I Bet Blizzard Really Wants to Mention Subscription Numbers About Now…

World of Warcraft remains the No. 1 subscription‐based MMORPG in the
world.

Activision Blizzard Q2 2016 Financial Results

It is easy to justify dumping a metric when it isn’t portraying you well.  But once you’ve publicly vowed never to bring that metric up again, and suddenly it might show you in a good light, what do you do?

Apparently you beat around the bush hinting about it.

Yesterday was the Activision Blizzard call for the Q2 2016 financial results.  All the data and slides are over at the investor relations site.

ActiBlizz450

The company had plenty of good news to report.  Revenue was strong, their monthly active user (MAU) metric was up, and they had a hot new title to brag about in Overwatch, which has sales in the $500 million range to date.

They also highlighted Blizzard in general, which had strong growth, and World of Warcraft in particular.  Along with the quote at the top of the post, they say:

…strong pre-expansion momentum for World of Warcraft.

World of Warcraft MAUs double digit growth quarter-over-quarter and year-over-year

[Legion] per-purchases tracking in-line with the last expansion.

Strong momentum in China following the Warcraft film…

That all sounds great, but they are just words.  What does “momentum” really mean here?  If you don’t publish per-game MAUs, which are a bullshit metric anyway, is double really that good?  Why aren’t they ten times better?  And if you make the claim that your game is the #1 subscription based MMORPG, I think it is incumbent on you to back that claim up.

Yes, the categories on the balance sheet where WoW fits in are up quite a bit, a sign that something is going on.  And if you’re playing WoW right now, it likely “feels” like the so-called “momentum” is building, that more players are back in the game.  I doubt anybody would seriously argue, with the WoW Legion expansion this close, that numbers are not up.

But you know what would seal the deal?  A nice little statement about how, at the end of Q2 2016, back on June 30th, after a year long content drought, subscriptions were already trending up on anticipation of the expansion with a hard number.  Anything higher that 5.5 million would do, though I think if they could have said 7 million it would have been a massive validation that the game is still strong and still has its own legion of loyal fans.

But instead, last November, when things were down, Blizz said they were not going to talk about subscription numbers any more.

I made what I felt was the case for continuing to report them every quarter.  Saying you’re number one is fine, but it isn’t news.  Trotting out a 7 digit subscription number though, that guarantees some headlines, be it up, down, or stable.  That gets your game in the eye of the press and being talked about.

I wonder, if WoW Legion does well, really well, and subscriptions are up into 8 digit figures again, if Blizzard will be content to just claim they are number one still, or will they roll out a special press release for that?

7 thoughts on “I Bet Blizzard Really Wants to Mention Subscription Numbers About Now…

  1. SynCaine

    The joy over Overwatch is interesting, because in reality Overwatch is basically Titan repackaged, and Titan cost how many millions to (not) make? So yes, 500m in revenue off Overwatch is great in terms of “look at our big number”, but if it cost you 10 years and 550m to make, you aren’t even in the black yet and already pissing people off with your revenue model changes. But of course, because financial numbers can often be twisted until they look how you want them to, Overwatch isn’t connected to all the money spent on Titan.

    Love that they are pretending HotS doesn’t exist ala EA and SW:TOR around release though, that’s nice.

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  2. Wilhelm Arcturus Post author

    @SynCaine – $550 million is literally 11 times more than any estimate I have seen as to what Blizz put into Titan. Going to need a reference if you are going to trot out those sorts of numbers.

    Liked by 1 person

  3. bhagpuss

    So long as they don’t have any fiduciary duty to give specific numbers i can’t see why they don’t just do a PR release when they have something they want to crow and keep quiet when things aren’t looking great. I know people would speculate if they gave “6.5m subscribers” one quarter and didn’t mention a number the next but people are going to speculate whatever. Just big up the good quarters and whistle through the bad.

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  4. Wilhelm Arcturus Post author

    @Bhagpuss – I don’t think it is much of a stretch to argue that the WoW subscription numbers are so materially relevant to the financial health of the Blizzard side of the company that a fiduciary duty to report them exists, and all the more so because they have reported that number for so many past quarters.

    But that isn’t the way the company/analyst system works. It is more a matter the analysts being willing to swallow and bullshit the company feeds them so long as everybody’s current favorite number, which has been margins for the last decade, still looks good. This is literally why IBM stock still has any market value at all, because they have been busy flushing the company down the toilet for years in the name of maintaining margins.

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  5. SynCaine

    http://www.gamesindustry.biz/articles/2014-09-23-titan-cancellation-cost-blizzard-usd50m-or-more-say-analysts

    I mean Titan was in dev for 7+ years, and while I’m guessing some of that time wasn’t fully production, some of it was. Given the average size of a Blizzard team, 50m is way too low IMO.

    But I wasn’t saying Titan did cost 550m, I’m just saying that whatever it did cost is completely removed from the numbers around OW. Not to mention all of the work that might not have happened. How many little bits like emotes and such wouldn’t have been put in if not for them already existing due to Titan?

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  6. Jenks

    I’d love to know exactly how low subs are and where they bottomed out. The graph of WoW subs will forever end with the subpocalypse. It looked like it was headed for well under 3m, and that was only 5 months into the 14 month content drought.

    Agree with Bhapguss completely, they’ll bust out the trumpets when subs spike.

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  7. Wilhelm Arcturus Post author

    I am still waiting for somebody to challenge my assertion that MAUs are a bullshit metric. But since nobody will bite, look at the presentation. King has the highest MAUs by a longshot, totaling up almost five times that of Activision and Blizzard combined. (409 for King, versus 49 and 33 for Acti and Blizz.)

    Do you think King is generating five times as much revenue?

    Go look at the investor summary sheet. Blizz, which has the lowest MAU count for Q2, has the highest revenue, operating income, and overall margins for the same period.

    Good times for Blizz, but not an endorsement of MAUs.

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