Trying to Find Data in the Activision Blizzard 2016 Financials

The final Activision Blizzard financial results for 2016 were announced yesterday.

ActiBlizz450

You can find all that was said and posted over at the company investor relations site.

Gone are the days of straightforward information when they used to tell you the World of Warcraft subscriber numbers and listed out revenue from those subscriptions as a separate line item.  You knew how the game was doing in straight up, hard numbers.

Now though, now the finance team has done all they can to declare everything is wonderful without really telling you where the money is coming from.  Now it is mostly bullshit like Monthly Active Users, as with this slide:

Activision Blizzard Q4 2016 Financial Results Presentation - Slide 7

Activision Blizzard Q4 2016 Financial Results Presentation – Slide 7

I mean, when the division that brings in the least revenue, King, has almost an order of magnitude higher MAUs, you’ve pretty much proven that MAUs are divorced from financial reality.  That is playing, not paying.

And then there are the oddly specific brags as we see on the next slide.

 Activision Blizzard Q4 2016 Financial Results Presentation - Slide 8


Activision Blizzard Q4 2016 Financial Results Presentation – Slide 8

I like this particular quote about WoW:

World of Warcraft time spent grew Q/Q, surpassing Legion’s launch quarter and all non launch quarters in the last 4 years

Time spent playing went up in Q4 compared to Q3.  That makes sense, really, since WoW Legion launched at the back half of Q3, so play time was probably going to ramp up after that.  But then things sort of fall apart as the quote goes on.  It surpassed all “non launch” quarters in the last four years.

So it isn’t doing as well as Warlords of Draenor or Mists of Pandaria launches I guess.  Seems like an odd thing to bring up.  And pining it down to just four years means… that things were better before that?  There was a quote previously about concurrency hitting a post Cataclysm high previously along with first day sales numbers.  So they are being cagey about anything that might allude to actual subscribers.

Still, it isn’t like Blizzard isn’t making money.  According to slide 10 of the presentation, Blizz is no slouch in net revenues and is the champ of operating income.

Activision Blizzard Q4 2016 Financial Results Presentation - Slide 10

Activision Blizzard Q4 2016 Financial Results Presentation – Slide 10

Activision topped Q4, but they released a Call of Duty title, so their previous quarters were not so hot.  Blizzard was a little more consistent over the last three quarters, if you dig into the financial model spreadsheet from the investor relations site.

But it is the highlights part under Blizzard that caught my eye.  Specifically, it says:

In 2016, >60% of segment revenue from non-World of Warcraft franchises…

That seemed like something from which I could get a hard number.  I decided to take a strict reading of that sentence and declare that it just mean WoW and not Hearthstone or any part of Heroes of the Storm.  Elsewhere in the presentation it was stated that Blizzard revenue was driven by WoW and Overwatch, so I don’t think assuming WoW-only for that statement is way off base.

Also, I chose to take 60% as a hard number, since if it was much more than that, they would have said so, since declaring that Blizzard isn’t totally dependent on WoW appeared to be part of the exercise.  It it had been 65% or 70%, they probably would have said that instead.

Given that, we can see right there on the slide that Blizzard’s revenue was $2,428 million, which indicates that WoW revenue for 2016 might be as high as $970 million.  Not bad for a twelve year old game.   Not as much as League of Legends in 2016 no doubt, but a bit more than Pokemon Go made in its first six months, if the number is correct.  Even if it is off by… say… 100 million… that is still a lot of income.  (That margin of error is more than GuildWars 2 made in 2016, as an example.)  The billion plus earning years might be behind the game, but it is still a money printing machine unlike any competing MMORPG.

As noted, Overwatch also got special mention in the presentation, so it must be doing well.  And even Hearthstone got a mention, having boosted its MAUs year over year, for whatever that is worth.

That leaves two of the Blizzard properties unaccounted for.  Diablo III didn’t have anything new to sell, so there was no real reason to expect that to show up for a special mention.  And then there is Heroes of the Storm, which has already been called out for problems that keep it from being a contender in its segment.  No mention gives that credence.

Overall though, Blizzard continues to make bank and WoW can support its 300 member development team (according to a GameSpot interview) and still turn a profit.  But with that many people working on the game, there isn’t any excuse for another long content drought.  We shall see if they can manage to avoid that before the next expansions.

3 thoughts on “Trying to Find Data in the Activision Blizzard 2016 Financials

  1. SynCaine

    Is it too late to predict that HotS gets shut down in 2017?

    The point about MAU is especially important though, in large part because the definition of what MAU is so garbage (your PC auto-starts Steam on restart, you are an MAU for that month, how valuable!)

    And you know they want to badly mention subscriber numbers, but then they would be going back on what they said, so they twist around to say “lots of people” without using the number that best shows “lots of people”.

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  2. Wilhelm Arcturus Post author

    @SynCaine – I am not sure Blizz knows how to deal with a product that is so far behind in its segment. My bet, which is in my 2016 predictions, is that they will revamp HotS in some major way first.

    The best case for MAUs is using them to compare against the same product over time, with some sort of revenue number to stake it against. Then you could at least build a predictive model. Just saying King had 355 million MAUs in December is trivia at best without something to anchor it.

    And I agree, they are trying so hard to say, “Subscriptions are back up!” without actually mentioning subscriber numbers. But the whole quarterly report has been moving further and further to obfuscate the performance of any individual product. They want to be able to call out stuff that does well and still hide stuff that is under performing.

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  3. Urtidig

    I think you might be predicting hots closing down for a lot of years considering you can still play Diablo 2 on battle.net, but who knows with new Blizzard.

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