Operating Segments and Geographic Region (Tables)

6 Months Ended

Jun. 30, 2019

Segment Reporting [Abstract]

Schedule of operating segments and reconciliations of total net revenues and total segment operating income to consolidated net revenues from external customers and consolidated income before income tax expense

Information on reportable segment net revenues and operating income for the three months ended June 30, 2019 and 2018, are presented below (amounts in millions):

	Three Months Ended June 30, 2019
	Activision		Blizzard		King		Total
Segment Net Revenues
Net revenues from external customers	$	268	$	381	$	499	$	1,148
Intersegment net revenues (1)	—		3		—		3
Segment net revenues	$	268	$	384	$	499	$	1,151
Segment operating income	$	55	$	75	$	171	$	301
	Three Months Ended June 30, 2018
	Activision		Blizzard		King		Total
Segment Net Revenues
Net revenues from external customers	$	338	$	485	$	502	$	1,325
Intersegment net revenues (1)	—		4		—		4
Segment net revenues	$	338	$	489	$	502	$	1,329
Segment operating income	$	84	$	133	$	169	$	386

Information on reportable segment net revenues and operating income for the six months ended June 30, 2019 and 2018, are presented below (amounts in millions):

	Six Months Ended June 30, 2019
	Activision		Blizzard		King		Total
Segment Net Revenues
Net revenues from external customers	$	585	$	720	$	1,028	$	2,333
Intersegment net revenues (1)	—		8		—		8
Segment net revenues	$	585	$	728	$	1,028	$	2,341
Segment operating income	$	128	$	130	$	349	$	607
	Six Months Ended June 30, 2018
	Activision		Blizzard		King		Total
Segment Net Revenues
Net revenues from external customers	$	651	$	964	$	1,036	$	2,651
Intersegment net revenues (1)	—		6		—		6
Segment net revenues	$	651	$	970	$	1,036	$	2,657
Segment operating income	$	175	$	255	$	360	$	790

(1) Intersegment revenues reflect licensing and service fees charged between segments.

Reconciliations of total segment net revenues and total segment operating income to consolidated net revenues and consolidated income before income tax expense are presented in the table below (amounts in millions):

	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Reconciliation to consolidated net revenues:
Segment net revenues	$	1,151		$	1,329		$	2,341		$	2,657
Revenues from non-reportable segments (1)	59			60			132			118
Net effect from recognition (deferral) of deferred net revenues (2)	189			256			755			838
Elimination of intersegment revenues (3)	(3		)	(4		)	(8		)	(6		)
Consolidated net revenues	$	1,396		$	1,641		$	3,220		$	3,607
Reconciliation to consolidated income before income tax expense:
Segment operating income	$	301		$	386		$	607		$	790
Operating income (loss) from non-reportable segments (1)	7			—			4			(11		)
Net effect from recognition (deferral) of deferred net revenues and related cost of revenues (2)	135			182			576			557
Share-based compensation expense	(38		)	(57		)	(100		)	(111		)
Amortization of intangible assets	(47		)	(77		)	(102		)	(196		)
Restructuring and related costs (4)	(22		)	—			(79		)	—
Consolidated operating income	336			434			906			1,029
Interest and other expense (income), net	(34		)	26			(31		)	54
Consolidated income before income tax expense	$	370		$	408		$	937		$	975

(1) Includes other income and expenses from operating segments managed outside the reportable segments, including our Studios and Distribution businesses. Also includes unallocated corporate income and expenses.

(2) Reflects the net effect from recognition (deferral) of deferred net revenues, along with related cost of revenues, on certain of our online-enabled products.

(3) Intersegment revenues reflect licensing and service fees charged between segments.

(4)

Reflects restructuring initiatives, primarily severance and other restructuring-related costs.

Schedule of net revenues by distribution channels

Net revenues by distribution channel, including a reconciliation to each of our reportable segment’s revenues, for the three months ended June 30, 2019 and 2018, were as follows (amounts in millions):

	Three Months Ended June 30, 2019
	Activision			Blizzard			King		Non-reportable segments			Elimination of intersegment revenues (3)			Total
Net revenues by distribution channel:
Digital online channels (1)	$	248		$	342		$	499	$	—		$	(3	)	$	1,086
Retail channels	180			13			—		—			—			193
Other (2)	—			56			—		61			—			117
Total consolidated net revenues	$	428		$	411		$	499	$	61		$	(3	)	$	1,396
Change in deferred revenues:
Digital online channels (1)	$	(51	)	$	(25	)	$	—	$	—		$	—		$	(76	)
Retail channels	(109		)	(3		)	—		—			—			(112		)
Other (2)	—			1			—		(2		)	—			(1		)
Total change in deferred revenues	$	(160	)	$	(27	)	$	—	$	(2	)	$	—		$	(189	)
Segment net revenues:
Digital online channels (1)	$	197		$	317		$	499	$	—		$	(3	)	$	1,010
Retail channels	71			10			—		—			—			81
Other (2)	—			57			—		59			—			116
Total segment net revenues	$	268		$	384		$	499	$	59		$	(3	)	$	1,207

	Three Months Ended June 30, 2018
	Activision			Blizzard			King			Non-reportable segments		Elimination of intersegment revenues (3)			Total
Net revenues by distribution channel:
Digital online channels (1)	$	333		$	420		$	510		$	—	$	(4	)	$	1,259
Retail channels	259			19			—			—		—			278
Other (2)	—			49			—			55		—			104
Total consolidated net revenues	$	592		$	488		$	510		$	55	$	(4	)	$	1,641
Change in deferred revenues:
Digital online channels (1)	$	(58	)	$	4		$	(8	)	$	—	$	—		$	(62	)
Retail channels	(196		)	(6		)	—			—		—			(202		)
Other (2)	—			3			—			5		—			8
Total change in deferred revenues	$	(254	)	$	1		$	(8	)	$	5	$	—		$	(256	)
Segment net revenues:
Digital online channels (1)	$	275		$	424		$	502		$	—	$	(4	)	$	1,197
Retail channels	63			13			—			—		—			76
Other (2)	—			52			—			60		—			112
Total segment net revenues	$	338		$	489		$	502		$	60	$	(4	)	$	1,385

Net revenues by distribution channel, including a reconciliation to each of our reportable segment’s revenues, for the six months ended June 30, 2019 and 2018, were as follows (amounts in millions):

	Six Months Ended June 30, 2019
	Activision			Blizzard			King		Non-reportable segments			Elimination of intersegment revenues (3)			Total
Net revenues by distribution channel:
Digital online channels (1)	$	714		$	748		$	1,025	$	—		$	(8	)	$	2,479
Retail channels	476			29			—		—			—			505
Other (2)	—			95			—		141			—			236
Total consolidated net revenues	$	1,190		$	872		$	1,025	$	141		$	(8	)	$	3,220
Change in deferred revenues:
Digital online channels (1)	$	(268	)	$	(139	)	$	3	$	—		$	—		$	(404	)
Retail channels	(337		)	(7		)	—		—			—			(344		)
Other (2)	—			2			—		(9		)	—			(7		)
Total change in deferred revenues	$	(605	)	$	(144	)	$	3	$	(9	)	$	—		$	(755	)
Segment net revenues:
Digital online channels (1)	$	446		$	609		$	1,028	$	—		$	(8	)	$	2,075
Retail channels	139			22			—		—			—			161
Other (2)	—			97			—		132			—			229
Total segment net revenues	$	585		$	728		$	1,028	$	132		$	(8	)	$	2,465

	Six Months Ended June 30, 2018
	Activision			Blizzard			King			Non-reportable segments		Elimination of intersegment revenues (3)			Total
Net revenues by distribution channel:
Digital online channels (1)	$	809		$	875		$	1,042		$	—	$	(6	)	$	2,720
Retail channels	656			33			1			—		—			690
Other (2)	—			89			—			108		—			197
Total consolidated net revenues	$	1,465		$	997		$	1,043		$	108	$	(6	)	$	3,607
Change in deferred revenues:
Digital online channels (1)	$	(290	)	$	(23	)	$	(6	)	$	—	$	—		$	(319	)
Retail channels	(524		)	(8		)	(1		)	—		—			(533		)
Other (2)	—			4			—			10		—			14
Total change in deferred revenues	$	(814	)	$	(27	)	$	(7	)	$	10	$	—		$	(838	)
Segment net revenues:
Digital online channels (1)	$	519		$	852		$	1,036		$	—	$	(6	)	$	2,401
Retail channels	132			25			—			—		—			157
Other (2)	—			93			—			118		—			211
Total segment net revenues	$	651		$	970		$	1,036		$	118	$	(6	)	$	2,769

(1) Net revenues from “Digital online channels” include revenues from digitally-distributed subscriptions, downloadable content, microtransactions, and products, as well as licensing royalties.

(2) Net revenues from “Other” include revenues from our Studios and Distribution businesses, as well as revenues from MLG and the Overwatch League.

(3)

Intersegment revenues reflect licensing and service fees charged between segments.

Schedule of net revenues by geographic region

Geographic information presented below is based on the location of the paying customer. Net revenues by geographic region, including a reconciliation to each of our reportable segment’s net revenues, for the three months ended June 30, 2019 and 2018, were as follows (amounts in millions):

	Three Months Ended June 30, 2019
	Activision			Blizzard			King			Non-reportable segments			Elimination of intersegment revenues (2)			Total
Net revenues by geographic region:
Americas	$	255		$	202		$	309		$	—		$	(2	)	$	764
EMEA (1)	135			127			137			61			(1		)	459
Asia Pacific	38			82			53			—			—			173
Total consolidated net revenues	$	428		$	411		$	499		$	61		$	(3	)	$	1,396
Change in deferred revenues:
Americas	$	(105	)	$	(15	)	$	(1	)	$	—		$	1		$	(120	)
EMEA (1)	(42		)	(13		)	—			(2		)	(1		)	(58		)
Asia Pacific	(13		)	1			1			—			—			(11		)
Total change in deferred revenues	$	(160	)	$	(27	)	$	—		$	(2	)	$	—		$	(189	)
Segment net revenues:
Americas	$	150		$	187		$	308		$	—		$	(1	)	$	644
EMEA (1)	93			114			137			59			(2		)	401
Asia Pacific	25			83			54			—			—			162
Total segment net revenues	$	268		$	384		$	499		$	59		$	(3	)	$	1,207

	Three Months Ended June 30, 2018
	Activision			Blizzard			King			Non-reportable segments		Elimination of intersegment revenues (2)			Total
Net revenues by geographic region:
Americas	$	349		$	239		$	315		$	—	$	(3	)	$	900
EMEA (1)	199			155			144			55		(1		)	552
Asia Pacific	44			94			51			—		—			189
Total consolidated net revenues	$	592		$	488		$	510		$	55	$	(4	)	$	1,641
Change in deferred revenues:
Americas	$	(143	)	$	7		$	(5	)	$	—	$	—		$	(141	)
EMEA (1)	(97		)	(6		)	(2		)	5		—			(100		)
Asia Pacific	(14		)	—			(1		)	—		—			(15		)
Total change in deferred revenues	$	(254	)	$	1		$	(8	)	$	5	$	—		$	(256	)
Segment net revenues:
Americas	$	206		$	246		$	310		$	—	$	(3	)	$	759
EMEA (1)	102			149			142			60		(1		)	452
Asia Pacific	30			94			50			—		—			174
Total segment net revenues	$	338		$	489		$	502		$	60	$	(4	)	$	1,385

Geographic information presented below is based on the location of the paying customer. Net revenues by geographic region, including a reconciliation to each of our reportable segment’s net revenues, for the six months ended June 30, 2019 and 2018, were as follows (amounts in millions):

	Six Months Ended June 30, 2019
	Activision			Blizzard			King			Non-reportable segments			Elimination of intersegment revenues (2)			Total
Net revenues by geographic region:
Americas	$	712		$	409		$	634		$	—		$	(4	)	$	1,751
EMEA (1)	378			276			281			141			(3		)	1,073
Asia Pacific	100			187			110			—			(1		)	396
Total consolidated net revenues	$	1,190		$	872		$	1,025		$	141		$	(8	)	$	3,220
Change in deferred revenues:
Americas	$	(371	)	$	(70	)	$	4		$	—		$	—		$	(437	)
EMEA (1)	(189		)	(61		)	—			(9		)	—			(259		)
Asia Pacific	(45		)	(13		)	(1		)	—			—			(59		)
Total change in deferred revenues	$	(605	)	$	(144	)	$	3		$	(9	)	$	—		$	(755	)
Segment net revenues:
Americas	$	341		$	339		$	638		$	—		$	(4	)	$	1,314
EMEA (1)	189			215			281			132			(3		)	814
Asia Pacific	55			174			109			—			(1		)	337
Total segment net revenues	$	585		$	728		$	1,028		$	132		$	(8	)	$	2,465

	Six Months Ended June 30, 2018
	Activision			Blizzard			King			Non-reportable segments		Elimination of intersegment revenues (2)			Total
Net revenues by geographic region:
Americas	$	859		$	473		$	637		$	—	$	(3	)	$	1,966
EMEA (1)	504			325			305			108		(3		)	1,239
Asia Pacific	102			199			101			—		—			402
Total consolidated net revenues	$	1,465		$	997		$	1,043		$	108	$	(6	)	$	3,607
Change in deferred revenues:
Americas	$	(471	)	$	—		$	(3	)	$	—	$	—		$	(474	)
EMEA (1)	(295		)	(14		)	(4		)	10		1			(302		)
Asia Pacific	(48		)	(13		)	—			—		(1		)	(62		)
Total change in deferred revenues	$	(814	)	$	(27	)	$	(7	)	$	10	$	—		$	(838	)
Segment net revenues:
Americas	$	388		$	473		$	634		$	—	$	(3	)	$	1,492
EMEA (1)	209			311			301			118		(2		)	937
Asia Pacific	54			186			101			—		(1		)	340
Total segment net revenues	$	651		$	970		$	1,036		$	118	$	(6	)	$	2,769

(1) “EMEA” consists of the Europe, Middle East, and Africa geographic regions.

(2)

Intersegment revenues reflect licensing and service fees charged between segments.

Schedule of net revenues by platform

Net revenues by platform, including a reconciliation to each of our reportable segment’s net revenues, for the three months ended June 30, 2019 and 2018, were as follows (amounts in millions):

	Three Months Ended June 30, 2019
	Activision			Blizzard			King		Non-reportable segments			Elimination of intersegment revenues (3)			Total
Net revenues by platform:
Console	$	374		$	33		$	—	$	—		$	—		$	407
PC	51			282			31		—			(3		)	361
Mobile and ancillary (1)	3			40			468		—			—			511
Other (2)	—			56			—		61			—			117
Total consolidated net revenues	$	428		$	411		$	499	$	61		$	(3	)	$	1,396
Change in deferred revenues:
Console	$	(141	)	$	(5	)	$	—	$	—		$	—		$	(146	)
PC	(19		)	(31		)	—		—			—			(50		)
Mobile and ancillary (1)	—			8			—		—			—			8
Other (2)	—			1			—		(2		)	—			(1		)
Total change in deferred revenues	$	(160	)	$	(27	)	$	—	$	(2	)	$	—		$	(189	)
Segment net revenues:
Console	$	233		$	28		$	—	$	—		$	—		$	261
PC	32			251			31		—			(3		)	311
Mobile and ancillary (1)	3			48			468		—			—			519
Other (2)	—			57			—		59			—			116
Total segment net revenues	$	268		$	384		$	499	$	59		$	(3	)	$	1,207

	Three Months Ended June 30, 2018
	Activision			Blizzard			King			Non-reportable segments		Elimination of intersegment revenues (3)			Total
Net revenues by platform:
Console	$	520		$	45		$	—		$	—	$	—		$	565
PC	69			347			39			—		(4		)	451
Mobile and ancillary (1)	3			47			471			—		—			521
Other (2)	—			49			—			55		—			104
Total consolidated net revenues	$	592		$	488		$	510		$	55	$	(4	)	$	1,641
Change in deferred revenues:
Console	$	(233	)	$	1		$	—		$	—	$	—		$	(232	)
PC	(21		)	(6		)	(1		)	—		—			(28		)
Mobile and ancillary (1)	—			3			(7		)	—		—			(4		)
Other (2)	—			3			—			5		—			8
Total change in deferred revenues	$	(254	)	$	1		$	(8	)	$	5	$	—		$	(256	)
Segment net revenues:
Console	$	287		$	46		$	—		$	—	$	—		$	333
PC	48			341			38			—		(4		)	423
Mobile and ancillary (1)	3			50			464			—		—			517
Other (2)	—			52			—			60		—			112
Total segment net revenues	$	338		$	489		$	502		$	60	$	(4	)	$	1,385

Net revenues by platform, including a reconciliation to each of our reportable segment’s net revenues, for the six months ended June 30, 2019 and 2018, were as follows (amounts in millions):

	Six Months Ended June 30, 2019
	Activision			Blizzard			King		Non-reportable segments			Elimination of intersegment revenues (3)			Total
Net revenues by platform:
Console	$	1,008		$	75		$	—	$	—		$	—		$	1,083
PC	176			623			64		—			(8		)	855
Mobile and ancillary (1)	6			79			961		—			—			1,046
Other (2)	—			95			—		141			—			236
Total consolidated net revenues	$	1,190		$	872		$	1,025	$	141		$	(8	)	$	3,220
Change in deferred revenues:
Console	$	(527	)	$	(17	)	$	—	$	—		$	—		$	(544	)
PC	(77		)	(120		)	1		—			—			(196		)
Mobile and ancillary (1)	(1		)	(9		)	2		—			—			(8		)
Other (2)	—			2			—		(9		)	—			(7		)
Total change in deferred revenues	$	(605	)	$	(144	)	$	3	$	(9	)	$	—		$	(755	)
Segment net revenues:
Console	$	481		$	58		$	—	$	—		$	—		$	539
PC	99			503			65		—			(8		)	659
Mobile and ancillary (1)	5			70			963		—			—			1,038
Other (2)	—			97			—		132			—			229
Total segment net revenues	$	585		$	728		$	1,028	$	132		$	(8	)	$	2,465

	Six Months Ended June 30, 2018
	Activision			Blizzard			King			Non-reportable segments		Elimination of intersegment revenues (3)			Total
Net revenues by platform:
Console	$	1,289		$	93		$	—		$	—	$	—		$	1,382
PC	169			726			82			—		(6		)	971
Mobile and ancillary (1)	7			89			961			—		—			1,057
Other (2)	—			89			—			108		—			197
Total consolidated net revenues	$	1,465		$	997		$	1,043		$	108	$	(6	)	$	3,607
Change in deferred revenues:
Console	$	(723	)	$	(17	)	$	—		$	—	$	—		$	(740	)
PC	(91		)	(6		)	—			—		—			(97		)
Mobile and ancillary (1)	—			(8		)	(7		)	—		—			(15		)
Other (2)	—			4			—			10		—			14
Total change in deferred revenues	$	(814	)	$	(27	)	$	(7	)	$	10	$	—		$	(838	)
Segment net revenues:
Console	$	566		$	76		$	—		$	—	$	—		$	642
PC	78			720			82			—		(6		)	874
Mobile and ancillary (1)	7			81			954			—		—			1,042
Other (2)	—			93			—			118		—			211
Total segment net revenues	$	651		$	970		$	1,036		$	118	$	(6	)	$	2,769

(1) Net revenues from “Mobile and ancillary” include revenues from mobile devices, as well as non-platform specific game-related revenues, such as standalone sales of physical merchandise and accessories.

(2) Net revenues from “Other” include revenues from our Studios and Distribution businesses, as well as revenues from MLG and the Overwatch League.

(3) Intersegment revenues reflect licensing and service fees charged between segments.

Long-lived assets by geographic region

Long-lived assets by geographic region were as follows (amounts in millions):

	At June 30, 2019		At December 31, 2018
Long-lived assets (1) by geographic region:
Americas	$	190	$	203
EMEA	56		62
Asia Pacific	13		17
Total long-lived assets by geographic region	$	259	$	282

(1)

The only long-lived assets that we classify by region are our long-term tangible fixed assets, which consist of property, plant, and equipment assets; all other long-term assets are not allocated by location.