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Hope You Don’t Like Wildstar
If you are a fan of Wildstar, well, you might want to soak it in while it lasts:
Not that that’s statistically likely.
The above graph is from NCSoft’s Q12015 report, which you can read here. Supposedly, “sales” does refer to all revenue brought in by a game through every channel, not just box sales. Reddit user “yeahreally2” summarizes as follows:
Company-wide sales are down 20% from the last quarter of 2014 from 235 billion won ($215 million USD) to 188 billion won ($172 million USD). Net income is down 43% from last quarter from 62 billion won to 35 billion won. NCsoft notes that income was high in the 4th quarter of last year “due to year-end promotions”. While NCsoft’s sales beat the forecast from Daewoo Securities (179 billion won), its operating profit and net income did not.
Guild Wars 2 performed slightly better in this quarter than last, probably boosted by the expansion hype exceeding Daewoo’s forecast by 3 billion won. Wildstar’s sales declined from 5.5 billion won ($5 million USD) in the previous quarter to 2.5 billion won ($2.3 million USD) in Q1. This is a 50% decrease in sales from the previous quarter, and is only slightly better than Daewoo’s projection of 2 billion won ($1.8 million USD).
I suppose it should not be particularly surprising given all the layoffs last October, but still… damn.
By the way, this was what the quarterly report looked like for City of Heroes at the end:
Uh oh.
In other words, City of Heroes was making 2,855… units to Wildstar’s current 2,593 units. And NCSoft axed CoH the following quarter. So if Wildstar makes it to its own one-year anniversary, it will be quite the birthday present from NCSoft.
I enjoyed the graphics of Wildstar, the housing, the general tone, and the hoverboards. I was even playing with friends there for a little bit. Trouble was that the gameplay wasn’t all that fun. More involved than WoW? Sure. Also more exhausting, especially when every mob in the world has a telegraph you need to circle-strafe out of. Plus, I got stuck playing a class I didn’t actually find all that fun.
Hmm. Where have I heard that before?
WoW Down 2.9 Million Subs
In news both kinda expected and yet still rather shocking, WoW is down 2.9 million subscriptions from last quarter.
Whiplash.
At a certain point, the sheer magnitude of the change makes commentary moot. You don’t lose nearly three million people because of Garrisons. Or screwing up professions. Or having easy-mode raids. Or hard raids. Or whatever. And as I mentioned when we first heard about the 10 million sub surprise, the numbers are too big to ascribe to the expected MMO Tourism/Locust Effect either. I mean, yeah, the numbers jumped to 10 million and then back down, so people went somewhere. But unless we’re willing to state three times as many wished to tour Draenor than Pandaria, it had to be a confluence of all sorts of things.
Whatever those things are, it’s clear that it isn’t enough to last a full quarter.
There is no transcript of the call as I write this, but I went ahead and listened to the whole 42 minutes of PR bullshit anyway. No real juicy tidbits were found… unless you consider Guitar Hero on your phone to be juicy. The whole WoW Token thing was mentioned only in passing, which makes sense considering any of its effects won’t appear until Q2. Oh, and I suppose there was this bit about Hearthstone (PDF):
Two franchises that go together like peas and carrots.
Still doesn’t clear anything up in terms of the money part of Hearthstone’s success, but I suppose another data point is another data point.
SWTOR Drops an EVE in Size
In other words, SWTOR lost 400,000 subscriptions in the last three months:
Star Wars: The Old Republichas dropped from 1.7 million active subscribers to 1.3 million, publisher Electronic Arts said today in an earnings statement.
That’s a loss of nearly 25% for the massively multiplayer online role-playing game, or 400,000 subscribers. […]
Update: In a conference call this afternoon, EA said the decrease was indeed due to “casual and trial players” cycling out of the game.
It is worth noting, of course, that the 1.3 million current subscribers is circa March 31st; things may have stabilized or gotten worse sense then.
Remember the whole brouhaha concerning the free month of game time given to Bioware’s “most valued players?” That took place two weeks into April. So while that may still have been a cynical move to prop up subscription numbers, we can be reasonably certain that the 1.3 million figure is not being finessed by anything (the 1.7 million figure at the beginning of the year had some vague language).
I’m not sure I’m going to follow SWTOR with the same level of attention I give to WoW’s subscription/raiding numbers, but for some future reference, here is an Xfire screenshot:
I… guess that’s a downward trend?
I personally don’t like using Xfire as a metric – the sample of players here are playing SWTOR for 5.3 hours at a time if I’m reading that right, and I’d assume even happily subbed players play less over time – but there you go. Damning evidence of EAware’s hubris and impending downfall, or signs of a much healthier MMO than most releases have achieved in the last few years. Obviously 400k is nothing to sneeze at, but 1.3 million is much better than analyst predictions of 800k.
Spin that narrative however you please.
The SWTOR Figures Thus Far
You have probably already heard about the 1.7 million subscription number, 2 million boxes sold, and so on surrounding SWTOR’s launch. What I am finding a bit more interesting are some of the investor call break-downs as gathered by Darth Hater. For example:
Q: What are your plans at expanding the global market?
A: We are looking at the Asian market. Expanding into Australian market on March 1st. We’re looking specifically at opportunities to expand in the Asian market.
Q: How long will it take to get into the Asian market?
A: Australia/New Zealand is the low-hanging fruit. Think in months rather than weeks. Individual Asian markets will be announced in the future, we’re bound by confidentiality agreements. When WoW was introduced in 2004, they were in Korea shortly after, and 9 months after in China. It was easier in those days – server outages were considered par for the course, that is not the case today. We hope to execute as well in Asia as we did in the NA/Europe launch.
Q: You’ve previously said you need about a half million subscribers to be profitable, is that still the case?
A: At 500,000 subscribers, we’d break even. At a million, we’d be making a profit but nothing worth writing home about. As it scales up from there, we’re talking about a nice profit. At this point with the successful launch, we can take the worst case scenarios off the table.
The ability for SWTOR to launch in Asian markets was one of the biggest concerns I had with the game from a success standpoint, as you may recall. Indeed, if/when the game is released in China, that will be the moment beyond which we will be unable to talk about its subscription numbers with any sort of coherency – not because it will necessarily be super-popular over there, but because, just like with WoW, millions of Eastern subs obfuscates armchair analysis. Remember Nils saying “[…] I would now say that EA could be happy if they had 500k subscribers one year after launch”? Would it “count” if there was some Western mass-exodus down to 250k but 2 million Chinese subs?
In any event, there are still legitimate questions about how the game will perform 3 to 6 months down the road, when there is less ambiguity surrounding whether 1.7 million was as-of December 31st or as-of the investor call (and what “most” means in the context of “Most of those 1.7m are paying at this point”). Then we have Frank Gibeau who says:
In the next phase, our goal is to grow the number of subscribers with frequent releases of content that make the game even more exciting. […] We plan on delivering another major update, even larger than the first, in March.
It is kind of interesting, on several levels. Can Bioware keep such a pace for any length of time, or will there be a drought soon after March wherein the reserve content drys up? Do frequent patches even drive subscription growth to begin with? Blizzard’s Mike Morhaime said back in November that patches were mainly about reducing churn, not growth. Maybe it’s different for games below market saturation? And speaking of games and markets, let’s not forget at least a half dozen high(ish) profile MMOs will also be dropping this year, including the mythical Guild Wars 2 and Mists of Pandaria. No doubt there will be some impact, eh?
Time will tell, but so far so good.
P.S. If you had bought EA stock after it dropped 3% in mid-January, when people were laughing about SWTOR’s “disastrous launch” based on that one analyst, you’d be sitting on a 10.22% return on your investment a little more than two weeks later. Or, hell, a 6.1% return between yesterday and today.
P.P.S. Christ. BRB opening eTrade account.
Delving Into the Earnings Call
The last time I talked about an Activision Blizzard earnings call, I had just quit the game myself. Now in Q3, you have undoubted heard that a further 800k subs were lost, bringing WoW down to 10.3 million. For those keeping track at home, the last time WoW was at ~10 million was in 2008 right during the release of TBC in China.
While sites like MMO-Champion and WoW Insider are nice for giving us summaries, I’m interested in the nuance inside the earnings call itself. Feel free to read alongside me at home (curtsey of Seeking Alpha).
1. Majority of the sub loss is occurring in the East.
You have probably already read the above bullet-point summary, so I’m here to assure you that Morhaime does not get more specific than this.
2. Implicitly, the difficulty of Cataclysm content was the cause of sub losses.
Feel free to try and read something different from these paragraphs (emphasis added):
That said, we know there are improvements that we can make in gaming content. The level-up content in Cataclysm is some of our best works. But it was consumed quickly compared to our past expansions set, Wrath of the Lich King. Once players reached max level, the end-game content in Cataclysm is more difficult. Balancing this content for our diverse player base can be very challenging.
Our development team is constantly analyzing the game, and we’re continuing to explore ways that we can adjust the game to better satisfy both hard-core and casual players. To that end, our next free major content update for World of Warcraft is already in testing and will be available for players in the coming weeks.
Now, the funny thing about this is how Blizzard may have cost themselves millions of dollars in lost revenue by pushing Cataclysm on the Chinese instead of letting Wrath work its magic. After all, Cataclysm was released in China on July 12th whereas Wrath was out in mid-August of 2010, a difference of 11 months. I am not sure whether Cata heroics came pre-nerfed like they ended up in the West, but even if they did it would still be worlds different than how it was in Wrath.
Which, no matter your feelings on the expansion, gained ~1 million subs and largely kept them until Cataclysm.
3. Expect some (more) “aggressive” World of Warcraft marketing.
Specifically: “We have other aggressive marketing plans in the coming months for World of Warcraft, but we’re not ready to share details yet.” Morhaime was then grilled in the Q&A section for further information.
Can you give us some additional color on what’s happening to engagement and subscriber levels for World of Warcraft, particularly following that big expansion pack announcement? Where do you think the subscribers are actually going? And I’ve got a quick follow-up.
Okay. Well, as you know, we don’t provide a forecast on subscribership levels. But I’ll say is that the announcements at BlizzCon were incredibly well received. There’s a lot of excitement around the expansion and the upcoming content in the next patch, which will be introduced in the next couple of weeks. It is currently in test on our public test realm, and we’re very excited about that content. I guess, I can say this, the majority of the declines were in the East. China still represents more than half of our global player base and historically, December has been a very good month for subscriber trends. We have a number of initiatives planned. We plan to be very aggressive in terms of our marketing promotions, and we’re looking forward to the end of the year.
It is an open question what kind of aggressive marketing Blizzard can even do with WoW. If they lowered prices on some of the other services like server transfers or even weekend sales or whatever, that might go a long way in getting me back – I’m not coming back to a dead server and then immediately spending $35+ to move one toon and just 10% of my wealth somewhere else.
Beyond that, what can they do? I doubt something like the cost of the box is keeping people away.
4. Patches are more about recapturing the recently churned.
Nothing ground-breaking, I just find it interesting.
Just out of curiosity, when you’ve had big patches before with World of Warcraft, what type of subscriber uplift do you typically see?
Well, historically, with the content updates that we’ve done, it’s really not intended to go out and drive new user acquisition, that’s a whole other strategy. But it does drive engagement with the game, and so that will impact churn, if we do it successfully and eventually will drive win back, as players tell each other about the content they’re enjoying. We’ll hopefully see a lift in our ability to win back players that may have already churned.
And that wraps up the earnings call.
OT: What Players Actually Want
If you come across anyone on any forum related to WoW exclaiming that Blizzard is nerfing content “because of the (baddies/Wrath babies/etc) whining on the forum,” you can correctly call them morons. This quote from Bashiok officially dispels such nonsense for what it is.
Blizzard, you do how little people post on the forums yes? how about doing some in game polls to really see what people want, and not what the idiots on the forums want
You want them to not be nerfed, you’re on the forums…
Just saying.
By looking at actual stats, actual progression, time spent playing, where, and to what extent, we can see that most people are looking for more accessible raid content, so yes, we absolutely are able to tell without a doubt that the plan we’re enacting is actually what players playing the game want and need, and are not just listening to people on the forums.
No reading between the lines is necessary, but let me emphasize this again for posterity:
By looking at actual stats, actual progression, time spent playing, where, and to what extent, we can see that most people are looking for more accessible raid content, so yes, we absolutely are able to tell without a doubt that the plan we’re enacting is actually what players playing the game want and need, and are not just listening to people on the forums.
“Want and need.” Blizzard’s words. I sketched the writing on the walls way back in March, and nothing has changed since that time… well, other than even more players leaving for lack of content tailored to their skill level. That is why Morhaime’s investor call comments are so thinly-veiled:
As our players have become more experienced playing World of Warcraft over the many years, they have become much better and much faster at consuming content. And so I think with Cataclysm, they were able to consume the content faster than with previous expansions.
As of this writing, WoWProgress states 55,797 guilds have killed Magmaw, among the NA, EU, KR, and TW population it tracks. Looking at MMOData’s WoW sub numbers, there are ~6.5 million non-Chinese accounts. The average raiding guild probably has 15 members killing bosses (most WoWProgress kills are from 10m), but let us also be charitable and also use 30 member guilds. Plugging in those numbers results in this:
55,797 * 15 / 6,500,000 =12.87%
55,797 * 30 / 6,500.000 = 25.75%
Cataclysm has been out for 6+ months and at best ~26% of the population has downed a single raid boss. The comparison is not entirely fair since not everyone is even interested in endgame raiding. Then again, I do consider it a fair question to ask how many of the 74% would be interested in raiding if things were not being designed around catering to hardcore players and/or being difficult out of principal. Only Blizzard knows for sure, but the answer appears to be “enough to matter.”
OT: By The Numbers
It is old news by this point, but I wanted to talk about the 600k subscription drop and what that actually means in the scheme of things. To be honest, my first reaction was “I told you so!” but without an actual breakdown of those 600k accounts no one outside Blizzard really knows what kind of people left – if the unsubs were from people who never zoned into a heroic dungeon let alone a raid, for example, then difficulty obviously would have nothing to do with that. Well… maybe they never zoned in because they were too difficult, but nevermind. In any case, here are some things to keep in mind:
Point 1: The numbers are actually significant.
The reactions among a lot of blogs and forum posters seemed to be almost dismissive of the numbers. “It’s only 5% of 12 million, /yawn.” While technically true, it is pretty inaccurate. Take a look at the following graph, which is a slightly modified graph you can see at MMOData:
The first thing you should notice, of course, is the huge dip that represents when WoW was banned in China for several months. It is worth noting because it indicated there are ~5 million WoW “subs” in China alone – the ~1.75 million subs still on the blue line represents the remainder of WoW East, which includes Korea and maybe Taiwan (the “does Taiwan count as China” deal is tricky business). With that in mind, here is Michael Morhaime:
Looking at the World of Warcraft side of the business, we were pleased to see record sales following the Cataclysm launch in the United States and Europe which helps drives growth and subscribership. During the first quarter of 2011, as players have eagerly consumed the new content, we have seen subscribership return to prelaunch levels in the West. We finished the quarter with more than 11.4 million subscribers worldwide. Moving forward, our objective is to continue delivering new content to players in all regions to further energize our community.
Key words: in the West. As in, that red line in the graph that has been largely stable since the release of Wrath. Now, there is nothing in the call itself that specifically says all 600k subs were solely from the West, but if they were, the drop suddenly goes from 5% to ~12% of anyone you or I could possibly be grouping with. Which leads me to my next point.
Point 2: WoW is not dying, but that is largely irrelevant to your individual experience.
I strongly believe people understand this point on a gut level, but sometimes get caught up in “logical” arguments over the internet. So picture this: did your daily WoW routine change at all when 5 million Chinese players suddenly could not log on? Assuming you are not Chinese, probably not. Ergo, anytime someone talks about 12 million 11.4 million WoW subs, they are really only talking about ~5.15 million WoW West subs that could possibly impact them in some way – using the bigger number just makes you feel better by identifying with a larger group, as opposed to it meaning anything in-game. It should even be broke down further into NA and EU, but that level of data is sadly no longer being kept by the MMOData people. A rough extrapolation from the chart would probably be ~3 million NA subs total.
And so that is the rub. If WoW lost, say, 2000 subs… but they were all from your server, that suddenly is a (personal) disaster. You either have to fork over some cash to transfer to other servers, or probably just quit the game. I do not know how many servers there are across NA and EU, but if we assume 400 total servers and 300k subs down (it’s possible the 600k drop came from post-peak Wrath launch in China), that still equals out to be 750 accounts per server. Drop in the bucket for Mal’Ganis with its 10k+ population, but a bigger deal on Auchindoun with our maybe 4k population.
Bottom line: any drop in your region is significant. WoW does not have to be dying overall for it to die for you.
Point 3: Ignore the vapid “there are always post-expansion peaks and drop-offs” argument.
It is literally true that more people buy the game/re-sub after an expansion is released than will be still playing the game several months later. However, I have seen this argument bandied about as if the exodus between Cataclysm’s release to post-Cataclysm was par for the course. Do I really need to remind people that Blizzard did not get from 0 to 12 million 11.4 million by having a 100% oscillation? At some point over WoW’s lifespan, it retained more players than it lost. Right here we have evidence that Cataclysm failed to retain as many players than it lost in the entire West region, e.g. where Cataclysm was released. Vanilla retained more players than it lost. TBC retained more players than it lost. Even Wrath retained more players than it lost. Cataclysm, thus far, has failed to do so.
That essentially sums up what I think about that.
A transcript of the Activision Blizzard investor call is available on Seeking Alpha for free, and I suggest reading it for yourself. Among other things, it has Michael Morhaime mentioning things we are starting to see now vis-a-vis even more “premium services” for WoW. For the record, I do not care that cross-realm RealID LFD groups can be formed for $3/month or whatever it ends up being. What I will say is that it is dangerously close to crossing into the Uncanny Valley of F2P-esque cash shop design where features that would have been free now suddenly cost extra money.
Calling it now, though: tri-spec and Dance Studio will cost $3/month. On the plus side, maybe that would get them to actually finish the latter. After all, we sure as hell get new $10 companion pets pretty regularly these days.
In An Age 
Closer Look: Blizzard’s Q4 2011
Feb 10
Posted by Azuriel
When we last left our intrepid heroes in Q3 2011, WoW had lost 800,000 subscriptions and the following four salient points were made in the earnings call:
I suppose the holiday box sale and Annual Pass count as aggressive marketing, but let me not get ahead of myself. If you want to read along from home, Seeking Alpha will hook you up.
1. Is Bungie not working on Titan?
Eric Hirshberg from Activision Publishing buried this gem 25 paragraphs into vapid gushing of COD and Skylanders:
Looking further out, we continue to lay the foundation for our new universe from Bungie, one of the world’s best developers. Bungie continues to make incredible progress on what we expect to be a genre-defining new IP that will provide us with tremendous new opportunities and which remains one of our key strategic growth pillars for the future.
This may or may not seem a non sequitur, but I have always entertained the notion that the Bungie acquisition might have had something to do with Blizzard’s Titan development. Why?
Let’s look at the entrails. First, both Joe Staten and Rob Pardo have been playing it coy as recently as 2 years ago about Bungie working with Blizzard. But we also know that Bungie’s secret project “Destiny,” is slated as a sci-fi MMOFPS that is, quote, “WoW in space.” If you have a tinfoil hat handy, things can get even more bizarre when you consider that Ensemble Studios was working on a Halo MMO to directly compete with Blizzard… that was code-named Titan. And when Ensemble Studios was disbanded, several ex-members joined Blizzard. And now Bungie is here with a 10-year contract, making a brand new MMOFPS IP to be a “strategic growth pillar” for Activision Blizzard at the same time Blizzard is making a “casual” new-IP MMO that isn’t supposed to compete with WoW… that is code-named Titan.
Technically a lot of this is old news, and the earnings call did not reveal anything new either way. But in reading that paragraph under the Activision Publisher heading, it occurs to me that it is entirely possible that we could see two new, separate MMO properties out of Activision Blizzard even with WoW still sucking most of the oxygen out of the MMO room. In some respects, that outcome is crazier than Titan turning out to be a Blizzard-Bungie joint MMO.
2. Around 1 million Annual Passes sold… in the West.
Another initiative that has been very successful is the World of Warcraft Annual Pass. This program was announced at BlizzCon this past year. Under its terms, players who commit to being a World of Warcraft subscriber for 1 year will get a free copy of Diablo III, unique digital items in World of Warcraft, and other benefits. To date, we have signed up more than 1 million players in the West for the World of Warcraft Annual Pass.
The more I think about that number, the crazier it ends up being. While the Annual Pass appears to be non-binding (your access to D3 will simply go away), can you otherwise imagine another MMO who can count on 1,000,000 Western subscription accounts being locked in for 12 months? That would make SWTOR automatically profitable for an entire year.
3. Mists of Pandaria information out on March 19.
Some of you may have seen recent news about the upcoming World of Warcraft expansion, Mists of Pandaria. Last week, we began inviting global press to visit our office to get a hands-on look at the game. The press visit will take place next month, and our players will be able to read the latest news on the game on March 19. We’re looking forward to showcasing the game to our community and collecting more feedback as we prepare for the upcoming beta for Mists of Pandaria.
By the way, that means there is an automatic 1 million beta-testers for Mists, yeah?
4. Chuck Norris was super effective!
Neil A. Doshi – Citigroup Inc, Research Division
Mike, I was wondering if you could provide us a little more detail around the subs for World of Warcraft. What was the impact from some of your marketing efforts? And then how many subs did you add from Brazil? And if you have any comments on trend that you could share with us, that would be great.
Michael Morhaime
Okay. So we were very pleased with the results of the marketing initiatives in Q4. The Chuck Norris spot was very effective. We’ve got over 29 million views of the spot on YouTube. And I think, just looking at how well the subscribership held up during our most competitive quarter ever, we’re very happy with that. Engagement of the player base is very strong. We do not break down regional. We do not provide regional breakdown of subs, but we’re off to a good start in Brazil. And I don’t have any detail on churn.
Nothing to add to that.
As reported everywhere, WoW did implicitly lose another 100,000 subs in the quarter. There have been a lot of “See? Not dying!” posts over in the MMO-Champ and WoW Insider comments, but it’s worth pointing out that A) if someone unsubbed for SWTOR, then they won’t count as “missing” until January, e.g. Q1, and B) WoW launched in Brazil this quarter, as noted above. There are several more high-profile MMO launches coming this year, and let’s not forget that everyone is stuck with Dragon Soul until Mists actually launches… which could be six months from now, or more.
In any event, sub numbers really only matter to me in the context of having objective data by which we can interpret future design philosophy, and MMO player desires by extension. If Blizzard’s reaction to losing 1.8 million subs is to make the game easier, then we can assume that they believe a hard game is why people left.
It’s crude, it’s imperfect, but it is all we really have as armchair game designers.
Posted in Commentary, WoW
9 Comments
Tags: Activision, Blizzard, Bungie, Earnings Call, Mists of Pandaria, Morhaime, Subscription, Titan