Operating Segments and Geographic Area

12 Months Ended

Dec. 31, 2011

13. Operating Segments and Geographic Region

Our operating segments are consistent with our internal organizational structure, the manner in which our operations are reviewed and managed by our Chief Executive Officer, who is our Chief Operating Decision Maker (“CODM”), the manner in which operating performance is assessed and resources are allocated, and the availability of separate financial information. Currently, we operate under three operating segments: Activision, Blizzard and Distribution (see Note 1 of the notes to the consolidated financial statements). We do not aggregate operating segments.

The CODM reviews segment performance exclusive of the impact of the change in deferred net revenues and related cost of sales with respect to certain of our online-enabled games, stock-based compensation expense, restructuring expense, amortization of intangible assets and purchase price accounting related adjustments, impairment of intangible assets and goodwill, integration and transaction costs, and other. The CODM does not review any information regarding total assets on an operating segment basis and, accordingly, no disclosure is made. Information on the operating segments and reconciliations of total net revenues and total segment income (loss) from operations to consolidated net revenues from external customers and income (loss) before income tax expense for the years ended December 31, 2011, 2010, and 2009 are presented below (amounts in millions):

			Years Ended December 31,
			2011		2010		2009		2011		2010		2009

			Net Revenues						Income (loss) from operations
	Activision		$	2,828	$	2,769	$	3,156	$	851	$	511	$	663
	Blizzard			1,243		1,656		1,196		496		850		555
	Distribution			418		378		423		11		10		16
		Operating segments total		4,489		4,803		4,775		1,358		1,371		1,234

Reconciliation to consolidated net revenues /
	consolidated income (loss) before tax expense:
	Net effect from deferral of net revenues and
		related cost of sales		266		(356)		(497)		183		(319)		(383)
	Stock-based compensation expense			---		---		---		(103)		(131)		(154)
	Restructuring			---		---		---		(26)		(3)		(23)
	Amortization of intangible assets			---		---		---		(72)		(123)		(259)
	Impairment of goodwill/intangible assets			---		---		---		(12)		(326)		(409)
	Integration and transaction costs			---		---		---		---		---		(24)
	Other			---		---		1		---		---		(8)
Consolidated net revenues / operating income (loss)			$	4,755	$	4,447	$	4,279	$	1,328	$	469	$	(26)
	Investment and other income, net									3		23		18
Consolidated income (loss) before income tax expense									$	1,331	$	492	$	(8)

For the years ended December 31, 2011 and 2010, restructuring expense of $1 million and $3 million is reflected in the “General and administrative expense” in the consolidated statement of operations, respectively. These restructuring expenses were related to the Business Combination consummated in July 2008. See Note 7 of the Notes to Consolidated Financial Statements for more detail.

Geographic information for the years ended December 31, 2011, 2010, and 2009 is based on the location of the selling entity. Net revenues from external customers by geographic region were as follows (amounts in millions):

		Years Ended December 31,
		2011		2010		2009
Net revenues by geographic region:
	North America	$	2,405	$	2,409	$	2,217
	Europe		1,990		1,743		1,798
	Asia Pacific		360		295		263
Total geographic region net revenues			4,755		4,447		4,278
	Other		---		---		1
Total consolidated net revenues		$	4,755	$	4,447	$	4,279

Net revenues by platform were as follows (amounts in millions):

		Years Ended December 31,
		2011		2010		2009
Net revenues by platform:
	Online subscriptions*	$	1,357	$	1,230	$	1,248
	Console		2,439		2,330		2,199
	Handheld		167		184		244
	PC and Other		374		325		164
Total platform net revenues			4,337		4,069		3,855
Distribution			418		378		423
Other			---		---		1
Total consolidated net revenues		$	4,755	$	4,447	$	4,279

*Revenue from online subscriptions consists of revenue from all World of Warcraft products, including subscriptions, boxed products, expansion packs, licensing royalties, and value-added services.

Long-lived assets by geographic region at December 31, 2011, 2010, and 2009 were as follows (amounts in millions):

		Years Ended December 31,
		2011		2010		2009
Long-lived assets* by geographic region:
	North America	$	105	$	113	$	100
	Europe		46		46		32
	Asia Pacific		12		10		6
Total long-lived assets by geographic region		$	163	$	169	$	138

*We classify long-lived assets as long term tangible fixed assets by the location of the controlling statutory entity, which only includes property, plant and equipment assets, as all other long term assets are corporate assets that are not allocated to locations.

For information regarding significant customers, see “Concentration of Credit Risk” in Note 2 of the Notes to Consolidated Financial Statements.