Operating Segments and Geographic Region

3 Months Ended

Mar. 31, 2015

Operating Segments and Geographic Region

Operating Segments and Geographic Region

8.       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, amortization of intangible assets as a result of purchase price accounting, and fees and other expenses (including legal fees, costs, expenses and accruals) 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, 2015 and 2014 are presented below (amounts in millions):

			Three Months Ended March 31,
			2015		2014		2015		2014
							Income (loss) from operations
			Net revenues				before income tax expense
	Activision		$	303	$	237	$	66	$	2
	Blizzard			352		462		139		239
	Distribution			48		73		(1)		(1)
		Operating segments total		703		772		204		240
Reconciliation to consolidated net revenues /
consolidated income before income tax
expense:
	Net effect from deferral of net revenues and
		related cost of sales		575		339		362		219
	Stock-based compensation expense			---		---		(23)		(30)
	Amortization of intangible assets			---		---		(1)		(2)
Consolidated net revenues / operating income			$	1,278	$	1,111	$	542	$	427
	Interest and other expense, net							50		51
Consolidated income before income tax expense							$	492	$	376

Geographic information presented below for the three months ended March 31, 2015 and 2014 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,
		2015		2014
Net revenues by geographic region:
	North America	$	704	$	563
	Europe		464		462
	Asia Pacific		110		86
Total consolidated net revenues		$	1,278	$	1,111

The Company's net revenues in the U.S. were 53%, and 48% of consolidated net revenues for the three months ended March 31, 2015 and 2014, respectively.  The Company's net revenues in the U.K. were 12% and 15% of consolidated net revenues for the three months ended March 31, 2015 and 2014, respectively. The Company's net revenues in France were 8% and 13% of consolidated net revenues for the three months ended March 31, 2015 and 2014, 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,
		2015		2014
Net revenues by platform:
	Console	$	758	$	654
	Online 1		272		201
	PC		114		100
	Mobile and other2		86		83
Total Activision Blizzard net revenues			1,230		1,038
Distribution			48		73
Total consolidated net revenues		$	1,278	$	1,111

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

(2)Revenues from mobile and other include revenues from handheld, mobile and tablet 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, 2015 and December 31, 2014 were as follows (amounts in millions):

		At March 31,		At December 31,
		2015		2014
Long-lived assets* by geographic region:
	North America	$	129	$	122
	Europe		24		29
	Asia Pacific		5		6
Total long-lived assets by geographic region		$	158	$	157

*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, 2015 and 2014.