

Note 17	Segment Information

We manage our business and report revenue and operating income (loss) in four 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 SaaS services and our integrated RealTimes® platform which is sold to mobile carriers; (3) Games, which includes all our games-related businesses, including sales of mobile games, games licenses, in-game virtual goods, subscription services, and advertising on games and social network sites; and (4) Napster, which includes our on-demand music streaming and music services.

RealNetworks allocates to its Consumer Media, Mobile Services and Games reportable segments certain corporate expenses which are directly attributable to supporting these 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 these businesses, are reported as corporate items. These corporate items also include restructuring charges and stock compensation charges. As stated in Note 5 Acquisitions, Napster is operating as an independent company and includes all their corporate expenses in their segment results, and RealNetworks does not allocate any expenses to the Napster segment.

RealNetworks reports four reportable segments based on factors such as how we manage our operations and how the 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 six months ended June 30, 2019 and 2018 (in thousands):



Consumer Media	Quarter Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Revenue	$	2,620		$	3,884		$	5,106		$	9,367
Cost of revenue	803			1,028			1,636			2,021
Gross profit	1,817			2,856			3,470			7,346
Operating expenses	2,877			3,439			5,996			7,357
Operating income (loss)	$	(1,060	)	$	(583	)	$	(2,526	)	$	(11	)



Mobile Services	Quarter Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Revenue	$	6,997		$	6,719		$	13,936		$	15,423
Cost of revenue	1,865			2,134			3,913			4,450
Gross profit	5,132			4,585			10,023			10,973
Operating expenses	7,438			6,969			14,999			14,335
Operating income (loss)	$	(2,306	)	$	(2,384	)	$	(4,976	)	$	(3,362	)



Games	Quarter Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Revenue	$	6,048		$	5,121		$	11,758		$	10,584
Cost of revenue	1,655			1,456			3,325			3,273
Gross profit	4,393			3,665			8,433			7,311
Operating expenses	5,288			5,095			10,325			10,012
Operating income (loss)	$	(895	)	$	(1,430	)	$	(1,892	)	$	(2,701	)



Napster	Quarter Ended June 30,					Six Months Ended June 30,
	2019			2018		2019			2018
Revenue	$	28,583		$	—	$	52,920		$	—
Cost of revenue	23,026			—		43,422			—
Gross profit	5,557			—		9,498			—
Operating expenses	6,638			—		12,170			—
Operating income (loss)	$	(1,081	)	$	—	$	(2,672	)	$	—



Corporate	Quarter Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Cost of revenue	$	(67	)	$	7		$	(144	)	$	17
Operating expenses	4,116			2,429			8,373			5,696
Operating income (loss)	$	(4,049	)	$	(2,436	)	$	(8,229	)	$	(5,713	)

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 June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
United States	$	21,322	$	7,646	$	40,292	$	19,080
Europe	17,097		3,010		32,481		6,035
Rest of the World	5,829		5,068		10,947		10,259
Total net revenue	$	44,248	$	15,724	$	83,720	$	35,374

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



	June 30, 2019		December 31, 2018
United States	$	89,883	$	11,823
Europe	11,028		6,761
Rest of the World	2,902		1,151
Total long-lived assets	$	103,813	$	19,735