Tag Archives: Activision

Friday Bullet Points for a Warm Spring Day

Well, it has been warm in Silicon Valley this week, with temperatures up to 90 degrees at times.  After a wet winter that means that more than spring is in the air.  Pollen is a serious, palpable thing outside right now for those of us with allergies.  But a runny nose and a desire for some of those good old “makes you drowsy” allergy meds from my youth won’t stop me from at least doing a bullet points post.

Pokemon Go in the Grass

Bulbasaur knows what I am talking about!

Clearly in the spirit of my pain, Niantic is having a Grass Weekend mini-event for Pokemon Go.  Starting this afternoon and ending early Monday grass type Pokemon are supposed to be out in force.  In addition, lures dropped at Pokestops are supposed to last 6 hours rather than the usual 30 minutes.  Will that be enough to lure me out of the house?

Pokemon Sun & Moon Bean Collecting

Meanwhile, in Pokemon Sun & Moon, there is an in-game event around collecting Poke Beans at the Poke Pelago.  As with the Pokemon Go event, it runs until Monday.  The minimum and bonus thresholds have already been reached, so all you have to do to get some Festival Coins is register in the Festival Plaza, collect some beans, and then go back and update you status.  Details are at the link.  If you are a registered Pokemon Global Link player, you get double the Festival coins plus a level ball and some rare candy as well.

We’re well past the 6 million bean stretch goal…

Ashes of Creation Campaign Status

The Ashes of Creation Kickstarter that I wrote about earlier in the week seems to have hit the mid-campaign doldrums already.  After passing a million dollars in the first 36 hours, pledges have slowed down.  That is to be expected.  I will be interested if they have a mid-campaign plan after their very strong start.  Meanwhile, there has been some concerns about Intrepid’s Creative Director and CEO Steven Sharif and the depth of experience of the Ashes of Creation team.  Sharif has responded via an interview with Massively OP.

Activision Blizzard still Touting MAUs

The Activision Blizzard first quarter results were announced yesterday.  You can find all the data, such that it is, over on their investor relations site.  Blizzard and King were tied as the first quarter net earning powers, with King ahead it gross revenue but Blizzard having a higher margin.

Revenues on Slide 10 of the investor presentation

And yet the big “we’re doing good!” metric remains Monthly Active Users, or MAUs.  I have griped before that MAUs are meaningless without context.  The fact that the two net earners have wildly different MAU numbers (41 million for Blizzard, or less than Activision, and 341 million for King) seems to require at least some details about their disparate business models.

Meanwhile, the report also celebrates Overwatch becoming Blizzard’s eighth “billion dollar” franchise, making me strain my brain to come up with that many.

  1. World of Warcraft
  2. Warcraft
  3. StarCraft
  4. Diablo
  5. Hearthstone
  6. Overwatch
  7. Heroes of the Storm
  8. Lost Vikings

They must be slicing and dicing what constitutes a franchise to get eight billion dollar earners… or Lost Vikings was more popular than I imagined.  Also, I would argue that WoW is a continuation of the Warcraft franchise.  But marketing will segment how they see fit.

Anyway, back to the land of Benedryl for me.

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.

Blizzard and the MAU Reality

MAU! MAU! DIDI MAU!

-Bobby Kotick, leaked internal communication

Last week Activision Blizzard had their quarterly earnings announcement.

ActiBlizz450

At one point this sort of announcement used to be a headline generating event in the MMO world, because among the numbers announced would be the total World of Warcraft subscribers.

It was kind of a big deal.  In a world where other MMO companies had pretty much given up on the idea, choosing to play up other, often dubious metrics, like registered users of beta applications, Blizzard actually coming out and straight up giving us a subscriber number was pretty cool.

That number wasn’t perfect.  There was always the question about how many of those subscribers were in China, plus the usual conspiracy theories about how Blizzard was padding those numbers by including something that should actually count… despite the fact that the statement regarding numbers was pretty clear about what constituted a subscriber.  But it was a number, a solid metric that carried over quarter after quarter and charted the financial fate of Azeroth.

And then those subscription reports dropped down to numbers not seen since late 2005 and suddenly the joke wasn’t funny any more.  Blizzard gave us one more set of numbers then declared that they would no longer be publishing subscription numbers.

The quarterly report done in February, which summed up the year 2015, lacked, as promised, any mention of subscription numbers for World of Warcraft.  I speculated that even poor subscription numbers were better than none at all, but it was going to be the dubious metric, divorced as it was from any revenue number when compared to subscribers, of “monthly average users” or MAUs.   Nobody is going to write a headline about MAUs.

But still, aside from the lack of subscription numbers, things looked to be following the pattern it had for the last few years, with the team in Anaheim an independent unit with its own slide in the presentation that focused on just the Blizzard properties.

And then there was last weeks announcement… and the pattern of the presentation set over the last few years changed.  Here are slides 4 through 8 of the presentation deck available at the investor relations site:

Blizzard got lumped into the mix this time around.

I don’t want to read too much into that.  Part of it was no doubt because King is now part of the club, having been purchased for $5.9 billion back in 2015.  There are now three distinct players in the mix and the company has to both make sure everybody knows King is on the team and justify spending that much money on a horrible company that stole every good idea it ever saw… um… by which I still mean King.

But to get there the emphasis is very much on how much time players spend with the company’s games, which gets us back to MAUs.

And when it comes to MAUs, King is… well… King, with 463 million.  Activision comes in a distant second, with 55 million, while Blizzard can’t even get halfway to that number, bringing up the rear with 26 million.

Not that hours played is the worst metric, and the company seems very proud that, in the last year, people spent nearly as much time playing its games as they spent watching Netflix.

But it is a measure that only has a correlation with revenue, as opposed to subscriptions, which have direct relationship with revenue.  To illustrate, there are the numbers from the financial statement:

Q1 2016 non-GAAP revenue – Total $908 million

  • Activision – $360 million (40%)
  • Blizzard – $294 million (32%)
  • King – $207 million (23%)
  • Other – $47 million (5%)

So the “King” of the MAUs at the company isn’t the actual king when it comes to bringing in cash.

King does a bit better when it comes to income.

Q1 2016 non-GAAP Operating Income – Total $252 million

  • Activision – $99 million (39%)
  • Blizzard – $86 million (34%)
  • King – $67 million ( 27%)

Which means that when it comes to operating margin, King is actually out in front.

Q1 2016 non-GAAP Operating Margin

  • Activision – 27.5%
  • Blizzard – 29.3%
  • King – 32.4%

But Blizzard is no slouch, bringing in more money than King and operates at a better margin than Activision despite being at the bottom of the MAU list.

Unfortunately, you can’t tell how much World of Warcraft is contributing to that mix.  There used to be a “Subscriptions” line item in the financial statement that was pretty much just WoW.  However, that has now been lumped into the “Digital online channels” line item, which includes subscriptions plus any other online purchases.  So if you buy the latest Hearthstone expansion, or something to help you beat a hard level in Candy Crush Saga, it goes there as well.

So, while I do not doubt that WoW contributes a decent chunk of the revenue to that $797 million line item, we cannot know exactly how much because that category is 88% of the revenue for the quarter.  WoW has been effectively disappeared.

Sure, there is a mention of it on one slide.  The upcoming expansion is still a thing.  But if you were gauging simply by the amount of attention a title got, you might easily assume that Hearthstone is the leading product out of Anaheim.

And such is the way of thing today.

Activision Blizzard Making More Money, WoW over 10 Million Subscribers Still

The Activision Blizzard results for the fourth quarter of 2014 were announced yesterday and, to probably nobody’s surprise, the combined companies reported making huge amounts of money.

ActiBlizz450What with Destiny still selling well, the latest Call of Duty installment somewhere out there, a World of Warcraft expansion, and Hearthstone apparently worthy of repeated mentions, the money was pouring in.

Actual footage of Bobby Kotick and Mike Morhaime during the call

Actual footage of Mike Morhaime and Bobby Kotick during the call

You can find summaries of the announcements around the web, or you can go to the Activision investor relations site to see the full financial report and the presentations.

Of course, I am more interested in Blizzard around here than the Call of Duty Activision side of the house.  The Blizzard slide shows about what we would expect.  Best annual revenues ever.  More registered users.  More good stuff coming.

Blizzard slide from the presentation deck

Blizzard slide from the presentation deck

Still, there is a point there that will be seen by some as losing by not winning enough.  Only 10 million subscribers?

I know, it says “over” 10 million, but if it was over, say, 10.5 million, they would have said over 10.5 million.  Past behavior indicates that.

And 10 million was the number they gave back in November after the expansion finally came out.  That only got us up to the Mists of Pandaria peak.  With the history of the game, anything less than 12 million will be failure in the eyes of some.

But at least this chart hasn't changed!

But at least this chart hasn’t changed!  Lich King, Best King!

Of course, that dissatisfaction with not getting back to the peak subscriber number ignores the scale of WoW’s subscriber base.  The jump from 7.4 million subscribers to over 10 million at the launch of Warlords of Draenor… 2.6 million subscribers… how many other popular MMOs would we have to stack up before we hit 2.6 million subscribers?  Not just registered users or those tagging along for free, but people who signed up to pay that $15 a month?  And what about that 10 million number?

The churn of users just coming and going since the expansion launched would probably kill some games.  You can sure as shit bet if EverQuest II had 10 million subscribers… or 7.4 million… or even 2.6 million… Smed would be telling the PlayStation people what to do rather than being sold into bondage.

World of Warcraft remains the outlier that distorts the scale when we talking about MMOs.  Comparing it to other things just doesn’t work, because even down from its peak it is still too big.

Anyway, that is the big news from Blizzard.  All money, all the time.

Oh… and one more thing.  StarCraft II – Legacy of the Void.  The mention of it being the “Final” expansion to the StarCraft II series stands out for me.  Maybe they said that back at BlizzCon and I missed it, but seeing that word “Final” on the financial presentation makes it stand out for me.

So what will the RTS team at Blizzard be doing when they have wrapped that up?

Should we read anything into the fact that the RTS team appears to be playing around with the Warcraft III assets?

Seven Pillars of Wisdom

All men dream: but not equally.  Those who dream by night in the dusty recesses of their minds wake up in the day to find it was vanity, but the dreamers of the day are dangerous men, for they may act their dreams with open eyes, to make it possible.

-T.E. Lawrence, Seven Pillars of Wisdom

I actually have a copy of Seven Pillars of Wisdom on my bookshelf, a 1938 US post-death edition of the 1926 version of the book.  It came from my grandfather, who picked it up somewhere along the way.  I took a couple shots at reading it when I was much younger, and now I am hesitant to even pick it up due to its age.

All of which is really an aside to explain the reference in the title, but which will make a bit more sense shortly.  Maybe.

Destiny launched last week.

Destiny_450

And while I wasn’t caught off guard like some, I would have to say that its impact on me has been minor.

I have fond memories of some past Bungie games.  Pathways into Darkness was good and many hours were spent playing Marathon and then Myth at the office.  But once Bungie got bought up by Microsoft and became just the Halo studio of the XBox division at the company, they faded from my consciousness.  It was to the point that when somebody would actually connect Bungie and Halo for me, I would get that squint on my face and say something like, “The same Bungie that made Marathon? They are still a thing?”

Anyway, through some machinations Bungie is still a thing and is free of Microsoft and the need to do things exclusively for the XBox.  That they managed to do this… though Microsoft got custody of Halo in the divorce… only to jump into bed with Activision might make your head hurt.   But, let’s face it, Bungie is a AAA developer so they need to go out and get screwed by hook up with a publisher that has the ability to move AAA titles.

So Destiny came to be.  It is a shooter of some sort… which given Bungie’s history is no big surprise… with MMORPG elements to it.  And while it is available on a platform I actually own… I still have a PlayStation 3… I doubt I will end up playing it.  Due to a variety of factors, our PS3 is used primarily for video streaming, to the point that I cannot remember when we last played a game on it.

Let’s see, so far I have a T. E. Lawrence quote and some chatter about a game company that used to be important to me but whose games I haven’t played this century, a trend that looks to continue into the foreseeable future.

Such deep insight.  Are you still awake?

Okay, time to wrap this up by reaching for the bit I could have probably pasted in at the top and let sit on its own.

As part of reading about Destiny, I came across a couple of references to Bungie’s “Seven Pillars of Design” and how the company uses this as the foundation for creating its games.  Naturally, I had to go look up those pillars, which were enumerated as such:

  1. A World Players Want to Be In
  2. A Bunch of Fun Things to Do
  3. Rewards Players Care About
  4. A New Experience Every Night
  5. Shared With Other People
  6. Enjoyable By All Skill Levels
  7. Enjoyable by the Impatient and Distracted

Not a bad list, the distillation of their own gaming wisdom, garnered through more than twenty years in the industry.  I especially like that last entry, though I might have tacked on something like, “but not in a way that annoys the rest of the audience.”  Or am I the only one who has been in a Dungeon Finder group with “that guy” whose sole phrase during the whole run was, “Go go go go go?”

It sure beats that fourth pillar hype, the most interesting aspect of which, more than four years down the road was it being plagiarized by another game.

It almost makes me want to play it at some point, just to see how they did on the list… though that gets us back to the list of reasons why we don’t actually play games on the PS3 at our house again.

The game itself seems to be doing well, with sell through for the first week reported by Activision at some insane number… $325 million in five days?  That is… well… insane.  They certainly won’t be in a hurry to port to the PC.

With that number, I guess we can say that Activision did their job for Bungie.  Pity about the bonuses after all that green was raked in.  Metacritic puts the game in what we might call the “mediocre” range of the review spectrum.  A lot of the reviews are heavy on complaints.  My current favorite piece on the game is over at Forbes with the title “Destiny Is A Bad Game, But I Can’t Stop Playing It.”  Meanwhile VG24/7 has attempted to compile every complaint about the game and call it a review.  (You have to have your satire sensors engaged though.)

And so it goes.  I guess the real test will be if people are still talking/complaining about Destiny six months or a year down the road.  Bungie has created a sizable installed base on little more than its reputation, now to see if they can do something with it.  Did they meet their design goals?  Is this the dawn of another Halo-like epic franchise?  Is the team at Bungie made up of dreamers of the day?

Blizzard – Subscribers and Independence of a Sort

Activision-Blizzard announced some preliminary numbers in advance of their quarterly report and investors call.  Earnings are up, profits are up, subscribers are down.

ActiBlizz450

On the subscription watch front, it was announced that World of Warcraft dropped from 8.3 to 7.7 million subscribers since their last report, again proving that they work in a completely different scale from other MMOs.  How many MMOs even have 600K paying customers?  And how many could afford to lose that many?

And while a loss of 600K subscribers is a blow, warnings of ongoing subscriber attrition was brought up previously.  And at least 600K is less than the 1.3 million subscribers they shed in the previous quarter.

All of which is a discussion point as those who attempt to track such things make another mark on their charts.

But the reason that there is even a preliminary report is because Activision-Blizzard is buying itself out of Vivendi.

Vivendi has been looking for ways to plunder the cash cow that is Activision-Blizzard in order to stave off its own financial woes.  Now it seems that Vivendi will get some money, but will lose control of Activision-Blizzard, its ownership stake dropping from 60% to 12%.

Now, will this change alter anything for Blizzard?  Bobby Kotick will still be in charge, and all the more so with an investment group he leads buying into the new situation.  But as Activision-Blizzard was the cash cow in Vivendi’s eyes, Blizzard remains such in the Activision-Blizzard family.  Blizzard in general, and World of Warcraft in particular, carries the company freight three quarters out of four in every fiscal year.  In that fourth quarter a Call of Duty game ships an eclipses Blizzard for a bit.  As long as Blizzard keeps to that role, I suspect that they will continue to operate as before.  But dropping subscriptions have to be a cause of worry.  There may come a point where WoW ceases to be insanely profitable.  And with Titan pushed out and nothing else big on the horizon, Blizzard needs to keep Azeroth well populated for a few more years.

Blizzard – Down Nearly 2 Million Subscribers, But Still Insanely Profitable

The big news for MMO watchers in Activision Blizzard’s quarterly report was the mention that World of Warcraft was down to 10.3 million subscribers, a loss of nearly 2 million from its 2010 peak.

Wait, where did I get that 2 million number?

Last year’s end of year report from Activision Blizzard stated that, as of Dec. 31, 2010, there were more than 12 million World of Warcraft subscribers.

As of October 7th, 2010 Blizzard claimed 12 million subscribers world wide.

Cataclysm came out between those two, which must have bumped up the subscriber base some, though we cannot tell exactly how big of a bump that was.  Still, selling 4.7 million units in in the first month probably a reasonable indication that some players came back for the expansion, especially since China did not get Cataclysm until this past summer.

So I think we can safely assume that, at some point in December there was a subscription peak at least close to 12.3 million.  And with the statement that WoW is down to 10.3 million, 2 million missing subscribers seems to be a reasonable estimate to throw around.

So that is my number.

What does it mean?

While I feel some of it is repudiation of the direction Cataclysm went, with its very solo-centric feel, my gut say that having just five levels of content, and pretty easy content, just wasn’t enough to keep the non-raiders hanging around.

The raid-or-die crew will blast through the content to get to work on raiding, but will hang out doing that for a long time.  People like me are more invested in a slower climb through the new zones, and those five zones were pretty fast.  That and I think the value people put on the new 1-60 content was pretty low.

Anyway, mistakes were made and at some point next year Pandas will either fix them or make them worse, we shall see.

But does being down 2 million subscribers, a 17% dip from peak (my estimate), mean doom for Blizzard?

Probably not.

The Activision Blizzard third quarter results bear that out pretty strongly.

Way down near the bottom, the results are broken out by “segment,” which means three different sections of the company:

  • Activision Publishing (“Activision”) — publishes interactive software products and content.
  • Blizzard — Blizzard Entertainment, Inc. and its subsidiaries (“Blizzard”) publishes games and online subscription-based games in the MMORPG category.
  • Activision Blizzard Distribution (“Distribution”) — distributes interactive entertainment software and hardware products.

Revenue for Activision was $253 million for the last quarter and $898 million for the year so far.

Revenue for Blizzard was $297 million for the last quarter and $968 million for the year so far.

So the Activision and Blizzard sides of the houses are not far out of syn when it comes to how much money they bring in before expenses.  And the numbers for Distribution, just to round this out, were $77 million for the last quarter and $214 million so far in 2011.

Then there is income, which is the amount of money left after they paid all the bills but before they paid taxes.

Income for Activision was… well… they fell short $36 million dollars last quarter, and for the year it has made a grand total of $42 million.

Income for Blizzard was $120 million last quarter and it has made $425 million dollars in 2011 so far.

And Distribution is in for a million dollars of income this year.

So with revenues that are reasonably close, Blizzard has made TEN TIMES as much income this year as Activision.

Not only that, Blizzard makes more than 43 cents on every dollar it takes in.  So of your $14.99 subscription fee, $6.58 cents go into a bucket that might as well be labelled “Profits and/or Bail Out Money for Bobby.”

Okay, yes, it is a bit more complicated than that.  There are other costs and taxes that come in after that number.  And the numbers are down from last year, which is partially because Blizzard didn’t ship anything new in 2010 and partially because of the subscription slide I am sure.  But those are still really solid financials.

So when Bobby the Tick comes out and says “Profits tripled!” it does not mean, as has been reported in the media, that Call of Duty saved the day.

Call of Duty merely meant that Activision wasn’t nearly as big of a drain of Blizzard’s money making acumen as they might have otherwise been.

Blizzard has been saving the day since was joined up with Activision.