Operating Segments and Geographic Regions

12 Months Ended

Dec. 31, 2022

Segment Reporting [Abstract]

Operating Segments and Geographic Regions

15. Operating Segments and Geographic Regions

We have three reportable segments—Activision, Blizzard, and King. Our operating segments are consistent with the manner in which our operations are reviewed and managed by our Chief Executive Officer, who is our chief operating decision maker (“CODM”). The CODM reviews segment performance exclusive of: the impact of the change in deferred revenues and related cost of revenues with respect to certain of our online-enabled games; share-based compensation expense (including liability awards accounted for under ASC 718); amortization of intangible assets as a result of purchase price accounting; fees and other expenses (including legal fees, expenses, and accruals) related to acquisitions, associated integration activities, and financings; certain restructuring and related costs; certain partnership wind down related costs; and certain other non-cash charges. The CODM does not review any information regarding total assets on an operating segment basis, and accordingly, no disclosure is made with respect thereto.

Our operating segments are also consistent with our internal organizational structure, the way we assess operating performance and allocate resources, and the availability of separate financial information. We do not aggregate operating segments.

Information on reportable segment net revenues and operating income are presented below (amounts in millions):

	Year Ended December 31, 2022
	Activision		Blizzard		King		Total
Segment Revenues
Net revenues from external customers	$	3,275	$	1,936	$	2,785	$	7,996
Intersegment net revenues (1)	—		76		—		76
Segment net revenues	$	3,275	$	2,012	$	2,785	$	8,072
Segment operating income	$	1,317	$	625	$	1,121	$	3,063
	Year Ended December 31, 2021
	Activision		Blizzard		King		Total
Segment Revenues
Net revenues from external customers	$	3,478	$	1,733	$	2,580	$	7,791
Intersegment net revenues (1)	—		94		—		94
Segment net revenues	$	3,478	$	1,827	$	2,580	$	7,885
Segment operating income	$	1,667	$	698	$	1,140	$	3,505
	Year Ended December 31, 2020
	Activision		Blizzard		King		Total
Segment Revenues
Net revenues from external customers	$	3,942	$	1,794	$	2,164	$	7,900
Intersegment net revenues (1)	—		111		—		111
Segment net revenues	$	3,942	$	1,905	$	2,164	$	8,011
Segment operating income	$	1,868	$	693	$	857	$	3,418

(1)Intersegment revenues reflect licensing and service fees charged between segments.

Reconciliations of total segment net revenues and total segment operating income to consolidated net revenues and consolidated income before income tax expense are presented in the table below (amounts in millions):

	Years Ended December 31,
	2022		2021		2020
Reconciliation to consolidated net revenues:
Segment net revenues	$	8,072	$	7,885	$	8,011
Revenues from non-reportable segments (1)	518		563		519
Net effect from recognition (deferral) of deferred net revenues (2)	(986)		449		(333)
Elimination of intersegment revenues (3)	(76)		(94)		(111)
Consolidated net revenues	$	7,528	$	8,803	$	8,086
Reconciliation to consolidated income before income tax expense:
Segment operating income	$	3,063	$	3,505	$	3,418
Operating income (loss) from non-reportable segments (1)	22		2		(55)
Net effect from recognition (deferral) of deferred net revenues and related cost of revenues (2)	(848)		347		(238)
Share-based compensation expense (4)	(462)		(508)		(218)
Amortization of intangible assets (5)	(13)		(10)		(79)
Restructuring and related costs (6)	3		(77)		(94)
Partnership wind down and related costs (7)	(27)		—		—
Merger and acquisition-related fees and other expenses (8)	(68)		—		—
Consolidated operating income	1,670		3,259		2,734
Interest expense from debt	108		108		99
Other (income) expense, net	(182)		(13)		(12)
Loss on extinguishment of debt	—		—		31
Consolidated income before income tax expense	$	1,744	$	3,164	$	2,616

(1)Includes other income and expenses outside of our reportable segments, including our Distribution business and unallocated corporate income and expenses.

(2)Reflects the net effect from recognition (deferral) of deferred net revenues, along with related cost of revenues, on certain of our online-enabled products.

(3)Intersegment revenues reflect licensing and service fees charged between segments.

(4)Reflects expenses related to share-based compensation.

(5)Reflects amortization of intangible assets from purchase price accounting.

(6)Reflects restructuring initiatives, primarily severance and other restructuring-related costs.

(7)Reflects expenses related to the wind down of our partnership with NetEase in Mainland China in regards to licenses covering the publication of several Blizzard titles which expired in January 2023.

(8)Reflects fees and other expenses related to our proposed transaction with Microsoft, which primarily consist of legal and advisory fees.

Net revenues by distribution channel, including a reconciliation to each of our reportable segment’s revenues, were as follows (amounts in millions):

	Year Ended December 31, 2022
	Activision		Blizzard		King		Non-reportable segments		Elimination of intersegment revenues (3)		Total
Net revenues by distribution channel:
Digital online channels (1)	$	2,324	$	1,600	$	2,785	$	—	$	(76)	$	6,633
Retail channels	274		16		—		—		—		290
Other (2)	45		56		—		504		—		605
Total consolidated net revenues	$	2,643	$	1,672	$	2,785	$	504	$	(76)	$	7,528
Change in deferred revenues:
Digital online channels (1)	$	629	$	341	$	—	$	—	$	—	$	970
Retail channels	3		—		—		—		—		3
Other (2)	—		(1)		—		14		—		13
Total change in deferred revenues	$	632	$	340	$	—	$	14	$	—	$	986
Segment net revenues:
Digital online channels (1)	$	2,953	$	1,941	$	2,785	$	—	$	(76)	$	7,603
Retail channels	277		16		—		—		—		293
Other (2)	45		55		—		518		—		618
Total segment net revenues	$	3,275	$	2,012	$	2,785	$	518	$	(76)	$	8,514

	Year Ended December 31, 2021
	Activision		Blizzard		King		Non-reportable segments		Elimination of intersegment revenues (3)		Total
Net revenues by distribution channel:
Digital online channels (1)	$	3,287	$	1,873	$	2,597	$	—	$	(94)	$	7,663
Retail channels	449		30		—		—		—		479
Other (2)	40		72		—		549		—		661
Total consolidated net revenues	$	3,776	$	1,975	$	2,597	$	549	$	(94)	$	8,803
Change in deferred revenues:
Digital online channels (1)	$	(264)	$	(140)	$	(17)	$	—	$	—	$	(421)
Retail channels	(34)		(8)		—		—		—		(42)
Other (2)	—		—		—		14		—		14
Total change in deferred revenues	$	(298)	$	(148)	$	(17)	$	14	$	—	$	(449)
Segment net revenues:
Digital online channels (1)	$	3,023	$	1,733	$	2,580	$	—	$	(94)	$	7,242
Retail channels	415		22		—		—		—		437
Other (2)	40		72		—		563		—		675
Total segment net revenues	$	3,478	$	1,827	$	2,580	$	563	$	(94)	$	8,354

	Year Ended December 31, 2020
	Activision		Blizzard		King		Non-reportable segments		Elimination of intersegment revenues (3)		Total
Net revenues by distribution channel:
Digital online channels (1)	$	2,930	$	1,672	$	2,167	$	—	$	(111)	$	6,658
Retail channels	702		39		—		—		—		741
Other (2)	57		92		—		538		—		687
Total consolidated net revenues	$	3,689	$	1,803	$	2,167	$	538	$	(111)	$	8,086
Change in deferred revenues:
Digital online channels (1)	$	365	$	102	$	(3)	$	—	$	—	$	464
Retail channels	(112)		—		—		—		—		(112)
Other (2)	—		—		—		(19)		—		(19)
Total change in deferred revenues	$	253	$	102	$	(3)	$	(19)	$	—	$	333
Segment net revenues:
Digital online channels (1)	$	3,295	$	1,774	$	2,164	$	—	$	(111)	$	7,122
Retail channels	590		39		—		—		—		629
Other (2)	57		92		—		519		—		668
Total segment net revenues	$	3,942	$	1,905	$	2,164	$	519	$	(111)	$	8,419

(1)Net revenues from “Digital online channels” include revenues from digitally-distributed downloadable content, microtransactions, subscriptions, and products, as well as licensing royalties.

(2)Net revenues from “Other” primarily include revenues from our Distribution business, the Overwatch League, and the Call of Duty League.

(3)Intersegment revenues reflect licensing and service fees charged between segments.

Net revenues by geographic region, including a reconciliation to each of our reportable segment’s net revenues, were as follows (amounts in millions):

	Year Ended December 31, 2022
	Activision		Blizzard		King		Non-reportable segments		Elimination of intersegment revenues (2)		Total
Net revenues by geographic region:
Americas	$	1,732	$	716	$	1,809	$	—	$	(49)	$	4,208
EMEA (1)	652		434		668		504		(22)		2,236
Asia Pacific	259		522		308		—		(5)		1,084
Total consolidated net revenues	$	2,643	$	1,672	$	2,785	$	504	$	(76)	$	7,528
Change in deferred revenues:
Americas	$	420	$	188	$	—	$	—	$	1	$	609
EMEA (1)	145		99		(1)		14		—		257
Asia Pacific	67		53		1		—		(1)		120
Total change in deferred revenues	$	632	$	340	$	—	$	14	$	—	$	986
Segment net revenues:
Americas	$	2,152	$	904	$	1,809	$	—	$	(48)	$	4,817
EMEA (1)	797		533		667		518		(22)		2,493
Asia Pacific	326		575		309		—		(6)		1,204
Total segment net revenues	$	3,275	$	2,012	$	2,785	$	518	$	(76)	$	8,514

	Year Ended December 31, 2021
	Activision		Blizzard		King		Non-reportable segments		Elimination of intersegment revenues (2)		Total
Net revenues by geographic region:
Americas	$	2,446	$	876	$	1,664	$	—	$	(55)	$	4,931
EMEA (1)	976		638		665		549		(31)		2,797
Asia Pacific	354		461		268		—		(8)		1,075
Total consolidated net revenues	$	3,776	$	1,975	$	2,597	$	549	$	(94)	$	8,803
Change in deferred revenues:
Americas	$	(198)	$	(79)	$	(11)	$	—	$	—	$	(288)
EMEA (1)	(80)		(65)		(5)		14		—		(136)
Asia Pacific	(20)		(4)		(1)		—		—		(25)
Total change in deferred revenues	$	(298)	$	(148)	$	(17)	$	14	$	—	$	(449)
Segment net revenues:
Americas	$	2,248	$	797	$	1,653	$	—	$	(55)	$	4,643
EMEA (1)	896		573		660		563		(31)		2,661
Asia Pacific	334		457		267		—		(8)		1,050
Total segment net revenues	$	3,478	$	1,827	$	2,580	$	563	$	(94)	$	8,354

	Year Ended December 31, 2020
	Activision		Blizzard		King		Non-reportable segments		Elimination of intersegment revenues (2)		Total
Net revenues by geographic region:
Americas	$	2,316	$	794	$	1,384	$	—	$	(60)	$	4,434
EMEA (1)	1,061		550		568		538		(37)		2,680
Asia Pacific	312		459		215		—		(14)		972
Total consolidated net revenues	$	3,689	$	1,803	$	2,167	$	538	$	(111)	$	8,086
Change in deferred revenues:
Americas	$	228	$	58	$	(1)	$	—	$	—	$	285
EMEA (1)	36		43		(1)		(19)		—		59
Asia Pacific	(11)		1		(1)		—		—		(11)
Total change in deferred revenues	$	253	$	102	$	(3)	$	(19)	$	—	$	333
Segment net revenues:
Americas	$	2,544	$	852	$	1,383	$	—	$	(60)	$	4,719
EMEA (1)	1,097		593		567		519		(37)		2,739
Asia Pacific	301		460		214		—		(14)		961
Total segment net revenues	$	3,942	$	1,905	$	2,164	$	519	$	(111)	$	8,419

(1)    “EMEA” consists of the Europe, Middle East, and Africa geographic regions.

(2)    Intersegment revenues reflect licensing and service fees charged between segments.

The Company’s net revenues in the U.S. were 49%, 49%, and 48% of consolidated net revenues for the years ended December 31, 2022, 2021, and 2020, respectively. The Company’s net revenues in the U.K. were 11%, 11%, and 12% of consolidated net revenues for the years ended December 31, 2022, 2021, and 2020, respectively. No other country’s net revenues exceeded 10% of consolidated net revenues for the years ended December 31, 2022, 2021, or 2020.

Net revenues by platform, including a reconciliation to each of our reportable segment’s net revenues, were as follows (amounts in millions):

	Year Ended December 31, 2022
	Activision		Blizzard		King		Non-reportable segments		Elimination of intersegment revenues (3)		Total
Net revenues by platform:
Console	$	1,661	$	92	$	—	$	—	$	—	$	1,753
PC	456		1,203		70		—		(76)		1,653
Mobile and ancillary (1)	481		321		2,715		—		—		3,517
Other (2)	45		56		—		504		—		605
Total consolidated net revenues	$	2,643	$	1,672	$	2,785	$	504	$	(76)	$	7,528
Change in deferred revenues:
Console	$	286	$	27	$	—	$	—	$	—	$	313
PC	252		239		—		—		—		491
Mobile and ancillary (1)	94		75		—		—		—		169
Other (2)	—		(1)		—		14		—		13
Total change in deferred revenues	$	632	$	340	$	—	$	14	$	—	$	986
Segment net revenues:
Console	$	1,947	$	119	$	—	$	—	$	—	$	2,066
PC	708		1,442		70		—		(76)		2,144
Mobile and ancillary (1)	575		396		2,715		—		—		3,686
Other (2)	45		55		—		518		—		618
Total segment net revenues	$	3,275	$	2,012	$	2,785	$	518	$	(76)	$	8,514

	Year Ended December 31, 2021
	Activision		Blizzard		King		Non-reportable segments		Elimination of intersegment revenues (3)		Total
Net revenues by platform:
Console	$	2,502	$	135	$	—	$	—	$	—	$	2,637
PC	660		1,673		84		—		(94)		2,323
Mobile and ancillary (1)	574		95		2,513		—		—		3,182
Other (2)	40		72		—		549		—		661
Total consolidated net revenues	$	3,776	$	1,975	$	2,597	$	549	$	(94)	$	8,803
Change in deferred revenues:
Console	$	(248)	$	(6)	$	—	$	—	$	—	$	(254)
PC	(82)		(145)		(1)		—		—		(228)
Mobile and ancillary (1)	32		3		(16)		—		—		19
Other (2)	—		—		—		14		—		14
Total change in deferred revenues	$	(298)	$	(148)	$	(17)	$	14	$	—	$	(449)
Segment net revenues:
Console	$	2,254	$	129	$	—	$	—	$	—	$	2,383
PC	578		1,528		83		—		(94)		2,095
Mobile and ancillary (1)	606		98		2,497		—		—		3,201
Other (2)	40		72		—		563		—		675
Total segment net revenues	$	3,478	$	1,827	$	2,580	$	563	$	(94)	$	8,354

	Year Ended December 31, 2020
	Activision		Blizzard		King		Non-reportable segments		Elimination of intersegment revenues (3)		Total
Net revenues by platform:
Console	$	2,668	$	116	$	—	$	—	$	—	$	2,784
PC	582		1,489		96		—		(111)		2,056
Mobile and ancillary (1)	382		106		2,071		—		—		2,559
Other (2)	57		92		—		538		—		687
Total consolidated net revenues	$	3,689	$	1,803	$	2,167	$	538	$	(111)	$	8,086
Change in deferred revenues:
Console	$	140	$	(8)	$	—	$	—	$	—	$	132
PC	64		115		—		—		—		179
Mobile and ancillary (1)	49		(5)		(3)		—		—		41
Other (2)	—		—		—		(19)		—		(19)
Total change in deferred revenues	$	253	$	102	$	(3)	$	(19)	$	—	$	333
Segment net revenues:
Console	$	2,808	$	108	$	—	$	—	$	—	$	2,916
PC	646		1,604		96		—		(111)		2,235
Mobile and ancillary (1)	431		101		2,068		—		—		2,600
Other (2)	57		92		—		519		—		668
Total segment net revenues	$	3,942	$	1,905	$	2,164	$	519	$	(111)	$	8,419

(1)Net revenues from “Mobile and ancillary” primarily include revenues from mobile devices.

(2)Net revenues from “Other” primarily include revenues from our Distribution business, the Overwatch League, and the Call of Duty League.

(3)Intersegment revenues reflect licensing and service fees charged between segments.

Long-lived assets by geographic region were as follows (amounts in millions):

	At December 31,
	2022		2021		2020
Long-lived assets* by geographic region:
Americas	$	279	$	264	$	270
EMEA	103		122		166
Asia Pacific	21		20		17
Total long-lived assets by geographic region	$	403	$	406	$	453

*    The only long-lived assets that we classify by region are our long-term tangible fixed assets, which consist of property, plant, and equipment assets and lease right-of-use assets. All other long-term assets are not allocated by location.

For information regarding significant customers, see “Concentration of Credit Risk” in Note 2.