Operating Segments and Geographic Region

12 Months Ended

Dec. 31, 2014

Operating Segments and Geographic Region

Operating Segments and Geographic Region

14.       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 we assess operating performance and allocate resources, and the availability of separate financial information. Currently, we conduct our business through three operating segments: Activision, Blizzard and Distribution (see Note 1 of the Notes to Consolidated Financial Statements). We do not aggregate operating segments.

The CODM reviews segment performance exclusive of the impact of the change in deferred revenues and related cost of sales with respect to certain of our online-enabled games, stock-based compensation expense, amortization of intangible assets as a result of purchase price accounting, and fees and other expenses (including legal fees, costs, expenses and accruals) related to the Purchase Transaction and related debt financings. The CODM does not review any information regarding total assets on an operating segment basis, and accordingly, no disclosure is made with respect thereto. Information on the operating segments and reconciliations of total net revenues and total segment operating income to consolidated net revenues from external customers and consolidated income before income tax expense for the years ended December 31, 2014, 2013 and 2012 are presented below (amounts in millions):

			Years Ended December 31,
			2014		2013		2012		2014		2013		2012
									Income (loss) from operations
			Net revenues						before income tax expense
	Activision		$	2,686	$	2,895	$	3,072	$	762	$	971	$	970
	Blizzard			1,720		1,124		1,609		756		376		717
	Distribution			407		323		306		9		8		11
		Operating segments total		4,813		4,342		4,987		1,527		1,355		1,698
Reconciliation to consolidated net revenues /
consolidated income before income tax
expense:
	Net effect from deferral of net revenues and
		related cost of sales		(405)		241		(131)		(215)		229		(91)
	Stock-based compensation expense			---		---		---		(104)		(110)		(126)
	Amortization of intangible assets			---		---		---		(12)		(23)		(30)
	Fees and other expenses related to the Purchase
		Transaction and related debt financings		---		---		---		(13)		(79)		---
Consolidated net revenues / operating income			$	4,408	$	4,583	$	4,856	$	1,183	$	1,372	$	1,451
	Interest and other investment income (expense), net									(202)		(53)		7
Consolidated income before income tax expense									$	981	$	1,319	$	1,458

Geographic information presented below for the years ended December 31, 2014, 2013, and 2012 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,
		2014		2013		2012
Net revenues by geographic region:
	North America	$	2,190	$	2,414	$	2,436
	Europe		1,824		1,826		1,968
	Asia Pacific		394		343		452
Total consolidated net revenues		$	4,408	$	4,583	$	4,856

The Company's net revenues in the U.S. were 48%, 51%, and 48% of consolidated net revenues for the years ended December 31, 2014, 2013, and 2012, respectively.  The Company's net revenues in the U.K. were 16%, 14%, and 14% of consolidated net revenues for the years ended December 31, 2014, 2013, and 2012, respectively. The Company's net revenues in France were 14%, 12%, and 13% of consolidated net revenues for the years ended December 31, 2014, 2013, and 2012, respectively.  No other country's net revenues exceeded 10% of consolidated net revenues.

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

		Years Ended December 31,
		2014		2013		2012
Net revenues by platform:
	Console	$	2,150	$	2,379	$	2,186
	Online 1		867		912		986
	PC		551		340		675
	Mobile and other2		433		629		703
Total Activision Blizzard net revenues			4,001		4,260		4,550
Distribution			407		323		306
Total consolidated net revenues		$	4,408	$	4,583	$	4,856

(1)       Revenues from online consist of revenues from all World of Warcraft products, including subscriptions, boxed products, expansion packs, licensing royalties, and value-added services.

(2)Revenues from mobile and other include revenues from handheld, mobile and tablet devices, as well as non-platform specific game related revenues such as standalone sales of toys and accessories products from the Skylanders franchise and other physical merchandise and accessories.

Long-lived assets by geographic region at December 31, 2014, 2013, and 2012 were as follows (amounts in millions):

		Years Ended December 31,
		2014		2013		2012
Long-lived assets* by geographic region:
	North America	$	122	$	102	$	90
	Europe		29		29		40
	Asia Pacific		6		7		11
Total long-lived assets by geographic region		$	157	$	138	$	141

*The only long-lived assets that we classify by region are our long-term tangible fixed assets, which only include property, plant and equipment assets; all other long-term assets are not allocated by location.

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