Segment Information

6 Months Ended

Sep. 30, 2014

Segment Reporting [Abstract]

Segment Information

(16) SEGMENT INFORMATION

Our reporting segment is based upon: our internal organizational structure; the manner in which our operations are managed; the criteria used by our Chief Executive Officer, our Chief Operating Decision Maker (“CODM”), to evaluate segment performance; the availability of separate financial information; and overall materiality considerations.

Prior to the third quarter of fiscal 2014, our “EA Labels” operating segment was comprised of our five labels: EA Games, EA SPORTS, Maxis, PopCap and All Play. Our CODM regularly reviewed the aggregated results of the five labels to assess overall performance and allocate resources.

In September 2013, we announced the appointment of a new Chief Executive Officer. Our new Chief Executive Officer subsequently made a number of changes to our internal organizational structure and the manner in which our operations are managed. In addition, we redefined our definition of segment profit for management reporting. Our CODM currently reviews total company operating results to assess overall performance and allocate resources.

The following table summarizes the financial performance of our current segment operating profit and a reconciliation to our consolidated operating income for the three and six months ended September 30, 2014 and 2013. Our current segment operating profit differs from the prior “EA Labels” segment profit primarily due to the inclusion of (1) our Switzerland distribution revenues and expenses and (2) certain corporate and other functional costs such as our Global Publishing and Marketing organization expenses, which were previously not allocated to the EA Labels. Prior periods below have been restated to reflect our current reporting segment structure (in millions):

	Three Months Ended September 30,						Six Months Ended September 30,
	2014			2013			2014			2013
Segment:
Net revenue before revenue deferral	$	1,220		$	1,040		$	1,995		$	1,535
Depreciation	(33		)	(32		)	(64		)	(62		)
Other expenses	(878		)	(865		)	(1,537		)	(1,491		)
Segment operating profit (loss)	309			143			394			(18		)
Reconciliation to consolidated operating income:
Other:
Revenue deferral	(1,035		)	(879		)	(1,658		)	(1,234		)
Recognition of revenue deferral	805			534			1,867			1,343
Amortization of intangibles	(16		)	(18		)	(33		)	(37		)
Acquisition-related contingent consideration	1			44			2			37
Restructuring and other charges	—			2			—			1
Stock-based compensation	(40		)	(38		)	(69		)	(71		)
Loss on licensed intellectual property commitment	—			—			(122		)	—
Other expenses	—			(40		)	5			(40		)
Consolidated operating income (loss)	$	24		$	(252	)	$	386		$	(19	)

Our segment profit differs from consolidated operating income primarily due to the exclusion of (1) the deferral of certain net revenue related to online-enabled games (see Note 10 for additional information regarding deferred net revenue (online-enabled games)), (2) certain non-cash costs such as stock-based compensation, (3) acquisition-related expenses such as amortization of intangibles and acquisition-related contingent consideration, and (4) other significant non-recurring costs that may not be indicative of the company’s core business, operating results or future outlook. Our CODM reviews assets on a consolidated basis and not on a segment basis.

Information about our total net revenue by revenue composition and by platform for the three and six months ended September 30, 2014 and 2013 is presented below (in millions):

	Three Months Ended September 30,				Six Months Ended September 30,
	2014		2013		2014		2013
Packaged goods and other	$	482	$	245	$	1,160	$	712
Digital	508		450		1,044		932
Net revenue	$	990	$	695	$	2,204	$	1,644

	Three Months Ended September 30,				Six Months Ended September 30,
	2014		2013		2014		2013
Platform net revenue
Xbox One, PlayStation 4	$	317	$	—	$	610	$	—
Xbox 360, PlayStation 3	308		298		851		792
Other consoles	6		11		9		15
Total consoles	631		309		1,470		807
PC / Browser	208		274		439		572
Mobile	123		75		246		188
Other	28		37		49		77
Net revenue	$	990	$	695	$	2,204	$	1,644

Information about our operations in North America and internationally as of and for the three and six months ended September 30, 2014 and 2013 is presented below (in millions): 

	Three Months Ended September 30,				Six Months Ended September 30,
	2014		2013		2014		2013
Net revenue from unaffiliated customers
North America	$	433	$	303	$	955	$	698
International	557		392		1,249		946
Net revenue	$	990	$	695	$	2,204	$	1,644

	As of September 30,
	2014		2013
Long-lived assets
North America	$	1,886	$	1,981
International	463		493
Total	$	2,349	$	2,474

We attribute net revenue from external customers to individual countries based on the location of the legal entity that sells the products and/or services. Note that revenue attributed to the legal entity that makes the sale is often not the country where the consumer resides. For example, revenue generated by our Swiss legal entities includes digital revenue from consumers who reside outside of Switzerland, including consumers who reside outside of Europe. Revenue generated by our Swiss legal entities during the three and six months ended September 30, 2014 represented $195 million and $635 million, or 20 percent and 29 percent, of our total net revenue, respectively. Revenue generated by our Swiss legal entities during the three and six months ended September 30, 2013 represented $136 million and $539 million, or 20 percent and 33 percent, of our total net revenue, respectively. Revenue generated in the United States represents over 99 percent of our total North America net revenue. There were no other countries with net revenue greater than 10 percent.

Our direct sales to GameStop Corp. represented approximately 16 percent and 14 percent of total net revenue, respectively, during the three and six months ended September 30, 2014. Our direct sales to GameStop Corp. represented approximately 16 percent and 12 percent of total net revenue for the three and six months ended September 30, 2013, respectively.