Restructuring

3 Months Ended

Mar. 31, 2020

Restructuring and Related Activities [Abstract]

Restructuring

Restructuring

During 2019, we began implementing our previously announced restructuring plan aimed at refocusing our resources on our largest opportunities and removing unnecessary levels of complexity from certain parts of our business. We have been:

• increasing our investment in development for our largest, internally-owned franchises—across upfront releases, in-game content, mobile, and geographic expansion;

• reducing certain non-development and administrative-related costs across our business; and

• integrating our global and regional sales and “go-to-market,” partnerships, and sponsorships capabilities across the business, which we believe will enable us to provide better opportunities for talent, and greater expertise and scale on behalf of our business units.

The restructuring actions remain in progress as we continue to focus on these goals and execute against our plan in 2020.

The following table summarizes accrued restructuring and related costs included in “Accrued expenses and other liabilities” in our condensed consolidated balance sheet and the cumulative charges incurred (amounts in millions):

	Severance and employee-related costs			Facilities and related costs		Other costs			Total
Balance at December 31, 2019	$	32		$	—	$	3		$	35
Costs charged to expense	23			—		—			23
Cash payments	(6		)	—		(2		)	(8		)
Balance at March 31, 2020	$	49		$	—	$	1		$	50
Cumulative charges incurred through March 31, 2020	$	99		$	29	$	32		$	160

Total restructuring and related costs by segment are (amounts in millions):

	Three Months Ended March 31,
	2020			2019
Activision	$	2		$	9
Blizzard	21			26
King	(1		)	8
Other segments (1)	1			14
Total	$	23		$	57

(1) Includes charges related to operating segments managed outside the reportable segments, including our Distribution business. Also includes restructuring charges for our corporate and administrative functions.

We expect to incur aggregate pre-tax restructuring charges of approximately $190 million associated with the restructuring plan. Approximately $50 million of these charges are expected to be incurred in 2020 as we complete the execution of the restructuring plan, as discussed above. These charges will primarily relate to severance and employee-related costs (approximately 60% of the aggregate charge), including, in many cases, amounts above those that are legally required, facilities and related costs (approximately 20% of the aggregate charge), and other costs (approximately 20% of the aggregate charge), including charges for restructuring related fees and the write-down of assets from canceled projects. A majority of the total pre-tax charge associated with the restructuring will be paid in cash using amounts on hand and the outlays are expected to continue throughout 2020.

The total charges incurred through March 31, 2020 and total expected pre-tax restructuring charges related to the restructuring plan by segment, inclusive of amounts already incurred, are presented below (amounts in millions):

	Total Charges Incurred Through March 31, 2020		Total Expected Charges
Activision	$	21	$	25
Blizzard	94		105
King	19		20
Other segments (1)	26		40
Total	$	160	$	190

(1)

Includes charges related to operating segments managed outside the reportable segments, including our Distribution business. Also includes restructuring charges for our corporate and administrative functions.