Segment Information

6 Months Ended

Jun. 30, 2015

Segment Reporting [Abstract]

Segment Information

Note 17 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 the residual components of our Helix business; and (3) Games, which includes all our games-related businesses, including licenses, online games subscription services, advertising on games sites and social network sites, microtransactions from online and social games, and 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. Also reported in our corporate segment were restructuring charges as well as lease exit and related charges, and in 2014 the extinguishment of the liability associated with our historical music business.

RealNetworks reports 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, in the 10-K.

Segment results for the quarters and six months ended June 30, 2015 and 2014 (in thousands):

RealPlayer Group

	Quarters Ended June 30,						Six Months Ended June 30,
	2015			2014			2015			2014
Revenue	$	7,344		$	8,556		$	15,357		$	23,771
Cost of revenue	4,317			3,620			8,429			7,138
Gross profit	3,027			4,936			6,928			16,633
Operating expenses	13,001			12,489			25,376			30,276
Operating income (loss)	$	(9,974	)	$	(7,553	)	$	(18,448	)	$	(13,643	)

Mobile Entertainment

	Quarters Ended June 30,					Six Months Ended June 30,
	2015		2014			2015			2014
Revenue	$	18,515	$	23,182		$	32,995		$	43,095
Cost of revenue	13,079		14,298			22,585			26,248
Gross profit	5,436		8,884			10,410			16,847
Operating expenses	5,301		9,424			10,934			19,040
Operating income (loss)	$	135	$	(540	)	$	(524	)	$	(2,193	)

Games

	Quarters Ended June 30,						Six Months Ended June 30,
	2015			2014			2015			2014
Revenue	$	8,095		$	9,087		$	16,199		$	19,683
Cost of revenue	2,286			2,717			5,080			5,846
Gross profit	5,809			6,370			11,119			13,837
Operating expenses	8,719			8,769			17,402			18,535
Operating income (loss)	$	(2,910	)	$	(2,399	)	$	(6,283	)	$	(4,698	)

Corporate

	Quarters Ended June 30,						Six Months Ended June 30,
	2015			2014			2015			2014
Cost of revenue	$	150		$	151		$	285		$	340
Extinguishment of liability	—			—			—			(10,580		)
Operating expenses	7,808			8,189			14,179			17,414
Operating income (loss)	$	(7,958	)	$	(8,340	)	$	(14,464	)	$	(7,174	)

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):

	Quarters Ended June 30,				Six Months Ended June 30,
	2015		2014		2015		2014
United States	$	12,303	$	15,092	$	24,652	$	35,520
Europe	3,728		6,968		7,891		15,380
Republic of Korea	12,375		11,092		18,699		21,386
Rest of the World	5,548		7,673		13,309		14,263
Total net revenue	$	33,954	$	40,825	$	64,551	$	86,549

Long-lived assets (which consist of equipment, software, leasehold improvements, other intangible assets, and goodwill) by geographic region (in thousands) are as follows:

	June 30, 2015		December 31, 2014
United States	$	30,198	$	33,421
Europe	6,172		6,696
Republic of Korea	438		547
Rest of the World	2,777		3,048
Total long-lived assets	$	39,585	$	43,712