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Operating Segments and Geographic Region (Tables)

3 Months Ended

Mar. 31, 2020

Schedule of 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

Information on reportable segment net revenues and operating income for the three months ended March 31, 2020 and 2019, are presented below (amounts in millions):



	Three Months Ended March 31, 2020
	Activision		Blizzard		King		Total
Segment Net Revenues
Net revenues from external customers	$	519	$	437	$	498	$	1,454
Intersegment net revenues (1)	—		15		—		15
Segment net revenues	$	519	$	452	$	498	$	1,469

Segment operating income	$	184	$	197	$	156	$	537

	Three Months Ended March 31, 2019
	Activision		Blizzard		King		Total
Segment Net Revenues
Net revenues from external customers	$	317	$	339	$	529	$	1,185
Intersegment net revenues (1)	—		5		—		5
Segment net revenues	$	317	$	344	$	529	$	1,190

Segment operating income	$	73	$	55	$	178	$	306


(1)	Intersegment revenues reflect licensing and service fees charged between segments.

Reconciliations of total segment net revenues and total segment operating income to consolidated net revenues and consolidated income before income tax expense are presented in the table below (amounts in millions):



	Three Months Ended March 31,
	2020			2019
Reconciliation to consolidated net revenues:
Segment net revenues	$	1,469		$	1,190
Revenues from non-reportable segments (1)	68			73
Net effect from recognition (deferral) of deferred net revenues (2)	266			567
Elimination of intersegment revenues (3)	(15		)	(5		)
Consolidated net revenues	$	1,788		$	1,825

Reconciliation to consolidated income before income tax expense:
Segment operating income	$	537		$	306
Operating income (loss) from non-reportable segments (1)	3			(3		)
Net effect from recognition (deferral) of deferred net revenues and related cost of revenues (2)	171			441
Share-based compensation expense	(43		)	(63		)
Amortization of intangible assets	(33		)	(54		)
Restructuring and related costs (4)	(23		)	(57		)
Consolidated operating income	612			570
Interest and other expense (income), net	8			3
Consolidated income before income tax expense	$	604		$	567


(1)	Includes other income and expenses from operating segments managed outside the reportable segments, including our Distribution business. Also includes unallocated corporate income and expenses.


(2)	Reflects the net effect from recognition (deferral) of deferred net revenues, along with related cost of revenues, on certain of our online-enabled products.


(3)	Intersegment revenues reflect licensing and service fees charged between segments.

(4)

Reflects restructuring initiatives, which include severance and other restructuring-related costs.

Schedule of net revenues by distribution channels

Net revenues by distribution channel, including a reconciliation to each of our reportable segment’s revenues, for the three months ended March 31, 2020 and 2019, were as follows (amounts in millions):



	Three Months Ended March 31, 2020
	Activision			Blizzard			King			Non-reportable segments			Elimination of intersegment revenues (3)			Total
Net revenues by distribution channel:
Digital online channels (1)	$	548		$	409		$	499		$	—		$	(15	)	$	1,441
Retail channels	212			9			—			—			—			221
Other (2)	20			31			—			75			—			126
Total consolidated net revenues	$	780		$	449		$	499		$	75		$	(15	)	$	1,788

Change in deferred revenues:
Digital online channels (1)	$	(93	)	$	8		$	(1	)	$	—		$	—		$	(86	)
Retail channels	(168		)	(4		)	—			—			—			(172		)
Other (2)	—			(1		)	—			(7		)	—			(8		)
Total change in deferred revenues	$	(261	)	$	3		$	(1	)	$	(7	)	$	—		$	(266	)

Segment net revenues:
Digital online channels (1)	$	455		$	417		$	498		$	—		$	(15	)	$	1,355
Retail channels	44			5			—			—			—			49
Other (2)	20			30			—			68			—			118
Total segment net revenues	$	519		$	452		$	498		$	68		$	(15	)	$	1,522



	Three Months Ended March 31, 2019
	Activision			Blizzard			King		Non-reportable segments			Elimination of intersegment revenues (3)			Total
Net revenues by distribution channel:
Digital online channels (1)	$	466		$	406		$	526	$	—		$	(5	)	$	1,393
Retail channels	297			16			—		—			—			313
Other (2)	—			39			—		80			—			119
Total consolidated net revenues	$	763		$	461		$	526	$	80		$	(5	)	$	1,825

Change in deferred revenues:
Digital online channels (1)	$	(217	)	$	(114	)	$	3	$	—		$	—		$	(328	)
Retail channels	(229		)	(4		)	—		—			—			(233		)
Other (2)	—			1			—		(7		)	—			(6		)
Total change in deferred revenues	$	(446	)	$	(117	)	$	3	$	(7	)	$	—		$	(567	)

Segment net revenues:
Digital online channels (1)	$	249		$	292		$	529	$	—		$	(5	)	$	1,065
Retail channels	68			12			—		—			—			80
Other (2)	—			40			—		73			—			113
Total segment net revenues	$	317		$	344		$	529	$	73		$	(5	)	$	1,258


(1)	Net revenues from “Digital online channels” include revenues from digitally-distributed subscriptions, downloadable content, microtransactions, and products, as well as licensing royalties.


(2)	Net revenues from “Other” include revenues from our Distribution business, the Overwatch League, and the Call of Duty League.

(3)

Intersegment revenues reflect licensing and service fees charged between segments.

Schedule of net revenues by geographic region

Geographic information presented below is based on the location of the paying customer. Net revenues by geographic region, including a reconciliation to each of our reportable segment’s net revenues, for the three months ended March 31, 2020 and 2019, were as follows (amounts in millions):



	Three Months Ended March 31, 2020
	Activision			Blizzard			King			Non-reportable segments			Elimination of intersegment revenues (2)			Total
Net revenues by geographic region:
Americas	$	472		$	172		$	311		$	—		$	(7	)	$	948
EMEA (1)	239			121			136			75			(5		)	566
Asia Pacific	69			156			52			—			(3		)	274
Total consolidated net revenues	$	780		$	449		$	499		$	75		$	(15	)	$	1,788

Change in deferred revenues:
Americas	$	(146	)	$	2		$	1		$	—		$	—		$	(143	)
EMEA (1)	(96		)	3			(1		)	(7		)	—			(101		)
Asia Pacific	(19		)	(2		)	(1		)	—			—			(22		)
Total change in deferred revenues	$	(261	)	$	3		$	(1	)	$	(7	)	$	—		$	(266	)

Segment net revenues:
Americas	$	326		$	174		$	312		$	—		$	(7	)	$	805
EMEA (1)	143			124			135			68			(5		)	465
Asia Pacific	50			154			51			—			(3		)	252
Total segment net revenues	$	519		$	452		$	498		$	68		$	(15	)	$	1,522



	Three Months Ended March 31, 2019
	Activision			Blizzard			King		Non-reportable segments			Elimination of intersegment revenues (2)			Total
Net revenues by geographic region:
Americas	$	458		$	207		$	326	$	—		$	(3	)	$	988
EMEA (1)	243			148			144		80			(1		)	614
Asia Pacific	62			106			56		—			(1		)	223
Total consolidated net revenues	$	763		$	461		$	526	$	80		$	(5	)	$	1,825

Change in deferred revenues:
Americas	$	(267	)	$	(54	)	$	3	$	—		$	—		$	(318	)
EMEA (1)	(146		)	(47		)	—		(7		)	—			(200		)
Asia Pacific	(33		)	(16		)	—		—			—			(49		)
Total change in deferred revenues	$	(446	)	$	(117	)	$	3	$	(7	)	$	—		$	(567	)

Segment net revenues:
Americas	$	191		$	153		$	329	$	—		$	(3	)	$	670
EMEA (1)	97			101			144		73			(1		)	414
Asia Pacific	29			90			56		—			(1		)	174
Total segment net revenues	$	317		$	344		$	529	$	73		$	(5	)	$	1,258


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

(2)

Intersegment revenues reflect licensing and service fees charged between segments.

Schedule of net revenues by platform

Net revenues by platform, including a reconciliation to each of our reportable segment’s net revenues, for the three months ended March 31, 2020 and 2019, were as follows (amounts in millions):



	Three Months Ended March 31, 2020
	Activision			Blizzard			King			Non-reportable segments			Elimination of intersegment revenues (3)			Total
Net revenues by platform:
Console	$	567		$	27		$	—		$	—		$	—		$	594
PC	126			362			25			—			(15		)	498
Mobile and ancillary (1)	67			29			474			—			—			570
Other (2)	20			31			—			75			—			126
Total consolidated net revenues	$	780		$	449		$	499		$	75		$	(15	)	$	1,788

Change in deferred revenues:
Console	$	(223	)	$	(8	)	$	—		$	—		$	—		$	(231	)
PC	(37		)	19			(1		)	—			—			(19		)
Mobile and ancillary (1)	(1		)	(7		)	—			—			—			(8		)
Other (2)	—			(1		)	—			(7		)	—			(8		)
Total change in deferred revenues	$	(261	)	$	3		$	(1	)	$	(7	)	$	—		$	(266	)

Segment net revenues:
Console	$	344		$	19		$	—		$	—		$	—		$	363
PC	89			381			24			—			(15		)	479
Mobile and ancillary (1)	66			22			474			—			—			562
Other (2)	20			30			—			68			—			118
Total segment net revenues	$	519		$	452		$	498		$	68		$	(15	)	$	1,522



	Three Months Ended March 31, 2019
	Activision			Blizzard			King		Non-reportable segments			Elimination of intersegment revenues (3)			Total
Net revenues by platform:
Console	$	635		$	42		$	—	$	—		$	—		$	677
PC	124			342			33		—			(5		)	494
Mobile and ancillary (1)	4			38			493		—			—			535
Other (2)	—			39			—		80			—			119
Total consolidated net revenues	$	763		$	461		$	526	$	80		$	(5	)	$	1,825

Change in deferred revenues:
Console	$	(386	)	$	(12	)	$	—	$	—		$	—		$	(398	)
PC	(59		)	(90		)	—		—			—			(149		)
Mobile and ancillary (1)	(1		)	(16		)	3		—			—			(14		)
Other (2)	—			1			—		(7		)	—			(6		)
Total change in deferred revenues	$	(446	)	$	(117	)	$	3	$	(7	)	$	—		$	(567	)

Segment net revenues:
Console	$	249		$	30		$	—	$	—		$	—		$	279
PC	65			252			33		—			(5		)	345
Mobile and ancillary (1)	3			22			496		—			—			521
Other (2)	—			40			—		73			—			113
Total segment net revenues	$	317		$	344		$	529	$	73		$	(5	)	$	1,258


(1)	Net revenues from “Mobile and ancillary” include revenues from mobile devices, as well as non-platform specific game-related revenues, such as standalone sales of physical merchandise and accessories.


(2)	Net revenues from “Other” include revenues from our Distribution business, the Overwatch League, and the Call of Duty League.


(3)	Intersegment revenues reflect licensing and service fees charged between segments.

Long-lived assets by geographic region

Long-lived assets by geographic region were as follows (amounts in millions):



	At March 31, 2020		At December 31, 2019
Long-lived assets (1) by geographic region:
Americas	$	312	$	322
EMEA	133		142
Asia Pacific	18		21
Total long-lived assets by geographic region	$	463	$	485

(1)

The