Segment Information

12 Months Ended

Dec. 31, 2015

Segment Reporting [Abstract]

Segment Information

Note 18. Segment Information

We have three reportable segments: (1) RealPlayer Group, which includes our new RealTimes product, our RealPlayer media player software, intellectual property licensing, 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, in which we ceased investing during the fourth quarter of 2014; 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 a corporate item was the 2014 extinguishment of the liability associated with our historical musical business, and the 2013 loss on litigation settlements.

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, 2015, 2014 and 2013 were as follows (in thousands):

RealPlayer Group

	2015			2014			2013
Revenue	$	29,141		$	39,201		$	75,206
Cost of revenue	16,171			14,508			16,220
Gross profit	12,970			24,693			58,986
Operating expenses	47,149			55,742			60,484
Operating income (loss)	$	(34,179	)	$	(31,049	)	$	(1,498	)

Mobile Entertainment

	2015		2014			2013
Revenue	$	65,407	$	79,901		$	81,181
Cost of revenue	44,212		50,399			47,608
Gross profit	21,195		29,502			33,573
Operating expenses	20,256		33,325			35,839
Operating income (loss)	$	939	$	(3,823	)	$	(2,266	)

Games

	2015			2014			2013
Revenue	$	30,748		$	37,110		$	49,809
Cost of revenue	9,291			11,074			13,359
Gross profit	21,457			26,036			36,450
Operating expenses	29,086			37,170			47,177
Operating income (loss)	$	(7,629	)	$	(11,134	)	$	(10,727	)

Corporate

	2015			2014			2013
Cost of revenue	$	623		$	400		$	1,904
Extinguishment of liability	—			(10,580		)	—
Operating expenses	27,695			33,327			54,413
Operating income (loss)	$	(28,318	)	$	(23,147	)	$	(56,317	)

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,
	2015		2014		2013
United States	$	46,893	$	61,660	$	90,250
Europe	15,166		26,575		38,155
Republic of Korea	37,832		39,852		46,601
Rest of the World	25,405		28,125		31,190
Total	$	125,296	$	156,212	$	206,196

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

	December 31,
	2015		2014		2013
United States	$	16,821	$	33,421	$	40,347
Europe	4,898		6,696		8,280
Republic of Korea	282		547		936
Rest of the World	2,015		3,048		4,078
Total long-lived assets	$	24,016	$	43,712	$	53,641