Computer equipment                $  4,360         $   2,079
         Office furniture and
            other equipment                   1,338               807
         Leasehold improvements                 310                99
                                         ----------        ----------
                                              6,008             2,985
         Less accumulated depreciation
            and amortization                (2,682)           (1,342)
                                         ----------        ----------
                                           $  3,326          $  1,643
                                             ======            ======

   Depreciation expense for the years ended March 31, 1996, 1995 and 1994 was
   $1,362,000, $658,000 and $382,000, respectively.

8. ACCRUED EXPENSES

   Accrued expenses were as follows (amounts in thousands):

                                        March 31, 1996       March 31, 1995

         Accrued royalties                 $  3,104           $   757
         Accrued production costs             1,241               170
         Accrued selling and marketing costs  1,759               959
         Accrued professional fees              248               246
         Accrued expenses related to
            foreign dissolution                   -               557
         Deferred revenue                     2,242                 -
         Other                                1,094               464
                                         ----------        ----------
                                            $ 9,688           $ 3,153
                                             ======            ======

9. OPERATIONS BY GEOGRAPHIC AREA

   The following table summarizes the geographic operations of the Company
   (amounts in thousands):

                                                 Year ended March 31,
                                           1996         1995          1994
   Net revenues:
        North America                    $47,176       $29,492      $20,176
        Europe                             6,501         7,574        4,183
        Japan                              4,768         2,194        1,362
        Australia and Pacific              2,948         1,409          883
                                       ---------    ----------    ---------
         Total net revenues              $61,393       $40,669      $26,604
                                          ======        ======       ======
   Operating income (loss):
        North America                   $(5,110)      $(5,114)     $(2,849)
        Europe                             2,547            77        (197)
        Japan                              3,814         1,655          707
        Australia and Pacific              1,281           425          308
                                       ---------     ---------     --------
         Total operating income (loss)   $ 2,532      $(2,957)     $(2,031)
                                          ======        ======       ======

                                       At March 31,  At March 31, At March 31
                                          1996           1995         1994
   Assets:
    United States                        $73,377       $68,226      $67,402
    Foreign                                4,236           657        1,275
                                       ---------     ---------    ---------
        Total assets                     $77,613       $68,883      $68,667
                                       =========     =========    =========

   Operating income (loss) by geographic territory is reflected without any
   allocation for product development and general and administrative expenses
   to the geographic territories other than North America.  These expenses are
   incurred entirely in North America.

10.SIGNIFICANT CUSTOMERS

   During the years ended March 31, 1996, 1995 and 1994 a total of 4, 3 and 2
   customers, each representing more than 5% of net revenues, accounted for a
   total of approximately 27%, 31% and 24% of net revenues, respectively.  The
   mix of significant customers has changed each fiscal year; however the loss
   of any of fiscal 1996's significant customers might have a material adverse
   impact on the Company's business and results of operations.

11.INCOME TAXES

   Domestic and foreign income (loss) before taxes and details of the income
   tax provision (benefit) are as follows (amounts in thousands):

                                                  Year ended March 31,
                                             1996        1995        1994
     Income (loss) before taxes: 
         Domestic                           $3,681     $(3,096)    $(1,407)
         Foreign                               558       1,731        (446)
                                           -------     -------     -------
                                            $4,239     $(1,365)    $(1,853)
                                           =======     =======     =======
     Income tax provision:
        Current:
         Federal                              $106     $     -    $      -
         State                                  25           -           -
         Foreign                                78         155         134
                                           -------     -------    --------
        Total current                          209         155         134
                                           -------     -------    --------
        Deferred:
         Federal                            (1,369)          -           -
         State                                (131)          -           -
                                           -------     -------    --------
        Total deferred                      (1,500)          -           - 
                                           -------     -------    --------
                                           $(1,291)       $155        $134
                                           =======     =======    ========
          The items accounting for the difference between income taxes computed
   at the U.S. federal statutory income tax rate and the income tax provision
   for each of the years are as follows:

                                          Year ended March 31
                                           1996         1995          1994

     Federal income tax provision
        at statutory rate                  34.0%        (34.0%)       (34.0%)
     Benefit of net operating loss
        carryforward                      (25.7%)           -          (4.6%)
     Nondeductible amortization            10.3%         30.4%         23.5%
     Future (current) deductible
        reserves                           (4.9%)         39.3%        27.4%
     Research and development credits      (8.7%)        (41.9%)      (14.2%)  
     Incremental effect of foreign
        and state taxes net of
        federal income tax benefit         (0.5%)         22.2%         2.4%
     Reduction of valuation allowance     (35.4%)             -            -
     Other                                  0.4%          (4.5%)        6.7%
                                     ------------  ------------ ------------
                                          (30.5%)         11.5%         7.2%
                                          =======       =======      =======
   
   The components of the net deferred tax asset and liability were as follows
   (amounts in thousands):
                                 March 31, 1996       March 31, 1995
       Deferred asset:
         Allowance for bad debts  $     211            $     186
         Allowance  for sales returns   785                1,308
         Inventory reserves              39                  120
         Miscellaneous                   10                    7
         Tax credit carrforwards      1,450                1,026
         Net operating loss
            carryforwards            13,310               14,003
                                -----------           ----------
          Deferred tax asset         15,805               16,650
          Valuation allowance       (14,305)              (16,500)
                                -----------           ----------
          Net deferred asset          1,500                  150
                                -----------           ----------
       Deferred liability:
         Amortization                     -                (150)
                                -----------           ----------
         Net deferred taxes         $ 1,500           $        -
                                ===========           ==========

   During the quarter and year ended March 31, 1996, the Company recognized a
   tax benefit of $1.5 million through a reduction in the Company's deferred
   tax asset valuation allowance.  This reduction in the valuation allowance
   resulted principally from the Company's assessment of the realizability of
   its deferred tax assets based on recent operating history as
   well as an assessment that operations will continue to generate taxable
   income.  Realization of the deferred tax assets are dependent upon the
   continued generation of sufficient taxable income prior to expiration of tax
   credits and loss carryforwards.  Although realization is not assured, 
   management believes it is more likely than not that the net deferred tax
   assets of approximately $1.5 million will be realized.  The amount of the
   deferred tax assets considered realizable, however, could be reduced in the
   future if estimates of future taxable income during the carryforward period
   are reduced.  The income taxes recorded in the provision for taxes for the
   year ended March 31, 1995 represents foreign taxes withheld.

   The Company's available net operating loss carryforward for federal tax
   reporting purposes approximates $34.4 million and is subject to certain
   limitations as defined under Section 382 of the Internal Revenue Code and
   Statement of Position 90-7, "Financial Reporting by Entities in
   Reorganization Under the Bankruptcy Code," issued by the American Institute
   of Certified Public Accountants.  The net operating loss carryforwards
   expire from 1999 to 2009.  At March 31, 1996, the Company had a net
   operating loss carryforward for California tax reporting purposes of
   approximately $16.8 million.  The California net operating loss
   carryforwards expire from 1998 to 2003.

12.COMMITMENTS AND CONTINGENCIES

   The Company has four non-cancelable operating leases for office space in Los
   Angeles, Tokyo, London and Sydney.  The Company's total obligations at March
   31, 1996 under such operating leases are approximately $1,182,000 for fiscal
   1997, and $431,000 for fiscal 1998; the Company has no obligations under
   operating leases extending beyond fiscal 1998.

   Rent expense for the years ended March 31, 1996, 1995 and 1994 was
   approximately $1,348,000, $811,000 and $497,000, respectively.

   As of March 31, 1996, the Company has entered into employment contracts with
   various personnel which have obligated the Company to make total minimum
   payments of $3,881,000 and $230,000 during the years ending March 31, 1997
   and 1998, respectively.

13.STOCK PLANS

   The Company established a stock option, stock bonus, restricted stock and
   equity based compensation plan (the "Stock Option Plan") for the benefit of
   officers, employees, consultants and others following the effectiveness of
   the Reorganization Plan.  The Stock Option Plan  permits the granting during
   a period of ten years from the effective date of the Stock Option Plan of
   (1) non-qualified stock options, (2) incentive stock options ("ISOs"), (3)
   stock appreciation rights ("SARs"), (4) restricted stock awards, (5)
   deferred stock awards and (6) other Common Stock-based awards (each of the
   foregoing being a "Stock Award" and collectively, the "Stock Awards").

   The total number of shares of Common Stock available for distribution under
   the Stock Option Plan is 4,066,667.  The plan requires available shares to
   consist in whole or in part of authorized and unissued shares or treasury
   shares.  Shares involved in the unexercised portion of any lapsed or
   cancelled options or forfeited restricted stock, deferred stock or other
   stock-based awards shall again be available for Stock Awards and
   distribution.  There were 91,561 remaining shares available for grant under
   the Stock Option Plan as of March 31, 1996.

   The stock option exercise price is determined at the discretion of the Board
   of Directors, and for ISO's, is not to be less than the fair market value at
   the date of grant, or in the case of non-qualified options must exceed or be
   equal to 85% of fair market value at date of grant.  Options typically
   become exercisable in equal installments over a period not to exceed five
   years, must be exercised within 10 years of date of grant and remain
   exercisable for 30 days after an individual ceases to be an employee of the
   Company.  Options issued to employees possessing more than 10% of voting
   control have an exercise price at least equal to 110% of the fair market
   value at the date of grant and must be exercised within five years of date
   of grant.

<TABLE>
   Plan activity was as follows (amounts in thousands, except weighted average
exercise price amounts):
<CAPTION>

                          1996                1995                 1994

                    Shares    Wtd Avg    Shares    Wtd Avg    Shares    Wtd Avg
                    (000)   Ex Price     (000)   Ex Price     (000)   Ex Price
<S>                   <C>        <C>       <C>        <C>       <C>        <C>
Outstanding 
 at beginning 
 of year           1,190       $5.20       398      $2.98       319      $2.22
Granted            2,805       13.61     1,073       5.61        89       6.20
Exercised            (50)       4.54       (59)      1.67        (3)      1.50
Forfeited           (220)       6.07      (222)      4.13        (7)      9.29
Expired                -           -         -          -         -          -
                   ------     -------    ------     ------      ----     ------
 Outstanding 
  at end 
  of year           3,725     $11.37     1,190      $5.20       398      $2.98
                   ======     ======     ======     ======      ====     ======

Exercisable at
 end of year          334      $4.55       176      $3.82        91      $2.04
</TABLE>

Restricted Stock

   Shares of restricted stock may be issued either alone or in addition to
   other Stock Awards granted under the Stock Option Plan.  As of March 31,
   1996, the Company had granted 137,500 shares of restricted stock to
   employees.  Such shares of restricted stock were granted as follows:
   136,500 shares during fiscal year 1992, which were 100% vested as of March
   31, 1996, and 1,000 shares during fiscal year 1995, which were 100% vested
   as of March 31, 1996.

   Stock Appreciation Rights/Deferred Stock Awards/Other Stock-Based Awards

   The Board of Directors is also authorized under the Stock Option Plan to
   award a variety of additional stock related rights, including SARs, deferred
   stock awards and other stock based awards.  As of March 31, 1996 there were
   no SARs, deferred stock or other stock-based awards granted under the Stock
   Option Plan.

   Director Warrant Plan

   The Director Warrant Plan provides for the automatic granting of warrants
   ("Director Warrants") to purchase 16,667 shares of the Common Stock to each
   director of the Company who is not an officer or employee of the Company or
   any of its subsidiaries.  The total number of shares of Common Stock
   available for distribution under the Director Warrant Plan is 100,000.
   Director Warrants granted under the Director Warrant Plan vest 25% on the
   first anniversary of the date of grant, 12.5% each six months thereafter,
   and the balance on the fifth anniversary of the date of grant.  The Director
   Warrant Plan expires on December 19, 1996.  The expiration has no effect on
   the outstanding Warrants

<TABLE>
   Director Warrant activity was as follows (amounts in thousands, except
   weighted average exercise price amounts):
<CAPTION>
                         1996                1995                 1994

                   Shares    Wtd Avg    Shares    Wtd Avg    Shares    Wtd Avg
                    (000)   Ex Price     (000)   Ex Price     (000)   Ex Price

<S>                   <C>        <C>       <C>        <C>       <C>        <C>
Outstanding 
 at beginning
 of year               50      $0.75        67      $0.94        67      $0.94
Granted                60       7.50         -          -         -          -
Exercised             (17)      0.75        (8)      1.50         -          -
Forfeited             (20)      7.50        (9)      1.50         -          -
Expired                 -          -         -          -         -          -
                     -----     -----       ----     -----        --      ----- 
Outstanding 
 at end 
 of year               73      $4.43        50      $0.75        67      $0.94
                     =====     =====       ===      =====        ==      =====

Exercisable
 at end
 of year               39      $2.47        38      $0.75        31      $0.90
</TABLE>

14.RETIREMENT PLAN

   The Company has a retirement plan covering substantially all of its eligible
   employees.  The retirement plan is qualified in accordance with Section
   401(k) of the Internal Revenue Code.  The plan permits the Company to make
   matching contributions up to 15% of the participantsO compensation, which
   vest immediately.  The Company made matching contributions to the Company's
   401K Plan of approximately $10,000 during the year ended March 31, 1996; The
   Company made no contributions in the years ended March 31, 1995 and 1994.

15.   RELATED PARTY TRANSACTIONS

   Promissory Notes Receivable

   As of March 31, 1996, other current assets includes $163,000 in promissory
   notes receivable from Mr. Robert A. Kotick, a director, officer and
   shareholder of the Company; The promissory notes are dated December 28, 1994
   and April 28, 1995, have maturity dates, as amended, of June 30, 1996 and
   bear interest at 9.0% per annum.


<TABLE>
16.   QUARTERLY FINANCIAL AND MARKET INFORMATION (UNAUDITED)

                                                                    
<CAPTION>                                                                      
(Dollars in thousands, except per share data)           

                                         Quarter Ended                   Year
                             June 30   Sept 30    Dec 31    Mar 31      Ended

Fiscal 1996:
<S>                              <C>       <C>       <C>        <C>        <C>
Net revenues                 $ 3,319   $18,848   $17,578    $21,648    $61,393
Operating income (loss)       (6,014)    2,366     1,573      4,607      2,532
Net income (loss)             (5,528)    2,765     1,948      6,345      5,530
Net income (loss) per
  common share                $(0.39)    $0.18     $0.13      $0.43      $0.37

Common stock price per share
 High                         $7 1/8   $19 3/4   $18 1/2    $15 1/8    $19 3/4
  Low                          5 3/4     6 3/4     8 1/8      8 5/8      5 3/4

Fiscal 1995:
Net revenues                  $3,249    $4,635   $26,185     $6,600    $40,669
Operating income (loss)       (2,211)     (977)      924       (693)    (2,957)
Net income (loss)             (1,873)     (632)    1,304       (319)    (1,520)
Net income (loss) per 
  common share                $(0.14)   $(0.05)    $0.09      $0.02     $(0.11)

Common stock price per share
  High                        $7 5/8    $6 5/8    $5 3/4         $9         $9
   Low                             5         4     3 1/4          5      3 1/4

</TABLE>


   
                                  SCHEDULE II

<TABLE>
                        ACTIVISION, INC. AND SUBSIDIARIES
                 VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
                             (Amounts in thousands)

<CAPTION>
              Col. A                                 Col. B          Col. C           Col. D           Col. E
                                                   Balance at                                        Balance at
                                                   Beginning                         Deductions        End of
           Description                             of Period        Additions        (Describe)        Period

Year ended March 31, 1994:
<S>                               <C>       <C>        <C>            <C>
  Allowance for 
    doubtful accounts            $358      $430       $163  (A)      $625

  Allowance for 
    sales returns and
    price protection           $1,413    $2,256     $1,028  (A)    $2,641

  Inventory valuation            $156      $337          -  (B)      $493

  Deferred tax 
    valuation allowance       $15,047      $484          -        $15,531


Year ended March 31, 1995:

  Allowance for 
    doubtful accounts           $625       $191       $288  (A)      $528     

  Allowance for 
    sales returns and
    price protection          $2,641     $3,604     $2,304  (A)    $3,941

  Inventory valuation           $493       $134       $270  (B)      $357

  Deferred tax 
    valuation allowance      $15,531       $969          -        $16,500

Year ended March 31, 1996:

  Allowance for 
    doubtful accounts           $528       $319       $159  (A)      $688

  Allowance for  
    sales returns and
    price protection          $3,941    $12,083     $9,707  (A)    $6,317

  Inventory valuation           $357       $532       $744  (B)      $145

  Deferred tax 
    valuation allowance      $16,500      $(695)    $1,500        $14,305
</TABLE>



(A)Actual write-offs of uncollectible accounts receivable or sales returns and
   price protection.
(B)Actual write-offs of obsolete inventory, scrap and reduction in carrying
   value of certain portions of inventory.
   

		EXHIBIT INDEX

       Exhibit	  	Sequential Page
		 Number	    	Exhibit		Number

				2.1 		Plan of Reorganization of the Company, as 	
 			 	 			confirmed by the United States Bankruptcy Court 					
        		for the Northern District of California on 		
				 		   November 25, 1991 (incorporated by reference to 		
			 		    Exhibit 28.2 of the Company's Current Report on 					
     		   Form 8-K dated October 4, 1991).
		
				2.2  	Plan and Agreement of Merger, dated March 30, 	
   	 					1992, among the Company, Disc Company, Inc. and 		
     					International Consumer Technologies Corporation 
   							(incorporated by reference to Exhibit 28.1 of the 	
     					Company's Current Report on Form 8-K dated 
 	   					March 31, 1992).

				2.3	 	Agreement and Plan of Merger between Activision, 					
        		Inc., a California corporation, and Activision, 					
		        Inc., a Delaware corporation, as filed with the 
			 				  Secretary of State of the State of Delaware 		
    						(incorporated by reference to Exhibit 4.7 of 
	 		  				Amendment No. 1 to the Company's Form S-8,
  								Registration No. 33-48411 filed on June 1, 1993).

				2.4	 	Plan and Agreement of Merger, dated October 28, 	
   	 					1994, among the Company, ACTV Acquisition, Inc. 			
			      	and International Consumer Technologies 		
		 			   	Corporation (incorporated by reference to Exhibit
  						  2.4 of the Company's Quarterly Report on Form 10-Q 			
 			      for the period ended December 31, 1994).

				3.1	 	Amended and Restated Articles of Incorporation of 	
			 		    Activision, Inc., dated October 15, 1992 			
     					(incorporated by reference to Exhibit 4.5 of 	
	 			   		Amendment No. 1 to the Company's Form S-8, 					
       			Registration No. 33-48411 filed on June 1, 1993).

				3.2		 Bylaws of Activision, Inc. (incorporated by  		
     					reference to Exhibit 4.6 of Amendment No.1 to the
  			  			Company's Form S-8, Registration No. 33-48411 		
 					    filed on June 1, 1993).

				4.1 		Certificate of Designations, Preferences and 					
	        	Rights of Series AA Preferred Stock, $.000001 par 		
				      value, of Activision, Inc., as filed with the 				
       			Delaware Secretary of State on March 29, 1993 	
			 			   (incorporated by reference to Exhibit 28.2 of the 		
      				Company's Current Report on Form 8-K dated 
	 				   	April 19, 1993).
	
				10.1	 Warrant Certificate for the purchase of 21,000,000 	
				     	shares of Common Stock, issued to International 	
						    Consumer Technologies Corporation pursuant to the
 					   	merger transaction (incorporated by reference to
 						  	Exhibit 28.4 of the Company's Current Report on
 							  Form 8-K dated March 31, 1992).

				10.2		Purchase Agreement, dated as of March 29, 1993, 
						   	between Activision, Inc. and the Purchasers listed
 					   	therein (incorporated by reference to Exhibit 28.1
 					   	of the Company's Current Report on Form 8-K dated 
					    	April 19, 1993).

				10.3		Form of Private Placement Warrant Certificate
   							(incorporated by reference to Exhibit 28.3 of the
 	   					Company's Current Report on Form 8-K dated 
					    	April 19, 1993).

				10.4		Agreement, dated as of March 31, 1993, among 	
    						International Consumer Technologies Corporation, 		
				     	Activision, Inc. and the Purchasers listed therein 			
       			(incorporated by reference to Exhibit 28.4 of the 			
       			Company's Current Report on Form 8-K dated 
					    	April 19, 1993).

				10.5		Agreement, dated as of March 31, 1993, among the 		
					     stockholders listed therein and Activision, Inc. 			
 		     		(incorporated by reference to Exhibit 28.5 of the
 					   	Company's Current Report on Form 8-K dated 
		    				April 19, 1993).

				10.6		Letter Agreement, dated April 14, 1993 among 			
      				Activision, Inc. and the Purchasers listed therein 	 
     					(incorporated by reference to Exhibit 28.6 of the
    						Company's Current Report on Form 8-K dated 
				    		April 19, 1993).

				10.7		Mediagenic 1991 Stock Option and Stock Award Plan, 	
     					as amended (incorporated by reference to Exhibit 	
    						4.1 to the Company's Registration Statement on 	
    						Form S-8, Registration No. 33-63638, filed on 				
       			December 8, 1995).

				10.8		Mediagenic 1991 Director Warrant Plan as amended 
   							(incorporated by reference to Exhibit 28.2 to the
    						Company's Registration Statement on Form S-8, 
   							Registration No. 33-63638, filed on June 1, 1993). 

				10.9		Purchase Agreement, dated as of January 24, 1994,
    						among the Company and each purchaser who is a 	
    						signatory thereto  (incorporated by reference to
   							Exhibit 28.1 of the Company's Form 8-K filed 
   							February 9, 1994).

				10.10	Registration Rights Agreement, dated as of 
  								January 31, 1994, among the Company and each
   							purchaser who is a signatory thereto (incorporated 	
     					by reference to Exhibit 28.2 of the Company's Form 		
      				8-K filed February 9, 1994).

				10.11	Share Exchange and Recapitalization Agreement, 
   							dated as of January 14, 1994, among the Company, 			
			      	International Consumer Technologies Corporation, 
						   	Steven Wynn, J.F. Shea Co., Inc. as Nominee 1993-6 	
				     	and ESL Partners, L.P. (incorporated by reference 			
		       	to Exhibit 28.3 of the Company's Form 8-K filed
 						  	February 9, 1994).

				10.12	Registration Rights Agreement, dated as of January
    						31, 1994, among the Company, International 		
			    			Consumer Technologies Corporation, Steven Wynn, 		
				     	J.F. Shea Co., Inc. as Nominee 1993-6 and ESL 
							   Partners, L.P. (incorporated by reference to 
						   	Exhibit 28.4 of the Company's Form 8-K filed 		
				     	February 9, 1994).

				10.13	Lease Agreement, as amended, dated as of November
    						29, 1993, among the Company and 11601 Wilshire 
				   			Associates (incorporated by reference to Exhibit 	
					    	10.14 of the Company's Form 10-K for the year
 							  ended March 31, 1994).

				11.		Statement regarding computation of per share earnings. 
	
													                                                       	51

				21.		Principal Subsidiaries of the Company.	

                                                      															52
				23.		Consent of Independent Accountants.	

                                                      															53


EXHIBIT 11

<TABLE>
<CAPTION>
ACTIVISION AND SUBSIDIARIES

COMPUTATION OF NET INCOME (LOSS) PER SHARE
(Dollar amounts in thousands except per share data)

                          						  Year ended       Year ended      Year ended
				                          		March 31, 1996   March 31, 1995  March 31, 1994
<S>                                        <C>              <C>             <C>
Weighted average shares 
  outstanding for the period	           14,011	          13,944           5,432

Net effect of stock options 
  based on the treasury 
  stock method	                            939			           	 -	 	        	   -

Net effect of common stock warrants	         -	     	         -	    		        -
                              							  ------- 	         ------	          -----	
Average common and common
  equivalent shares outstanding	        14,950	          13,944           5,432
                              							  =======	          ======	          =====	
 

Net income (loss)
  continuing operations		           	   $5,530	         $(1,520)		      $(1,987)
Loss - discontinued operations	              -	               -               -
Loss- dissolution of 
  discontinued operations	                   -	               -               -
	                                       ------	          ------         -------
Net income (loss)	                       5,530	          (1,520)         (1,987)

Less accumulated preferred 
  stock dividends	                           -	               -          (3,296)
	                                       ------	         -------          ------	
Net income (loss) available 
  for common stock	                     $5,530	         $(1,520)        $(5,283)  				                 
                                        ======	         =======         =======
Primary:
	
Net income (loss) per common share - 
  continuing operations	                 $0.37	          $(0.11)         $(0.97)
Loss per common share - 
  discontinued operation      s	             -	               -               -
Loss per common share - dissolution
	of discontinued operations	                 -	               -               -	
	                                      -------	          ------          ------	
Net income (loss) per common share	      $0.37	          $(0.11)         $(0.97)
                                       =======	          =====	          ======

Fully diluted:

Net income (loss) per common share - 
  continuing operations	                 $0.37	          $(0.11)         $(0.97)
Loss per common share - 
  discontinued operation	                    -	               -               -
Loss per common share - dissolution
	of discontinued operations	                 -	               -               -	
	                                      -------	          ------          ------
Net income (loss) per common share	      $0.37           $(0.11)	        $(0.97)
	                                      =======           ======          ======



</TABLE>






EXHIBIT 21


PRINCIPAL SUBSIDIARIES OF THE REGISTRANT


                            								State or Other Jurisdiction
								                              	of Incorporation or 
        Name of subsidiary				            Organization
- - -------------------------------------------------------------------------------	

Activision Japan Co., Ltd.			                	Japan

Activision (U.K.) Ltd.				                   	United Kingdom

Activision Europe SARL		                   			France

Activision Australia Pty Ltd.             				Australia

TDC Group, Inc.                         						Delaware

Activision Productions, Inc.	              			Delaware


EXHIBIT 23



CONSENT OF INDEPENDENT ACCOUNTANTS


We consent to the incorporation by reference in the registration statement of 
Activision, Inc. on Forms S-8 (File Nos. 33-48411, 33-63638 and 33-91074) and
Forms S-3 (File Nos. 33-68144 and 33-75878) of our report dated May 15, 1996, 
on our audits of the consolidated financial statements and financial statement
schedules of Activision, Inc. and Subsidiaries as of March 31, 1996 and 1995 and
for the years ended March 31, 1996, 1995 and 1994, which report is included in 
this Annual Report on Form 10-K. 


COOPERS & LYBRAND

Los Angeles, California
July 2, 1996













<TABLE> <S> <C>

<ARTICLE> 5
       
<S>                             <C>
<PERIOD-TYPE>                   YEAR
<FISCAL-YEAR-END>                          MAR-31-1996
<PERIOD-END>                               MAR-31-1996
<CASH>                                          25,288
<SECURITIES>                                         0
<RECEIVABLES>                                   26,915
<ALLOWANCES>                                   (7,005)
<INVENTORY>                                      2,975
<CURRENT-ASSETS>                                54,507
<PP&E>                                           5,677
<DEPRECIATION>                                 (2,527)
<TOTAL-ASSETS>                                  77,613
<CURRENT-LIABILITIES>                           14,280
<BONDS>                                              0
<PREFERRED-MANDATORY>                                0
<PREFERRED>                                          0
<COMMON>                                             0
<OTHER-SE>                                      62,999
<TOTAL-LIABILITY-AND-EQUITY>                    77,613
<SALES>                                         61,393
<TOTAL-REVENUES>                                61,393
<CGS>                                           21,749
<TOTAL-COSTS>                                   21,749
<OTHER-EXPENSES>                                37,112
<LOSS-PROVISION>                                     0
<INTEREST-EXPENSE>                                   0
<INCOME-PRETAX>                                  4,239
<INCOME-TAX>                                   (1,291)
<INCOME-CONTINUING>                              5,530
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                                     5,530
<EPS-PRIMARY>                                      .37
<EPS-DILUTED>                                      .37