Operating Segments and Geographic Region

9 Months Ended

Sep. 30, 2016

Segment Reporting [Abstract]

Operating Segments and Geographic Region

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 have three reportable operating segments (see Note 1 of the notes to condensed consolidated financial statements). We do not aggregate operating segments in determining and disclosing our reportable segments.

The CODM reviews segment performance exclusive of the impact of the change in deferred revenues and related cost of revenues 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 related to financings and acquisitions. 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 three and nine months ended September 30, 2016 and 2015 are presented below (amounts in millions):

	For the Three Months Ended September 30,
	2016			2015			2016			2015
	Net revenues						Operating income and income before income tax expense
Activision	$	377		$	591		$	123		$	122
Blizzard	727			369			321			128
King	459			—			138			—
Reportable segments total	1,563			960			582			250
Reconciliation to consolidated net revenues / consolidated income before income tax expense:
Other segments (1)	67			80			(7		)	1
Net effect from recognition (deferral) of deferred net revenues and related cost of revenues	(62		)	(50		)	(33		)	(26		)
Stock-based compensation expense	—			—			(33		)	(28		)
Amortization of intangible assets	—			—			(211		)	(1		)
Fees and other expenses related to acquisitions (2)	—			—			(4		)	—
Consolidated net revenues / operating income	$	1,568		$	990		$	294		$	196
Interest and other expense (income), net							63			51
Consolidated income before income tax expense							$	231		$	145
	For the Nine Months Ended September 30,
	2016			2015			2016			2015
	Net revenues						Operating income and income before income tax expense
Activision	$	1,069		$	1,208		$	309		$	244
Blizzard	1,760			1,106			740			383
King	1,149			—			381			—
Reportable segments total	3,978			2,314			1,430			627
Reconciliation to consolidated net revenues / consolidated income before income tax expense:
Other segments (1)	169			189			(15		)	—
Net effect from recognition (deferral) of deferred net revenues and related cost of revenues	447			809			228			517
Stock-based compensation expense	—			—			(118		)	(70		)
Amortization of intangible assets	—			—			(495		)	(4		)
Fees and other expenses related to acquisitions (2)	—			—			(43		)	—
Consolidated net revenues / operating income	$	4,594		$	3,312		$	987		$	1,070
Interest and other expense (income), net							181			151
Consolidated income before income tax expense							$	806		$	919

(1) Other includes other income and expenses from operating segments managed outside the reportable segments, including MLG, Studios, and Distribution businesses. Other also includes unallocated corporate income and expenses.

(2) Reflects fees and other expenses related to the King Acquisition, inclusive of related debt financings and integration costs.

Geographic information presented below for the three and nine months ended September 30, 2016 and 2015, is based on the location of the paying customer. Net revenues from external customers by geographic region were as follows (amounts in millions):

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2016		2015		2016		2015
Net revenues by geographic region:
Americas	$	796	$	495	$	2,411	$	1,750
EMEA (1)	499		367		1,528		1,219
Asia Pacific	273		128		655		343
Total consolidated net revenues	$	1,568	$	990	$	4,594	$	3,312

(1)    EMEA consists of the Europe, Middle East, and Africa geographic regions.

The Company's net revenues in the U.S. were 43% and 46% of consolidated net revenues for the three months ended September 30, 2016 and 2015, respectively. The Company's net revenues in the U.K. were 10% and 13% of consolidated net revenues for the three months ended September 30, 2016 and 2015, respectively. No other country's net revenues exceeded 10% of consolidated net revenues for the three months ended September 30, 2016 or 2015.

The Company's net revenues in the U.S. were 46% and 50% of consolidated net revenues for the nine months ended September 30, 2016 and 2015, respectively. The Company's net revenues in the U.K. were 10% and 13% of consolidated net revenues for the nine months ended September 30, 2016 and 2015, respectively. No other country's net revenues exceeded 10% of consolidated net revenues for the nine months ended September 30, 2016 or 2015.

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

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2016		2015		2016		2015
Net revenues by platform:
Console	$	452	$	420	$	1,867	$	1,737
PC (1)	609		359		1,421		1,114
Mobile and ancillary (2)	440		131		1,137		272
Other (3)	67		80		169		189
Total consolidated net revenues	$	1,568	$	990	$	4,594	$	3,312

(1) Net revenues from PC includes revenues that were historically shown as Online.

(2) Net revenues from mobile and ancillary includes revenues from handheld, mobile and tablet devices, as well as non-platform specific game-related revenues such as standalone sales of toys and accessories from our Skylanders franchise and other physical merchandise and accessories.

(3) Net revenues from Other include revenues from MLG, Studios, and Distribution businesses.

Long-lived assets by geographic region at September 30, 2016, and December 31, 2015, were as follows (amounts in millions):

	At September 30, 2016		At December 31, 2015
Long-lived assets (1) by geographic region:
Americas	$	145	$	138
EMEA	97		42
Asia Pacific	16		9
Total long-lived assets by geographic region	$	258	$	189

(1) 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.