Operating Segments and Geographic Region

6 Months Ended

Jun. 30, 2015

Segment Reporting [Abstract]

Operating Segments and Geographic Region

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 and six months ended June 30, 2015 and 2014 are presented below (amounts in millions):

	Three Months Ended June 30,
	2015		2014		2015			2014
	Net revenues				Income (loss) from operations before income tax expense
Activision	$	313	$	252	$	57		$	(31	)
Blizzard	385		340		117			145
Distribution	61		66		(1		)	(1		)
Operating segments total	759		658		173			113
Reconciliation to consolidated net revenues / consolidated income before income tax expense:
Net effect from deferral of net revenues and related cost of sales	285		312		181			220
Stock-based compensation expense	—		—		(21		)	(22		)
Amortization of intangible assets	—		—		(1		)	(1		)
Consolidated net revenues / operating income	$	1,044	$	970	$	332		$	310
Interest and other expense, net					50			50
Consolidated income before income tax expense					$	282		$	260

	Six Months Ended June 30,
	2015		2014		2015			2014
	Net revenues				Income (loss) from operations before income tax expense
Activision	$	616	$	489	$	121		$	(29	)
Blizzard	737		801		256			383
Distribution	109		140		(1		)	(1		)
Operating segments total	1,462		1,430		376			353
Reconciliation to consolidated net revenues / consolidated income before income tax expense:
Net effect from deferral of net revenues and related cost of sales	860		651		545			440
Stock-based compensation expense	—		—		(44		)	(53		)
Amortization of intangible assets	—		—		(3		)	(3		)
Consolidated net revenues / operating income	$	2,322	$	2,081	$	874		$	737
Interest and other expense, net					100			101
Consolidated income before income tax expense					$	774		$	636

Geographic information presented below for the three and six months ended June 30, 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 June 30,				Six Months Ended June 30,
	2015		2014		2015		2014
Net revenues by geographic region:
North America	$	551	$	471	$	1,255	$	1,035
Europe	388		395		852		856
Asia Pacific	105		104		215		190
Total consolidated net revenues	$	1,044	$	970	$	2,322	$	2,081

The Company’s net revenues in the U.S. were 50% and 46% of consolidated net revenues for the three months ended June 30, 2015 and 2014, respectively.  The Company’s net revenues in the U.K. were 14% of consolidated net revenues for the three months ended both June 30, 2015 and 2014. The Company’s net revenues in France were 10% and 16% of consolidated net revenues for the three months ended June 30, 2015 and 2014, respectively.  No other country’s net revenues exceeded 10% of consolidated net revenues.

The Company’s net revenues in the U.S. were 52% and 47% of consolidated net revenues for the six months ended June 30, 2015 and 2014, respectively.  The Company’s net revenues in the U.K. were 13% and 14% of consolidated net revenues for the six months ended June 30, 2015 and 2014, respectively. The Company’s net revenues in France were 8% and 15% of consolidated net revenues for the six months ended June 30, 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 June 30,				Six Months Ended June 30,
	2015		2014		2015		2014
Net revenues by platform:
Console	$	559	$	479	$	1,317	$	1,134
Online1	221		195		492		395
PC	149		182		263		281
Mobile and other2	54		48		141		131
Total Activision Blizzard net revenues	983		904		2,213		1,941
Distribution	61		66		109		140
Total consolidated net revenues	$	1,044	$	970	$	2,322	$	2,081

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 June 30, 2015 and December 31, 2014 were as follows (amounts in millions):

	At June 30, 2015		At December 31, 2014
Long-lived assets1 by geographic region:
North America	$	145	$	122
Europe	26		29
Asia Pacific	8		6
Total long-lived assets by geographic region	$	179	$	157

¹  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.