Restructuring

12 Months Ended

Dec. 31, 2020

Restructuring and Related Activities [Abstract]

During 2019, we began implementing a plan aimed at refocusing our resources on our largest opportunities and removing unnecessary levels of complexity from certain parts of our business. We have been:

•increasing our investment in development for our largest, internally-owned franchises—across upfront releases, in-game content, mobile, and geographic expansion;

•reducing certain non-development and administrative-related costs across our business; and

•integrating our global and regional sales and “go-to-market,” partnerships, and sponsorships capabilities across the business, which we believe will enable us to provide better opportunities for talent, and greater expertise and scale on behalf of our business units.

Since initial implementation in 2019, we have expanded the scope of certain actions within our plan that are aimed at integrating our global and regional functions to allow continued focus on investing in our largest, internally-owned franchises and to provide us with the ability to better leverage our scale across the organization. The restructuring actions remain in progress as we continue to focus on these goals and will continue into 2021.

The following table summarizes accrued restructuring and related costs included in “Accrued expenses and other liabilities” in our consolidated balance sheet (amounts in millions) related to this plan:


	Severance and employee related costs		Facilities and related costs		Other costs		Total
Balance at December 31, 2018	$	—	$	—	$	—	$	—
















Costs charged to expense	76		29		27		132
Cash payments	(44)		—		(12)		(56)
Non-cash charge adjustment (1)	—		(29)		(12)		(41)
Balance at December 31, 2019	$	32	$	—	$	3	$	35
Costs charged to expense	76		6		5		87
Cash payments	(20)		—		(5)		(25)
Non-cash charge adjustment (1)	—		(6)		—		(6)
Balance at December 31, 2020	$	88	$	—	$	3	$	91

Cumulative charges incurred through December 31, 2020	$	152	$	35	$	32	$	219

(1)Adjustments relate to non-cash charges included in “Costs charged to expense” for the write-down of assets from canceled projects and the write-down of assets for our lease facilities, inclusive of lease right-of-use assets and associated fixed assets, that were vacated.

Total restructuring and related costs by segment are (amounts in millions):


	Year Ended December 31, 2020		Year Ended December 31, 2019
Activision	$	13	$	19
Blizzard	71		68
King	(1)		20
Other segments (1)	4		25
Total	$	87	$	132

(1)Includes charges for operating segments managed outside the reportable segments and our corporate and administrative functions.

During the year ended December 31, 2020, we incurred additional restructuring charges that are not included in the plan discussed above. Such amounts were not material.

During the year ended December 31, 2019, we also recorded $5 million to write-down inventory as a result of changes to certain of our consumer product activities as part of our restructuring actions, whereby those activities will now operate under a licensing business model rather than being direct sales. This write-down is recorded within “Cost of revenues—product sales: Product costs” in our consolidated statement of operations.

We expect to incur total aggregate pre-tax restructuring charges of approximately $310 million associated with the plan, of which the remaining charges that have not yet been incurred are expected to largely be incurred within the next 12 months. The charges associated with the plan are expected to relate to severance and employee-related costs (approximately 60% of the aggregate charge), facilities and related costs (approximately 20% of the aggregate charge), and other costs (approximately 20% of the aggregate charge), including charges for restructuring related fees and the write-down of assets. A substantial majority (approximately 70%) of the total pre-tax charge associated with the restructuring is expected to be paid in cash using amounts on hand, and such cash outlays are largely expected to be completed by the end of 2021. We do not expect to realize significant net savings in our total operating expenses as a result of our plan, as cost reductions in our selling, general and administrative activities is expected to be offset by increased investment in product development.

The total charges incurred through December 31, 2020 and total expected pre-tax restructuring charges related to the plan by segment, inclusive of amounts already incurred and inclusive of the inventory write-down discussed above, are presented below (amounts in millions):


	Total Charges Incurred Through December 31, 2020		Total Charges Expected as of December 31, 2020
Activision	$	32	$	42
Blizzard	144		200
King	19		25
Other segments (1)	29		43
Total	$	224	$	310

(1)Includes charges for operating segments managed outside the reportable segments and our corporate and administrative functions.