

Note 18	Segment Information

We manage our business and report revenue and operating income (loss) in three segments: (1) Consumer Media, which includes licensing of our codec technology and our PC-based RealPlayer products, including RealPlayer Plus and related products; (2) Mobile Services, which includes our subscription services and our integrated RealTimes platform which is sold to mobile carriers; and (3) Games, which includes all our games-related businesses, including sales of mobile games, sales of games licenses, games subscription services, advertising on games sites and within our games, and microtransactions from online games.

We allocate to our reportable segments certain corporate expenses which are directly attributable to supporting our businesses, including but 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 are restructuring charges, lease exit and related charges, as well as stock-based compensation expense.

RealNetworks reports three reportable segments based on factors such as how we manage our operations and how our Chief Operating Decision Maker (CODM) reviews results. The CODM 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 nine months ended September 30, 2018 and 2017 (in thousands):

Consumer Media



	Quarter Ended September 30,					Nine Months Ended September 30,
	2018		2017			2018		2017
Revenue	$	4,733	$	4,197		$	14,100	$	16,817
Cost of revenue	955		981			2,976		3,545
Gross profit	3,778		3,216			11,124		13,272
Operating expenses	3,448		3,217			10,805		10,957
Operating income (loss)	$	330	$	(1	)	$	319	$	2,315

Mobile Services



	Quarter Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017
Revenue	$	7,348		$	7,678		$	22,771		$	23,597
Cost of revenue	2,052			2,134			6,502			7,750
Gross profit	5,296			5,544			16,269			15,847
Operating expenses	6,825			6,437			21,160			21,261
Operating loss	$	(1,529	)	$	(893	)	$	(4,891	)	$	(5,414	)

Games



	Quarter Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017
Revenue	$	5,498		$	6,682		$	16,082		$	19,439
Cost of revenue	1,228			2,226			4,501			6,842
Gross profit	4,270			4,456			11,581			12,597
Operating expenses	5,447			5,071			15,459			15,108
Operating loss	$	(1,177	)	$	(615	)	$	(3,878	)	$	(2,511	)

Corporate



	Quarter Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017
Cost of revenue	$	4		$	2		$	21		$	62
Operating expenses	2,548			2,948			8,244			10,202
Operating loss	$	(2,552	)	$	(2,950	)	$	(8,265	)	$	(10,264	)

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



	Quarter Ended September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017
United States	$	9,026	$	10,098	$	28,106	$	30,727
Europe	3,005		3,337		9,040		9,737
Rest of the World	5,548		5,122		15,807		19,389
Total net revenue	$	17,579	$	18,557	$	52,953	$	59,853

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



	September 30, 2018		December 31, 2017
United States	$	11,862	$	12,236
Europe	7,001		3,437
Rest of the World	1,233		1,572
Total long-lived assets	$	20,096	$	17,245