Operating Segments and Geographic Region

3 Months Ended

Mar. 31, 2013

Operating Segments and Geographic Region

Operating Segments and Geographic Region

7.       Operating segments and geographic region

Our operating segments are consistent with our internal organizational structure, the manner in which our operations are reviewed and managed by our Chief Executive Officer, who is our Chief Operating Decision Maker (“CODM”), the manner in which we assess operating performance and allocate resources, and the availability of separate financial information. Currently, we operate under three operating segments: Activision, Blizzard and Distribution (see Note 1 of the Notes to the Condensed Consolidated Financial Statements). We do not aggregate operating segments.

The CODM reviews segment performance exclusive of the impact of the change in deferred net revenues and related cost of sales with respect to certain of our online-enabled games, stock-based compensation expense, and amortization of intangible assets as a result of purchase price accounting. The CODM does not review any information regarding total assets on an operating segment basis, and accordingly, no disclosure is made with respect thereto. Information on the 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 for the three months ended March 31, 2013 and 2012 are presented below (amounts in millions):

			Three months ended March 31,
			2013		2012		2013		2012
							Income from operations
			Net revenues				before income tax expense
	Activision		$	423	$	271	$	112	$	---
	Blizzard			330		251		135		89
	Distribution			51		65		---		1
		Operating segments total		804		587		247		90
Reconciliation to consolidated net revenues /
consolidated income before income tax
expense:
	Net effect from deferral of net revenues and
		related cost of sales		520		585		369		447
	Stock-based compensation expense			---		---		(26)		(21)
	Amortization of intangible assets			---		---		(3)		(3)
Consolidated net revenues / operating income			$	1,324	$	1,172		587		513
	Investment and other income (expense), net							2		1
Consolidated income before income tax expense							$	589	$	514

Geographic information for the three months ended March 31, 2013 and 2012 is based on the location of the selling entity. Net revenues from external customers by geographic region were as follows (amounts in millions):

		Three months ended March 31,
		2013		2012
Net revenues by geographic region:
	North America	$	738	$	601
	Europe		487		485
	Asia Pacific		99		86
Total consolidated net revenues		$	1,324	$	1,172

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

		Three months ended March 31,
		2013		2012
Net revenues by platform:
	Console	$	749	$	688
	Online subscriptions1		275		256
	Other2		156		116
	PC		93		47
Total platform net revenues			1,273		1,107
Distribution			51		65
Total consolidated net revenues		$	1,324	$	1,172

(1)       Revenue from online subscriptions consists of revenue from all World of Warcraft products, including subscriptions, boxed products, expansion packs, licensing royalties, value-added services, and revenues from Call of Duty® Elite memberships.

(2)Revenue from other includes revenues from handheld and mobile devices, as well as non-platform specific game related revenues such as standalone sales of toys and accessories products from the Skylanders franchise and other physical merchandise and accessories.

Long-lived assets by geographic region at March 31, 2013 and December 31, 2012 were as follows (amounts in millions):

		At March 31, 2013		At December 31, 2012
Long-lived assets* by geographic region:
	North America	$	89	$	90
	Europe		35		40
	Asia Pacific		9		11
Total long-lived assets by geographic region		$	133	$	141

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

We did not have any single external customer that accounted for 10% or more of consolidated net revenues for the three months ended March 31, 2013 and 2012.