Operating Segments and Geographic Region

3 Months Ended

Mar. 31, 2014

Operating Segments and Geographic Region

Operating Segments and Geographic Region

9.       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 conduct our business through three operating segments: Activision, Blizzard and Distribution (see Note 1 of the Notes to Condensed Consolidated Financial Statements). We do not aggregate operating segments.

The CODM reviews segment performance exclusive of the impact of the change in deferred revenues and related cost of sales with respect to certain of our online-enabled games, stock-based compensation expense, restructuring expense, amortization of intangible assets as a result of purchase price accounting, impairment of goodwill and intangible assets, and expenses related to the Purchase Transaction and related debt financings. 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, 2014 and2013are presented below (amounts in millions):

			Three Months Ended March 31,
			2014		2013		2014		2013
							Income (loss) from operations
							operations before income
			Net revenues				tax expense
	Activision		$	237	$	423	$	2	$	112
	Blizzard			462		330		239		135
	Distribution			73		51		(1)		---
		Operating segments total		772		804		240		247
Reconciliation to consolidated net revenues /
consolidated income before income tax
expense:
	Net effect from deferral of net revenues and
		related cost of sales		339		520		219		369
	Stock-based compensation expense			---		---		(30)		(26)
	Amortization of intangible assets			---		---		(2)		(3)
Consolidated net revenues / operating income			$	1,111	$	1,324		427		587
	Interest and other investment income (expense), net							(51)		2
Consolidated income before income tax expense							$	376	$	589

Geographic information presented below for the three months ended March 31, 2014 and 2013 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,
		2014		2013
Net revenues by geographic region:
	North America	$	563	$	738
	Europe		462		487
	Asia Pacific		86		99
Total consolidated net revenues		$	1,111	$	1,324

The Company's net revenues in the U.S. were 48%, and 53% of consolidated net revenues for the three months ended March 31, 2014 and 2013, respectively.  The Company's net revenues in the U.K. were 15% and 12% of consolidated net revenues for the three months ended March 31, 2014 and 2013, respectively. The Company's net revenues in France were 13%and 12% of consolidated net revenues for the three months ended March 31, 2014 and 2013, respectively.  No other country's net revenues exceeded 10% of consolidated net revenues.

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

		Three Months Ended March 31,
		2014		2013
Net revenues by platform:
	Console	$	654	$	749
	Online (1)		201		275
	PC		100		93
	Mobile and other (2)		83		156
Total Activision Blizzard net revenues			1,038		1,273
Distribution			73		51
Total consolidated net revenues		$	1,111	$	1,324

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

(2)Revenues from mobile and other include 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, 2014 and December 31, 2013 were as follows (amounts in millions):

		At March 31,		At December 31,
		2014		2013
Long-lived assets* by geographic region:
	North America	$	107	$	102
	Europe		36		29
	Asia Pacific		9		7
Total long-lived assets by geographic region		$	152	$	138

*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 customers that accounted for 10% or more of consolidated net revenues for the three months ended March 31, 2014 and 2013.