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Operating Segments and Geographic Regions
 3 Months Ended
Mar. 31, 2023
Segment Reporting [Abstract]  
Operating Segments and Geographic Regions
8. 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 and 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):

Three Months Ended March 31, 2023
ActivisionBlizzardKingTotal
Segment Revenues
Net revenues from external customers$580 $435 $739 $1,754 
Intersegment net revenues (1)— 8 — 8 
Segment net revenues$580 $443 $739 $1,762 
Segment operating income$179 $56 $241 $476 
Three Months Ended March 31, 2022
ActivisionBlizzardKingTotal
Segment Revenues
Net revenues from external customers$453 $265 $682 $1,400 
Intersegment net revenues (1)— 9 — 9 
Segment net revenues$453 $274 $682 $1,409 
Segment operating income$59 $53 $243 $355 
(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):

Three Months Ended March 31,
20232022
Reconciliation to consolidated net revenues:
Segment net revenues$1,762 $1,409 
Revenues from non-reportable segments (1)
101 81 
Net effect from recognition (deferral) of deferred net revenues (2)528 287 
Elimination of intersegment revenues (3)
(8)(9)
Consolidated net revenues
$2,383 $1,768 
Reconciliation to consolidated income before income tax expense:
Segment operating income
$476 $355 
Operating income (loss) from non-reportable segments (1)6 19 
Net effect from recognition (deferral) of deferred net revenues and related cost of revenues (2)471 235 
Share-based compensation expense (4)(124)(98)
Amortization of intangible assets (5)(4)(2)
Restructuring and related costs (6)— 2 
Partnership wind down and related costs (7)(4)— 
Merger and acquisition-related fees and other expenses (8)(21)(32)
Consolidated operating income
800 479 
Interest expense from debt27 27 
Other (income) expense, net(122)(13)
Consolidated income before income tax expense $895 $465 

(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.

(7)Reflects expenses related to the wind down of our partnership with NetEase, Inc. 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):

Three Months Ended March 31, 2023
ActivisionBlizzardKingNon-reportable segmentsElimination of intersegment revenues (3)Total
Net revenues by distribution channel:
Digital online channels (1)$902 $525 $738 $— $(8)$2,157 
Retail channels102 2 — — — 104 
Other (2)6 4 — 112 — 122 
Total consolidated net revenues$1,010 $531 $738 $112 $(8)$2,383 
Change in deferred revenues:
Digital online channels (1)$(362)$(87)$1 $— $— $(448)
Retail channels(68)(1)— — — (69)
Other (2)— — — (11)— (11)
Total change in deferred revenues$(430)$(88)$1 $(11)$— $(528)
Segment net revenues:
Digital online channels (1)$540 $438 $739 $— $(8)$1,709 
Retail channels34 1 — — — 35 
Other (2)6 4 — 101 — 111 
Total segment net revenues$580 $443 $739 $101 $(8)$1,855 

Three Months Ended March 31, 2022
ActivisionBlizzardKingNon-reportable segmentsElimination of intersegment revenues (3)Total
Net revenues by distribution channel:
Digital online channels (1)$616 $300 $682 $— $(9)$1,589 
Retail channels83 2 — — — 85 
Other (2)11 2 — 81 — 94 
Total consolidated net revenues$710 $304 $682 $81 $(9)$1,768 
Change in deferred revenues:
Digital online channels (1)$(192)$(30)$— $— $— $(222)
Retail channels(65)1 — — — (64)
Other (2)— (1)— — — (1)
Total change in deferred revenues$(257)$(30)$— $— $— $(287)
Segment net revenues:
Digital online channels (1)$424 $270 $682 $— $(9)$1,367 
Retail channels18 3 — — — 21 
Other (2)11 1 — 81 — 93 
Total segment net revenues$453 $274 $682 $81 $(9)$1,481 
(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.


Geographic information presented below is based on the location of the paying customer. Net revenues by geographic region, including a reconciliation to each of our reportable segment’s net revenues, were as follows (amounts in millions):

Three Months Ended March 31, 2023
ActivisionBlizzardKingNon-reportable segmentsElimination of intersegment revenues (2)Total
Net revenues by geographic region:
Americas$652 $257 $473 $1 $(5)$1,378 
EMEA (1)256 153 181 111 (2)699 
Asia Pacific102 121 84 — (1)306 
Total consolidated net revenues$1,010 $531 $738 $112 $(8)$2,383 
Change in deferred revenues:
Americas$(280)$(44)$1 $— $— $(323)
EMEA (1)(125)(28)— (11)— (164)
Asia Pacific(25)(16)— — — (41)
Total change in deferred revenues$(430)$(88)$1 $(11)$— $(528)
Segment net revenues:
Americas$372 $213 $474 $1 $(5)$1,055 
EMEA (1)131 125 181 100 (2)535 
Asia Pacific77 105 84 — (1)265 
Total segment net revenues$580 $443 $739 $101 $(8)$1,855 
Three Months Ended March 31, 2022
ActivisionBlizzardKingNon-reportable segmentsElimination of intersegment revenues (2)Total
Net revenues by geographic region:
Americas$460 $125 $437 $— $(6)$1,016 
EMEA (1)184 94 170 81 (2)527 
Asia Pacific66 85 75 — (1)225 
Total consolidated net revenues$710 $304 $682 $81 $(9)$1,768 
Change in deferred revenues:
Americas$(164)$(11)$1 $— $— $(174)
EMEA (1)(80)(13)— — — (93)
Asia Pacific(13)(6)(1)— — (20)
Total change in deferred revenues$(257)$(30)$— $— $— $(287)
Segment net revenues:
Americas$296 $114 $438 $— $(6)$842 
EMEA (1)104 81 170 81 (2)434 
Asia Pacific53 79 74 — (1)205 
Total segment net revenues$453 $274 $682 $81 $(9)$1,481 
(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. was 51% of consolidated net revenues for both the three months ended March 31, 2023 and 2022, respectively. The Company’s net revenues in the U.K. was 10% of consolidated net revenues for both the three months ended March 31, 2023 and 2022, respectively. No other country’s net revenues exceeded 10% of consolidated net revenues for the three months ended March 31, 2023 or 2022.

Net revenues by platform, including a reconciliation to each of our reportable segment’s net revenues, were as follows (amounts in millions):
Three Months Ended March 31, 2023
ActivisionBlizzardKingNon-reportable segmentsElimination of intersegment revenues (3)Total
Net revenues by platform:
Console$597 $42 $— $— $— $639 
PC270 386 18 — (8)666 
Mobile and ancillary (1)137 99 720 — — 956 
Other (2)6 4 — 112 — 122 
Total consolidated net revenues$1,010 $531 $738 $112 $(8)$2,383 
Change in deferred revenues:
Console$(278)$(4)$— $— $— $(282)
PC(151)(52)— — — (203)
Mobile and ancillary (1)(1)(32)1 — — (32)
Other (2)— — — (11)— (11)
Total change in deferred revenues$(430)$(88)$1 $(11)$— $(528)
Segment net revenues:
Console$319 $38 $— $— $— $357 
PC119 334 18 — (8)463 
Mobile and ancillary (1)136 67 721 — — 924 
Other (2)6 4 — 101 — 111 
Total segment net revenues$580 $443 $739 $101 $(8)$1,855 

Three Months Ended March 31, 2022
ActivisionBlizzardKingNon-reportable segmentsElimination of intersegment revenues (3)Total
Net revenues by platform:
Console$460 $24 $— $— $— $484 
PC124 251 17 — (9)383 
Mobile and ancillary (1)115 27 665 — — 807 
Other (2)11 2 — 81 — 94 
Total consolidated net revenues$710 $304 $682 $81 $(9)$1,768 
Change in deferred revenues:
Console$(216)$(5)$— $— $— $(221)
PC(62)(18)— — — (80)
Mobile and ancillary (1)21 (6)— — — 15 
Other (2)— (1)— — — (1)
Total change in deferred revenues$(257)$(30)$— $— $— $(287)
Segment net revenues:
Console$244 $19 $— $— $— $263 
PC62 233 17 — (9)303 
Mobile and ancillary (1)136 21 665 — — 822 
Other (2)11 1 — 81 — 93 
Total segment net revenues$453 $274 $682 $81 $(9)$1,481 
(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 March 31, 2023At December 31, 2022
Long-lived assets* by geographic region:
Americas$289 $279 
EMEA102 103 
Asia Pacific21 21 
Total long-lived assets by geographic region$412 $403 

*    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.