Blizzard further hides revenues from World of Warcraft

[Deficineiron]

Edit: for those unable to find things themselves http://investor.activision.com/relea...leaseID=969556
Edit2: Base on more, uh, reliable maths ive debunked my initial estimate. Please refer to my post on page 14 for more info.

For those of your interested I've just had a quick read through 1st quarter results and of greatest interest was a decision to merge World of Wacrsft revenues with their other PC revenues. PC revenues have been increasing significantly each quarter driven by demand for Hearthstone in particular which has a much larger market than World of Warcraft.

I've done some back of a napkin maths which can only be described as a guesstimate and would put subscription numbers for the last 3 months at 2.9mill. This makes an assumption that growth from PC sales have stayed consistent with the last 3 quarters which given the growth of hearthstone I think is reasonable.

What's most interesting is the intent to hide the true revenue of World of Warcraft. While not surprising it does indicate a likelihood that World of Warcraft is now considered end-of-life.

If you have any questions or would like me to expand further on points or do some more comprehensive analysis of numbers I'll be happy to respond to any well thought out questions.

To be clear, while an outspoken pro legacy poster, I do not want this to be about legacy servers. There is another thread in there for that. I do want to open a discussion/speculation about the future for wow post legion and if blizzard may be considering another mmo or pulling out of the mmo business altogether.

I figured (and suggested) this might be coming when they quit reporting subs. online has been wow only almost the entire time since the merger (cod elite was in there for a bit) and was broken out in filings for some period prior to the merger once it was done.

so, effectively, there are no concrete tools to determine wow population trends left.

[Grevie]

I still feel the need to ask, why does this matter at all?

So, i'm going to give it back. And Elaborate please. Why doesn't this matter at all?

[Deficineiron]

It's mind numbing that people are asking for a source when I've said its their q1 results.

What I am reading here is references to the 10q now fit within 'wild claims'

this is a circus.

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meh. This Give it to me now and easy attitude is why Blizzard changed their game in the first place.

in other words, the surreal reaction the first 2 pages is consistent with the target playerbase of wow's behavior/expectations.

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Salty players discussing revenue and quarterly reports, this is getting weird. In this era of increasingly quick fix mobile gaming, a decade old MMO has fewer players, especially during pre-expansion droughts...someone alert the President. Well let's solve this by looking at the veritable treasure trove of MMOs with millions of players that have made it to 10+ years of age to see how they've addressed the problem:



Oh damn...that's right.

what is weird is that from the merger in 2008 until very recently we got sub numbers and broken-out revenues (gaap and non-gaap) for wow. now we get neither.

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Guess I remember wrong. Coulda sworn the last release was only 100k less than previous.

right 100k drop was the last reported change.

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This stuff is so frustrating. Why is it so damn important to know exactly how many people (millions of which it is impossible for you to even group up or know) are subscribed? Why does it matter exactly how much money WoW makes? Why is it so damn important to speculate that "WoW is ending!" so often?

why was it so important for a/b to hide both subs and revenue after disclosing them for ~8 years?

People will discuss quarterly reports on this, but it is naive to not expect discussion when blizzard takes multiple affirmative steps to hide all wow data.

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Uurdz is correct, the online line has always been WoW income (although it briefly included CoD Elite) until Q1 this year.

I must confess it is somewhat odd that you linked an ATVI P&L which proves that this is the case and then state that it is not.

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Well it will only be three years this August since they told us they had already increased the team size by 40%. So maybe we'll see some benefit in... say... the next two or three years?

it is probably a reasonable assumption that a/b would have ceased breaking out wow revenue in q4 if not for the accounting mis-match it would create, thus they started this year. they simply declined to mention that they were going to totally lock up the info. I think one of my first thoughts was 'would they hide the revenue too' particularly since osmeric had suggested a viable worldwide-sub multiple that had been useful for many years based on revenue.

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I have a suspicion that they've been injecting extra tokens not bought by anyone for $. This would show up in revenue numbers but they've obscured those now.

I suspect the opposite - they are rebuying in ah tokens that were sold in gameshop for cash. the orderly market approach would almost demand something like this, and they DO sell out of tokens during known peak events (the 6-month suspension lapse in november).

the language in their filings, the last time i looked, didn't mention either of these options but I think they can do a LOT under the guise of market stabilization. a managed auction market is expected to have a buyer/seller of last resort.

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While it's really hard to estimate how profitable the game is, looking at the 2015 numbers I just don't see them downscaling the dev team.

Let's assume that on 500 million USD annual revenue the upkeep cost is 200 million (dev team, customer support, marketing etc.). That's still a 300 million USD profit. There are AAA games that cost less than that. Even with a 100 million dollar profit, I just don't see them downscaling, it's a ton of money, and it's not like they have to move people from WoW team the other teams, they can hire new people.

they have been on a 700-800m revenue run rate for some time.

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Based on the content that WoD launched with and the pitiful amount added with patches it is difficult to argue that they have not already downscaled the dev team.

i was going to post 'no way Pann, this is the biggest team ever, they are just working on legion' as you know the joke, but then I see

It's equally likely that the dev team was upscaled for Legion. Warlords was pretty much baked into place as far as the design framework long before they talked about enlarging the team. There's no evidence from rumors of personnel moves etc., that the development team for World of Warcraft has been down-scaled at all. That's just rumor mongering.

in the post right below yours, so that point has been covered.

we will just ignore 1 major content path and no netherstorm for purposes of this episode of 'suspension of disbelief'

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Interesting, that aligns with the lower-end of my "educated guess" range based on extrapolated wowcensus data last month. 2.9 million certainly seems plausible.

http://www.mmo-champion.com/threads/...ted-Guess-quot

that is western only, and it not a meaningful change from 50% of the prior released number.

got to remember, western subs are only maybe half of worldwide subs.

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Royalties? You mean from the license agreement in China? Cause those are subs...
CoD Elite dropped off pre 2012 which is why I didn't include that data.

in fact if you go back and look at q1, 2, 3, 4 2009 you can see the bump from when they moved from netease to the9, and get some handle on how much of a revenue increase it might have been.

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I apologise. I was too quick to post this and not provide any mathematical evidence to back it up.
The intent is to reverse engineer subscription numbers by comparing previous quarterly announcements to the most recent one. Most discussions about wow include speculation regarding sub numbers and my initial view indicates it's around 3 million.

As I've already noted I'll do some more thoughtout data analysis and provide evidence to either back my initial view up or refute it.
Again, sorry for posting before doing this due diligence. Expect it'll take a few hours time tonight to write

i dont know blizzard's other business products or what revenue events might be occuring there.

I do know if you could extrapolate trends and there were no signfiicant one-times, you could get a leaky estimate on wow revenue.

Osmeric determined that the worldwide sub number, over a number of years, closely tracked 29$/qtr revenue to the company (remember half the subs are in china). you have to back out the one-time spike quarters with presales, expansion releases, etc. there was deferred revenue spike in q4 iirc? My own general work suggested using a value of 1/7th (earlier 1/6th) as revenue value of a china sub vs western sub. the decrease in fraction was likely due to increased value added service sales some years ago. overall this definitely suggests blizzard is getting a LOT out of western subs to keep that 29$/qtr rate. one unknown variable is the ratio of china to western subs.

also, how were tokens that were sold for cash but used for a sub many months out handled? were these already in deferred revenue?

osmeric - was this 29$/qtr? seems a bit low but i cannot parse through and find the working number you had. if correct, suggests china subs still a notable majority of wow subs.

[Eapoe]

So, i'm going to give it back. And Elaborate please. Why doesn't this matter at all?

All it's stating is that Blizz is reporting revenue as a lump sum from IP's. They didn't report revenue specifically from WoW. Okay, so what's it matter? Is Blizzard reporting WoW profits with only Hearthstone, with only Overwatch, or all these properties together? The OP is acting like this is a big deal and people are jumping on the bandwagon. Why it doesn't matter: what's this showing? Is there something to go along with this to discuss? Is the OP trying to insinuate the death of WoW? Is this to show Blizz is shady? Is the OP saying Blizzard is in the right for doing this? Is the OP just bored wanting to talk about something?
I simply ask for clarification as to what the point of this thread is.

[Mesphisto]

There will never be a WoW 2. EQ tried it, it failed more or less. The initial cost is just not worth it at this point. Too much of the player base has invested too much into this version of the game, just to throw it away to play a shinier version of the same game. Whatever initial interest there would be, would quickly be lost to "I want my mounts, xmogs, pets, titles, achievements, etc".

[Alyxanna]

All it's stating is that Blizz is reporting revenue as a lump sum from IP's. They didn't report revenue specifically from WoW. Okay, so what's it matter? Is Blizzard reporting WoW profits with only Hearthstone, with only Overwatch, or all these properties together? The OP is acting like this is a big deal and people are jumping on the bandwagon. Why it doesn't matter: what's this showing? Is there something to go along with this to discuss? Is the OP trying to insinuate the death of WoW? Is this to show Blizz is shady? Is the OP saying Blizzard is in the right for doing this? Is the OP just bored wanting to talk about something?
I simply ask for clarification as to what the point of this thread is.

There is one thing that can be said: It's a mistake and remarkably foolish to take a corporate revenue report for Activision Blizzard, which has multiple divisions and a very wide variety of IP's, merchandising agreements and ancillary income, to attempt to read tea leaves in an effort to reconstruct a single piece of information about one part of one game in one division. Attempting to make Activision's quarterly revenue report all about Blizzard and WoW specifically is no longer really possible without creating a wide variety of assumptions that render the exercise pointless. Even more pointless when Overwatch launches. Game sales will be in one category and character sales will be mixed in with WoW subscriptions. One would presume the same is true for Hearthstone packs and HotS purchases.

And once again, this is not Blizzard hiding anything. This is Activision reorganizing how they report their revenues to suit their own purposes. This is Kotick.

[Deleted]

I still feel the need to ask, why does this matter at all?

exactly who cares, like i said, you like the game you play it, you dont like it you dont play it.

[Osmeric]

osmeric - was this 29$/qtr? seems a bit low but i cannot parse through and find the working number you had. if correct, suggests china subs still a notable majority of wow subs.

I only vaguely recall that discussion, but I think it was per qtr.