Activision Blizzard Q3 2012 Earnings Call

[MikeyD]

Despite how people want to spin it, it's evident that the game isn't experiencing a growth surge. So when the growing stops, the shrinking begins. How fast will the shrink be? That's what we will see as each fiscal quarter's results are reported. People will sooner or later come to terms with the game they know and love is dying, it has been since it went live. Everything dies. Ultima Online is still dying...so is Everquest.

But if you love WoW and your life is so intertwined with it that naysayers and discussion about subscriber losses really upsets you, then perhaps consider seeing a doctor to get a little help.

The lack of actual subscriber totals being reported, and the evasive answers when questioned about China's performance (he spouts off about hitting a million concurrent users at a single point in time, which doesn't indicate a whole lot for financials) it's clear that the big picture isn't as beautiful as they'd hoped.

[Justignoreme]

With everything slated for 5.1 you'd really have to dislike the franchise to not even want to see or experience it live

[Kevyne-Shandris]

They state very frequently and explicitly that WoW subscription revenues are down from last year. Blizzard's 2012 revenue is largely influenced by D3 and MoP sales, but offset by losses in WoW subscription numbers compared to the previous year.

Not on the cover of those reports. Heck, no. They don't discuss the sub loss in any detail. You have to dig for it.

[Tharn]

Or not trouble anyone, because people don't have to know how many people are subscribed in order to enjoy the game.

But naysayers will twist the details any way they want, while pro-Blizzard fans will twist it the way that helps them. These threads seem to be largely useless and just encourage arguing in the community.

This is a discussion not an arguement, Blizzard should be very thankful they have fans that are concerned about how they are doing and take a serious interest in the games they produce.

For anyone to think that a player base won't get upset if they see signs of their favorite title/game/entertainment faltering, they haven't been in gaming for a long time if that is the case. Further more, most producers would kill to have a player base that feels that way about what they produce. I've only seen one other MMO see this much concern and activity; that MMO was Star Wars Galaxies.

Needless to say Sony didn't listen to it's player base either and what happened SWG which was one of the better open based sandbox MMO's to be released in some time finally closed it's doors. What happened to Sony, they suffered as a result and are still struggling to regain it's footing in the genre.

Activision/Blizzard should be honored at the zeal of their player base, they also need to realize; that zeal won't last forever because eventually hope dies and as Sony and other MMO makers have learned. It's very hard to ressurect hope once it's been beaten so bloody and sadly miracles seem to be in short supply in the 21st century to date.

[Wowalixi]

Not on the cover of those reports. Heck, no. They don't discuss the sub loss in any detail. You have to dig for it.

The question is why you care so much about it? If you enjoy WoW, keep playing. If you don't, stop playing and find something else to do with your life.

If you're a serious investor, you should have the means and knowledge to find the information anyways, and even at that point sub numbers and revenues really shouldn't impact you, since they're still making a decent profit.

This is a discussion not an arguement, Blizzard should be very thankful they have fans that are concerned about how they are doing and take a serious interest in the games they produce.

For anyone to think that a player base won't get upset if they see signs of their favorite title/game/entertainment faltering, they haven't been in gaming for a long time if that is the case. Further more, most producers would kill to have a player base that feels that way about what they produce. I've only seen one other MMO see this much concern and activity; that MMO was Star Wars Galaxies.

Needless to say Sony didn't listen to it's player base either and what happened SWG which was one of the better open based sandbox MMO's to be released in some time finally closed it's doors. What happened to Sony, they suffered as a result and are still struggling to regain it's footing in the genre.

Activision/Blizzard should be honored at the zeal of their player base, they also need to realize; that zeal won't last forever because eventually hope dies and as Sony and other MMO makers have learned. It's very hard to ressurect hope once it's been beaten so bloody and sadly miracles seem to be in short supply in the 21st century to date.

There's a difference in taking an interest in a company and taking interest in a company's in-depth financials. I'm interested to see how Blizzard is doing, but I don't care about the number of subscriptions they have.

Also, nobody's saying you can't be upset about sub numbers dipping. But it shouldn't be the difference between enjoying a game or not. That was my argument.

[Kevyne-Shandris]

also i brought this up in another thread but never really got any replies to it (at least i dont remember if i did). there was a discussion about some guy who multi boxes 40 accounts. so i was wondering, out of 10 million subscribers they have i wonder how many of those subscriptions are individuals and not people who have 2 or 3 different accounts, or 40 in this one persons case.

Don't know if Blizzard counts different accounts on one Battle.net account as separate or not. If they did, that will inflate the numbers even more.

As our computers get more power we can run more than one client at a time. Was running 3 at a time when I was subscribed (until CRZ made that impossible, thus I unsubbed), and there's more and more doing the same.

[Manataurus]

If it's still counting the 1+ million annual pass subscribers from last year (year passes don't run out until mid-Nov to Dec and Jan for most), then their numbers will most likely stay steady at about 10 mil. Next quarter, after they can no longer float on those annual pass subs, they'll prob drop a good 500-1mil in subs again.

So what you're saying is that at least half of the people that did the annual pass are going to quit playing when their pass time is up? Because there was about a million people involved in it altogether.

[Tharn]

The question is why you care so much about it? If you enjoy WoW, keep playing. If you don't, stop playing and find something else to do with your life.

If you're a serious investor, you should have the means and knowledge to find the information anyways, and even at that point sub numbers and revenues really shouldn't impact you, since they're still making a decent profit.

There's a difference in taking an interest in a company and taking interest in a company's in-depth financials. I'm interested to see how Blizzard is doing, but I don't care about the number of subscriptions they have.

Also, nobody's saying you can't be upset about sub numbers dipping. But it shouldn't be the difference between enjoying a game or not. That was my argument.

Actually it can as sub numbers dip holes begin to appear within the gaming environment. A great example in Cataclysm my mains guild was 464 strong and running 3 DS runs. 1 core heroic group, 1 core normal group and 1 Alternate group to fit in members who we couldn't bring in the core heroic and normal.

Currently a good portion of both cores have not returned, the guild which had decent progression both in 10 & 25 man standings now can't even field a guild group to generate any type of recorded progression. Before we had 8-18-35 people on at given time. Sometimes now we get a whopping 4 and sometimes 8.

A good portion of the player base put in not only a great deal of time to this entertainment but money, of course many are going to react to sweeping changes that throw their "chosen" form of entertainment into chaos. How can we continue to enjoy the game when so much of what we have endured seems to be flushed.

So that is why people react to falling subscription numbers, whether Activision/Blizzard believe it or not the player base also made heavy investments in their successes; people will react when they feel that form of investment is being treated as trivial.

[Wowalixi]

Actually it can as sub numbers dip holes begin to appear within the gaming environment. A great example in Cataclysm my mains guild was 464 strong and running 3 DS runs. 1 core heroic group, 1 core normal group and 1 Alternate group to fit in members who we couldn't bring in the core heroic and normal.

Currently a good portion of both cores have not returned, the guild which had decent progression both in 10 & 25 man standings now can't even field a guild group to generate any type of recorded progression. Before we had 8-18-35 people on at given time. Sometimes now we get a whopping 4 and sometimes 8.

A good portion of the player base put in not only a great deal of time to this entertainment and money, of course many are going to react to sweeping changes that throw their "chosen" form of entertainment into chaos. How can we continue to enjoy the game when so much of what we have endured seems to be flushed.

So that is why people react to falling subscription numbers, whether Activision/Blizzard believe it or not the player base also made heavy investments in their successes; people will react when they feel that form of investment is being treated as trivial.

I'll see your example and raise you my example. In WOTLK (the height of subscriptions) I couldn't find a worthwhile guild to save my life. Now I'm in a nice, close-knit guild where we have a very strict style we look for in our apps and we stick together. So despite the drop of 2 million players, my experience has actually improved and I enjoy the game much more than before.

Essentially what I'm saying is that your experience is not everyone's. And even if our friends do quit, or our guilds do collapse, there are always more guilds out there to join. But even in TBC, guilds collapsed and people stopped playing.

[Kevyne-Shandris]

The question is why you care so much about it?

Investment.

You invest not only money, you invest time and effort. If the subs aren't enough for you to enjoy end-game...now you see why it's important.

I was spending $45/mon on WoW. You bet I have an interest if it's worth ever continuing, or write WoW off as a loss.

[Wowalixi]

Investment.

You invest not only money, you invest time and effort. If the subs aren't enough for you to enjoy end-game...now you see why it's important.

I was spending $45/mon on WoW. You bet I have an interest if it's worth ever continuing, or write WoW off as a loss.

It's going to be a loss no matter what. Whenever the time comes that the WoW servers are shut down, you will have nothing but a loss of money. All you can hope for is that you meet a few new friends and had some fun while it lasted. You don't invest money in entertainment for monetary reasons. You invest because you want a good time for your money. If you feel that your time wasn't worth it, well that's on you to let the company know and hopefully they fix the issue for you. At the end of the day, if you feel your money was worth it, you no longer have any stake in the company.

Essentially what I'm saying is that yes, you expect value for your money. But at this point, you either have the value or you don't. Subscription numbers and finance reports have no bearing on your personal entertainment value.

[Tharn]

Essentially what I'm saying is that your experience is not everyone's. And even if our friends do quit, or our guilds do collapse, there are always more guilds out there to join. But even in TBC, guilds collapsed and people stopped playing.

Yes that is true, since release I've seen a lot of guilds die. That is a fact of gaming, albeit Warcraft is the only MMO I've experienced that seems to have such a high Guild Mortality rate. Many previous MMO's I've played I was in max 2 guilds for the entire time I played.

Glad you found a stable guild and are getting enjoyment out of the game. Sadly that isn't the case for other players and they are concerned; it's natural they have made a very large time/money commitment to the franchise. It is only natural many are going to be frustrated and angry at making the commitment only to have it's life sucked out of it.

Many of the players I was in guild with in SWG refused to play another mmo after that seriously fell apart with it's overhaul called New Game Enhancements, that was the first damaging blow that cost Sony a big subscriber base and took guild members I was active with right out of the MMO market.

I'd rather not see Blizzard endure that and believe me, hindsight being 20/20 always; I'm sure Sony would love to be able to Time Travel back to 2005.

It not only effects current events but future events, whether Activision/Blizzard want to believe it or not. Those who played Dark of Camelot with me (quite a few who were also playing SWG as well) when Mythic got to big for itself and thrust out Nerf Frontiers which ultimately destroyed DAOC and got Mythic Packed off to belong to EA before EA moth balled them.

Many players were badly treated and ignored by the Mythic company. What was the result, a dead game, an attempt to make a new mmo that never left paper stage. They finally got another really good Intellectual Property "Warhammer" and what happened. It flopped dismally because and I know this because I talked with a lot of people back then about Warhammer. Mythic did such a great job at alienating it's player base, nobody I spoke with would even touch Warhammer because they remembered previous treatment.

Sadly history can repeat itself and Activision/Blizzard probably won't be immune.

[Wowalixi]

Yes that is true, since release I've seen a lot of guilds die. That is a fact of gaming, albeit Warcraft is the only MMO I've experienced that seems to have such a high Guild Mortality rate. Many previous MMO's I've played I was in max 2 guilds for the entire time I played.

Glad you found a stable guild and are getting enjoyment out of the game. Sadly that isn't the case for other players and they are concerned; it's natural they have made a very large time/money commitment to the franchise. It is only natural many are going to be frustrated and angry at making the commitment only to have it's life sucked out of it.

Many of the players I was in guild with in SWG refused to play another mmo after that seriously fell apart with it's overhaul called New Game Enhancements, that was the first damaging blow that cost Sony a big subscriber base and took guild members I was active with right out of the MMO market.

I'd rather not see Blizzard endure that and believe me, hindsight being 20/20 always; I'm sure Sony would love to be able to Time Travel back to 2005.

I understand what you're saying, and do encourage people to keep up to date with Blizzard information.

I just don't see how sales numbers should affect most people. If they're still enjoying the game, then there's nothing to worry about.

[Ausr]

The question is why you care so much about it? If you enjoy WoW, keep playing. If you don't, stop playing and find something else to do with your life.

If you're a serious investor, you should have the means and knowledge to find the information anyways, and even at that point sub numbers and revenues really shouldn't impact you, since they're still making a decent profit.

There's a difference in taking an interest in a company and taking interest in a company's in-depth financials. I'm interested to see how Blizzard is doing, but I don't care about the number of subscriptions they have.

Also, nobody's saying you can't be upset about sub numbers dipping. But it shouldn't be the difference between enjoying a game or not. That was my argument.

You'll notice that the same people only come around when two things happen 1) Annual earnings call or 2) Negative WoW thread.

Seriously. You'll now notice the same people only post in these threads, even when they've admitted they've never played for a while and supposedly quit WoW cold-turkey.

[Tharn]

I understand what you're saying, and do encourage people to keep up to date with Blizzard information.

I just don't see how sales numbers should affect most people. If they're still enjoying the game, then there's nothing to worry about.

I'll stop here, because you obviously are not reading what I'm saying.

You'll notice that the same people only come around when two things happen 1) Annual earnings call or 2) Negative WoW thread.

Seriously. You'll now notice the same people only post in these threads, even when they've admitted they've never played for a while and supposedly quit WoW cold-turkey.

Sub ended late October, had no choice but to quit cold turkey. So I haven't been out very long, I'm still angry about it. Most people would be.

[huth]

Don't know if Blizzard counts different accounts on one Battle.net account as separate or not. If they did, that will inflate the numbers even more.

As our computers get more power we can run more than one client at a time. Was running 3 at a time when I was subscribed (until CRZ made that impossible, thus I unsubbed), and there's more and more doing the same.

Wait, what? How did CRZ make multiboxing impossible? That doesn't even make sense.

[Wowalixi]

You'll notice that the same people only come around when two things happen 1) Annual earnings call or 2) Negative WoW thread.

Seriously. You'll now notice the same people only post in these threads, even when they've admitted they've never played for a while and supposedly quit WoW cold-turkey.

I've noticed it for awhile, yeah.

MMO-Champion is a WoW Naysayers version of methadone. They can't quite quit the product, so they just consume a less addicting product to help them get over the shakes and stomach cramps.

[Kevyne-Shandris]

Wait, what? How did CRZ make multiboxing impossible? That doesn't even make sense.

Should even read even the Blue posts, because YOU don't even make any sense to them.

Even they acknowledge the zone change delays.

So stop with the BS already.

[vizzle]

Let's not be stupid. It will stay over 10 million, but that shouldn't be a surprise to anyone. Q3 ended right after MoP launched, so whatever gain MoP brought the game, Q3 will still show it. If there are any losses so far it won't be clear until Q4.

[link064]

Here's Mike Morhaime's part of the earning's call:

Thanks, Eric. The third quarter for Blizzard was a very successful one, thanks in large part of the launch of Mists of Pandaria at the end of September. As of the first week, more than 2.7 million copies sold through and subscribership had grown to over 10 million at the end of the quarter. We also launched the game in China just one week after the other regions, which as far as we are aware, is the first time any game has officially released in China as part of a global launch. Overall, it was a successful launch and we were very pleased with the reaction from players and critics.

The team worked hard to create a good variety of deeply engaged content for a wide range of players. The challenge mode and the new raids had been very appealing for hard-core players, while our other new features, such as the pet battle system have been popular with players across the board. This breadth of new content, combined with a vast amount of existing content in World of Warcraft, has resulted in the game that has a lot to offer for veterans, as well as newcomers to online gaming.

We're looking forward to maintaining engagement by providing more frequent content updates. The first major update to Mists of Pandaria is already in public testing, with additional updates to follow. We have other initiatives planned for the holiday season that we hope will maintain momentum from the launch and continued growth in the community.

Moving on to Diablo III, the game continued to sell very well in the quarter, riding the momentum from its record-breaking launch in May. We've updated the game several times to add new features and these changes have been received well by the community. Next on the slate for Blizzard will be Heart of the Swarm, the first expansion to StarCraft II. With 6 million copies of Wings of Liberty sold to date, we have a large community of players eagerly awaiting the next installment of StarCraft.

Beta testing for Heart of the Swarm is well underway and the development team has been collecting great feedback from the community. Just last week, we made a major content update to the beta in order to test some important community features, which have been well-received by players. These features are designed to improve the social aspect, as well as the overall user experience for StarCraft players. We're working hard towards the first half 2013 launch for Heart of the Swarm.

We plan on closing out 2012 with one more major initiative, our Battle.net World Championship event, which will take place on November 17 and 18 in Shanghai, China. This event is the culmination of months of intense eSports competition, involving dozens of online tournaments and live events across 5 continents. The global finals will be very much like a World Cup of eSports with more than 60 top pro gamers in StarCraft II and World of Warcraft competing at the event. The sold out Battle.net World Championship will be broadcast online to a global audience. Live streams and information about the tournament can be found at www.battle.net/bwc.

In closing, we're very pleased with the success of Mists of Pandaria and Diablo III continues to be a top seller on the PC chart. Heart of the Swarm is well on its way and we have other exciting projects in the pipeline. BlizzCon will be returning next year as well, adding to what will be a busy 2013 for Blizzard. We continue to build on our infrastructure for long-term growth and remain focused on creating high-quality content for all of our players around the world.

I understand that they're really just reporting on the end of the quarter, but I wonder if the fact that they haven't updated their subscribers and sales since then is an indication of slowed sales. Haven't they typically given 1-month-out reports on sales numbers in the past?