Segment Information

12 Months Ended

Dec. 31, 2014

Segment Reporting [Abstract]

Segment Information

Note 18. Segment Information

We have three reportable segments: (1) RealPlayer Group, which includes our new RealPlayer Cloud product, our RealPlayer media player software and related products, and our SuperPass service; (2) Mobile Entertainment, which includes our SaaS services, our LISTEN product and to a lesser degree, sales of technology licenses of our software products such as Helix; and (3) Games, which includes all our games-related businesses, including sales of games licenses, online games subscription services, advertising on games sites and social network sites, microtransactions from online and social games, and sales of mobile games.

We allocate certain corporate expenses which are directly attributable to supporting the business to our reportable segments. These corporate expenses include but are not limited to a portion of finance, legal, human resources and headquarters facilities. Remaining expenses, which are not directly attributable to supporting the business, are reported as corporate items. All restructuring, lease exit and related charges are reported as corporate items. Also reported as corporate items were the 2014 extinguishment of the liability associated with our historical musical business, the 2013 loss on litigation settlements, and in 2012, the sale of patent and other technology assets, net of costs.     

RealNetworks reports the three reportable segments based on factors such as how we manage our operations and how our Chief Operating Decision Maker reviews results. Our Chief Operating Decision Maker is considered to be the CEO Staff (CEOS), which includes the Chief Executive Officer, Chief Financial Officer, our Presidents and General Counsel. The CEOS reviews financial information presented on both a consolidated basis and on a business segment basis. The accounting policies used to derive segment results are the same as those described in Note 1, Description of Business and Summary of Significant Accounting Policies.

Segment results for the years ended December 31, 2014, 2013 and 2012 were as follows (in thousands):

RealPlayer Group

	2014			2013			2012
Revenue	$	39,201		$	75,206		$	91,469
Cost of revenue	14,508			16,220			21,544
Gross profit	24,693			58,986			69,925
Operating expenses	55,742			60,484			55,223
Operating income (loss)	$	(31,049	)	$	(1,498	)	$	14,702

Mobile Entertainment

	2014			2013			2012
Revenue	$	79,901		$	81,181		$	100,318
Cost of revenue	50,399			47,608			57,670
Gross profit	29,502			33,573			42,648
Operating expenses	33,325			35,839			52,614
Operating income (loss)	$	(3,823	)	$	(2,266	)	$	(9,966	)

Games

	2014			2013			2012
Revenue	$	37,110		$	49,809		$	67,055
Cost of revenue	11,074			13,359			21,828
Gross profit	26,036			36,450			45,227
Operating expenses	37,170			47,177			51,890
Operating income (loss)	$	(11,134	)	$	(10,727	)	$	(6,663	)

Corporate

	2014			2013			2012
Cost of revenue	$	400		$	1,904		$	2,689
Extinguishment of liability	(10,580		)	—			—
Gain on sale of patents and other technology assets, net of costs	—			—			116,353
Operating expenses	33,327			54,413			56,174
Operating income (loss)	$	(23,147	)	$	(56,317	)	$	57,490

Our customers consist primarily of consumers and corporations located in the U.S., Europe, Republic of Korea and various foreign countries (Rest of the World). Revenue by geographic region (in thousands):

	Years ended December 31,
	2014		2013		2012
United States	$	61,660	$	90,250	$	117,844
Europe	26,575		38,155		56,473
Republic of Korea	39,852		46,601		40,467
Rest of the World	28,125		31,190		44,058
Total	$	156,212	$	206,196	$	258,842

Long-lived assets (consists of equipment, software, leasehold improvements, other intangible assets, and goodwill) by geographic region (in thousands):

	December 31,
	2014		2013		2012
United States	$	33,421	$	40,347	$	27,915
Europe	6,696		8,280		2,350
Republic of Korea	547		936		2,463
Rest of the World	3,048		4,078		6,172
Total long-lived assets	$	43,712	$	53,641	$	38,900