Segment Information

3 Months Ended

Mar. 31, 2020


Note 12			Segment Information

We manage our business and report revenue and operating income (loss) in four segments: (1) Consumer Media, which includes licensing of our codec technology and our PC-based RealPlayer products, including RealPlayer Plus and related products; (2) Mobile Services, which includes our SaaS services and our integrated RealTimes® platform which is sold to mobile carriers; (3) Games, which includes all our games-related businesses, including sales of in-game virtual goods, mobile games, games licenses, games subscription services, and in-game advertising and advertising on game sites; and (4) Napster, which includes on-demand music streaming and music services.

RealNetworks allocates to its Consumer Media, Mobile Services and Games reportable segments certain corporate expenses which are directly attributable to supporting these businesses, including but not limited to a portion of finance, legal, human resources and headquarters facilities. Remaining expenses, which are not directly attributable to supporting these businesses, are reported as corporate items. These corporate items may also include restructuring charges and stock compensation charges. As stated in Note 5 Acquisitions, Napster operates as an independent company and, therefore, RealNetworks allocates no corporate expenses to the Napster segment.

RealNetworks reports four reportable segments based on factors such as how we manage our operations and how the Chief Operating Decision Maker (CODM) reviews results. The CODM reviews financial information presented on both a consolidated basis and on a business segment basis. The accounting policies used to derive segment results are the same as those described in Note 1, Description of Business and Summary of Significant Accounting Policies, in the 10-K.

Segment results for the quarters ended March 31, 2020 and 2019 (in thousands):


Consumer Media	Quarter Ended March 31,

	2020		2019
Revenue	$	3,495	$	2,486
Cost of revenue	611		833
Gross profit	2,884		1,653
Operating expenses	2,458		3,119
Operating income (loss)	$	426	$	(1,466)


Mobile Services	Quarter Ended March 31,

	2020		2019
Revenue	$	6,690	$	6,939
Cost of revenue	1,696		2,048
Gross profit	4,994		4,891
Operating expenses	7,588		7,561
Operating income (loss)	$	(2,594)	$	(2,670)


Games	Quarter Ended March 31,

	2020		2019
Revenue	$	6,637	$	5,710
Cost of revenue	1,794		1,670
Gross profit	4,843		4,040
Operating expenses	4,923		5,037
Operating income (loss)	$	(80)	$	(997)


Napster	Quarter Ended March 31,

	2020		2019
Revenue	$	26,323	$	24,337
Cost of revenue	20,072		20,396
Gross profit	6,251		3,941
Operating expenses	6,461		5,532
Operating income (loss)	$	(210)	$	(1,591)


Corporate	Quarter Ended March 31,
	2020		2019
Cost of revenue	$	3	$	(77)
Operating expenses	2,627		4,257
Operating income (loss)	$	(2,630)	$	(4,180)

Our customers consist primarily of consumers and corporations located in the U.S., Europe, and various foreign countries (Rest of the World). Revenue by geographic region (in thousands):


	Quarter Ended March 31,
	2020		2019
United States	$	22,420	$	18,970
Europe	14,838		15,384

Rest of the World	5,887		5,118
Total net revenue	$	43,145	$	39,472

Long-lived assets (consisting of goodwill, equipment, software, leasehold improvements, operating lease assets, and other intangible assets) by geographic region (in thousands) are as follows:


	March 31, 2020		December 31, 2019
United States	$	81,524	$	83,342
Europe	10,220		10,504

Rest of the World	1,956		2,281
Total long-lived assets	$	93,700	$	96,127