Activision Blizzard: Conference Call Q2 2012

[Deficineiron]

Without knowing exact regional data it's really hard to tell. Since they said the majority of subscribers in this recent loss were in Eastern countries it could've been China released some new mmo so 1 million people quit suddenly to try it. That's a stretch of course but it's an example.

The chinese are very finicky and jump around games like we change our underwear. Since they pay per hour instead of per month it's a lot easier to bounce between games so the subscriptions can go up and down very quickly. It all matters on which day Blizzard takes it's count.

the issue here is the revenue change - despite the acct charge and the cod revenue increase, wow seems to have still had about a 30m drop in revenue sequentially. This makes me think that western sub losses weren't far from being half, AND that their time ran out on average in the early part of the quarter, and STILL I have trouble figuring out where all the revenue loss was.

The other idea I had would model a fairly large descrease in billed hours in china, enough to get into a high-7 digit royalty drop.

[Karizee]

Without knowing exact regional data it's really hard to tell. Since they said the majority of subscribers in this recent loss were in Eastern countries it could've been China released some new mmo so 1 million people quit suddenly to try it. That's a stretch of course but it's an example.

The chinese are very finicky and jump around games like we change our underwear. Since they pay per hour instead of per month it's a lot easier to bounce between games so the subscriptions can go up and down very quickly. It all matters on which day Blizzard takes it's count.

They count all subs that had any paid time in the last month of the quarter, so for this case - June.

For instance, I had 2 accounts. I hit that unsub button on both of them in May. One of the accounts had paid time on it that ended in May, that sub was not included in the 9.1 mil sub number.

The other account had paid time on it that ended sometime in June. Even though I didn't log on after May and had already unsubbed, it was included in the 9.1 mil.

[Puck]

It's more than most of us expected, myself included.

It's actually kind of ridiculous, as for the length of the quarter is on average three months?

In that time, on average: 9 People per minute, 510 people an hour, and 12,000 people a day, all hit that unsubscribe button.

Which is creepy, as you would imagine that it has to have been felt across their respective servers, that's a shit-ton of people.

People are just waiting for more content. It's not like they have huge grievances with the game and will never return, they left because they completed all the content available and are simply waiting for more. Stop overplaying this.

[Karizee]

It's more than most of us expected, myself included.

It's actually kind of ridiculous, as for the length of the quarter is on average three months?

In that time, on average: 9 People per minute, 510 people an hour, and 12,000 people a day, all hit that unsubscribe button.

Which is creepy, as you would imagine that it has to have been felt across their respective servers, that's a shit-ton of people.

Another consideration is how much of that 9.1 mill sub number is propped up with SoR accounts? I had one that I'd SoR'd up just to transfer some items from a busy server to my dead one. It just hadn't expired yet and was counted in the total sub numbers.

[Deleted]

I'm calling it now, by the end of MoP WoW will have about 6 or 7 million players. Possibly even less.

This game is in decline and it cannot be stopped. The only thing a new expansion does is slow down the decline for a little while.

[Cows For Life]

They said that most of the loss was once again in China.

I see lack of specifics and language obfuscation in their words.

[Deficineiron]

I see lack of specifics and language obfuscation in their words.

the revenue drop makes me think that close to half the sub losses were western.

[Cows For Life]

People stopped unsubbing the moment 4.3 was released!
So how can that possibly be a result from the content when people actually keep playing and paying when they release this 'bad' content?

That's a stretch. Think longer term trend and get out of the what-have-you-done-for-me-lately box.

---------- Post added 2012-08-08 at 01:54 PM ----------

the revenue drop makes me think that close to half the sub losses were western.

I would think so too if I compared the new numbers to old ones. For whatever reason, their words sound fuzzy and seem like dodges at times. Reminds me of office meetings actually...

edit: Bumping up the hardware requirements once more for MoP probably won't help matters either.

[Deficineiron]

That's a stretch. Think longer term trend and get out of the what-have-you-done-for-me-lately box.

---------- Post added 2012-08-08 at 01:54 PM ----------



I would think so too if I compared the new numbers to old ones. For whatever reason, their words sound fuzzy and seem like dodges at times. Reminds me of office meetings actually...

yeah, after you back in the one-time charge and remove revenue growth from cod elite, it still looks like ~25-30m sequential revenue decline. I honestly cannot account for it solely based on their comments. if you had 500k western subs run out of time mid-quarter, you would expect to see a revenue drop of say 12-15m for that quarter (sub fee + some average value added services no longer purchased).

[Duridi]

They count all subs that had any paid time in the last month of the quarter, so for this case - June.

Are you sure about that? I thought they only counted those active at june 31st., but I guess it makes sense to count the entire last month. In that case, I was counted as an active subscriber for the last quarter. I took my one month SoR in May, which ended june 13th. In reality I have been unsubbed since september last year, excluding that one month I took the last quarter.

[Deficineiron]

Are you sure about that? I thought they only counted those active at june 31st., but I guess it makes sense to count the entire last month. In that case, I was counted as an active subscriber for the last quarter. I took my one month SoR in May, which ended june 13th. In reality I have been unsubbed since september last year, excluding that one month I took the last quarter.

I believe poster you replied to was referring to netease/china players, who are counted as subs if they logged in the last 30 days. they have no sub fees per se, just pay for time actually logged in.

[Duridi]

I believe poster you replied to was referring to netease/china players, who are counted as subs if they logged in the last 30 days. they have no sub fees per se, just pay for time actually logged in.

Good point. A moment of sucky readingskills.

[bcbully]

Just stopped in to say I told you so.


Maybe they should nerf some more that will get people back, right?[COLOR="red"]

---------- Post added 2012-08-08 at 08:31 PM ----------

Calling it now? People have been calling that "now" since patch 2.0.0.
Just wait and see.. But does it really matter?
If WoW explodes to 20 million subs, I would leave if I wasn't having fun.
And if WoW went down to 2 million subs, I would stay if I was having fun.

hey buddy how are you?

---------- Post added 2012-08-08 at 08:32 PM ----------

People stopped unsubbing the moment 4.3 was released!
So how can that possibly be a result from the content when people actually keep playing and paying when they release this 'bad' content?

Conclusion: They LIKED it, they just didn't like it for 6+ months.

You not help'n them your hurting them kangodo.

[Tharkkun]

They count all subs that had any paid time in the last month of the quarter, so for this case - June.

For instance, I had 2 accounts. I hit that unsub button on both of them in May. One of the accounts had paid time on it that ended in May, that sub was not included in the 9.1 mil sub number.

The other account had paid time on it that ended sometime in June. Even though I didn't log on after May and had already unsubbed, it was included in the 9.1 mil.

But how do they count subscribers in China is the question? They pay per hour and not per month. What rules do they use for separating these users? It's completely different because of government laws about gaming. The US/Europe ones are easy to figure out.

[Karizee]

But how do they count subscribers in China is the question? They pay per hour and not per month. What rules do they use for separating these users? It's completely different because of government laws about gaming. The US/Europe ones are easy to figure out.

World of Warcraft’s Subscriber Definition

World of Warcraft® subscribers include individuals who have paid a subscription fee or have an active prepaid card to play World of Warcraft, as well as those who have purchased the game and are within their free month of access. Internet Game Room players who have accessed the game over the last thirty days are also counted as subscribers. The above definition excludes all players under free promotional subscriptions, expired or cancelled subscriptions, and expired prepaid cards. Subscribers in licensees’ territories are defined along the same rules.

As long as their prepaid card has not expired, they are counted. I have no clue how often those cards expire.

[Tharkkun]

the issue here is the revenue change - despite the acct charge and the cod revenue increase, wow seems to have still had about a 30m drop in revenue sequentially. This makes me think that western sub losses weren't far from being half, AND that their time ran out on average in the early part of the quarter, and STILL I have trouble figuring out where all the revenue loss was.

The other idea I had would model a fairly large descrease in billed hours in china, enough to get into a high-7 digit royalty drop.

From the transcript.

Dennis Durkin - Chief Financial Officer

Sure. When you unpack essentially the sequence, I think you're referring to the sequential quarter-over-quarter decline in subscription revenues. I think you need to unpack it just a little bit, where about half of it does come from the subscriber decline. I think the other half relates to several other things, which I'll list right now. One is the $11 million that you mentioned, which is a onetime noncash adjustment, accounting adjustment. The second is, in Q1 we had some of value-added services and an amount that we didn't have in Q2, so again stripping that piece out. And there was a little bit of a modest impact for new Annual Pass members who joined during the quarter so that when you strip out kind of the last 3 things, the actual subscriber -- subscription revenue decline is actually more in line with the subscriber decline.

I guess a lot more people were buying glowing horses and moonkin pets than we may think.

[charlieprince]

People are just waiting for more content. It's not like they have huge grievances with the game and will never return, they left because they completed all the content available and are simply waiting for more. Stop overplaying this.

Explain Wrath of the Lich King..?

..and if you don't know what i mean, tsk tsk

-no content
-completed content
-content drought
-etc ad infinitum

...explain why WOTLK's subscription remained steady instead of this mass exodus that has happened

[Tharkkun]

As long as their prepaid card has not expired, they are counted. I have no clue how often those cards expire.

You can always say I don't know, since neither of us know the accounting rules in China.

[charlieprince]

the revenue drop makes me think that close to half the sub losses were western.

I agree.. I've said this before I'll say it again.. I WOULD HATE to be in that boardroom..

holy crap the closed door session would've been beyond brutal.. I been in some board meetings and there is nothing, nothing, NOTHING WORSE

than when your CFO/CEO/Chairman/whatever is bluntly telling you.. costs will have to be mitigated.. there will be cuts.. then in the same breath say, "get the subs back"

personally hoping nobody at Blizz gets fired.. never good for the company morale/culture specially when they cut staff and then tell you, "bring the subs back"

ouch.

I'm calling it now, by the end of MoP WoW will have about 6 or 7 million players. Possibly even less.

This game is in decline and it cannot be stopped. The only thing a new expansion does is slow down the decline for a little while.

well.. to be honest.. once Guild Wars 2 is released and annual passes expire.. even with the release of MOP

I expect WoW to drop below 8million subs.. 6 or 7mil would be.. impossible

I think sorry but if it drops to 6 million subs..

nah, cannot even think of what will happen

SEE HERE IS THE THING NOBODY MENTIONS. The MMO genre is saturated right now.. WoW HAS NOT BEEN GAINING NEW SUBS.. nevermind that it's hemorrhaging.. IT IS NOT GAINING NEW SUBS.. so people leave.. nobody's replacing them due to whatever factor you want to blame

look.. mmo's are a revolving door.. people leave, new players come.. but the problem is..

WoW has been in decline without adding new players..

you know what that is? Attrition. Slow Death :X sorry to break it to you but the future is bleak for World of Warcraft

[plantation]

I think that MMOs in general are an archaic game formula. Like many posters have already said, the game is in a decline and MoP probably won't do anything but halt or slow down the sub losses. I doubt we'll ever see a large amount of gains again. MMOs in general are dying out, and when WoW is finally "dead" I don't think anyone will try to make another one.