As we posted a couple of weeks ago, the 2010 First Quarter earnings report is due via conference call this afternoon at 1:30pm, PDT. (4:30pm EST, 9:30pm GMT). These conference calls are geared for investors and the financial industry, but they often include some game info, in terms of beta dates and release dates and the like. (It’s surprising Blizzard didn’t save the Starcraft 2 release date until this event, actually.)
The report comes at an interesting time, with the economic/debt crisis in Greece causing worldwide financial unrest. The leading US
dogtrack stock market, the DOW Jones Industrial, was down a jaw-dropping 1000 points today, before rebounding 700 to close with a loss of around 350 points. Understandably, investor fear is high. Activision/Blizzard (Symbol: ATVI on NASDAQ) was down 2.43% today, and currently sits at 10.49, after reaching a high for the year at 12.50 in early April. Clearly, investors hope to hear some good news during today’s conference call.
As we did with the last such call three months ago, we’ll provide a sort of live blog and a wrap up at the end, summarizing the important and useful Blizzard game and financial information.
If you want to listen in on the conference call, click to the Activision Investor’s page and follow the links and agree to the disclaimers.
1:31 – 1:34pm —The call begins with an introduction by the Senior VP of Investor Relations. She gives an extensive disclaimer explaining that today’s comments will be “forward looking statements” and are subject to change based on virtually anything and everything you can imagine. (I was reminded of John Belushi’s excuses for missing the wedding in the Blues Brothers. Except those were funny.)
1:34 – 1:47—Activision/Blizzard CEO Bobby Kotick takes over. Wonderful profits, great games, tremendous employees, etc. Happy about the 10-year alliance with Bungie. Much happy talk about Call of Duty’s fan base and planned future success. All their continued success is due to well-planned, long term goals, retail partners, new DLC, huge plans for new maps that will appeal more in China and Korea, etc. (He does occasionally mention the fact that the games are good, but that’s clearly a fairly minor element of the overall company approach.)
Delicate discussion of the beheading of Infinity Ward. “Refer to our legal filings for our official discussion.” Kotick says the firing of the two hears of the company was due to their betrayal, that they violated their terms of employment, and that firing them was essential. That they were forced to, “pursue the difficult right, rather than the easy wrong.”
Then lots of talk about how great their alliance with Bungie will be. Bungie’s next great property after Halo will be even bigger. They’ve only been on the Xbox, now that they’ll be on multi-platforms, greater sales can result.
1:47 – 2:08—The new Activision COO (just promoted from CFO) Tom Tipple, (who possesses a wonderfully Arnold Schwarzenegger-esque accent). $714m net earnings for the quarter. Ahead of their projections from last quarter. Chiefly driven by Call of Duty sales and map packs, as well as WoW. (All of their financial disclosures are available in official documents on the Activision website, so I’m not going to try to summarize them here.)
They are focusing on a few key building blocks to drive economic expansion. They expect significant growth from their online components, chiefly from Blizzard. The upcoming launches of StarCraft 2 and World of Warcraft later this year should further boost profits. They expect that this year’s PC game sales will be up this year, for the first time in more than 10 years; driven largely by SC2 and WoW:Cat.
He repeatedly stresses the importance of DLC sales, and how additional revenue streams will boost the company. Much about Modern Warfare 2 map packs. Sold more than 1m in the first 24 hours. No disclosures about SC2 subscriptions or DLC fees. (Yet.)
2:08 – 2:15—Blizzard CEO Mike Morhaime comes on to talk about Blizzard. WoW remains popular, still more than 11.5m subscribers. They hope to expand their player base with the Cataclysm launch later this year. Restates the SC2 July 27th release date. Beta is going great, lots of polishing and improvements. Huge enthusiasm of players; replays and shoutcasts on YouTube. SC2 is already the #2 RTS in online play time, even while still in closed beta.
SC2 will be most ambitious launch ever. 11 languages across 5 continents. Tailored business model for each reason. (Charge whatever people are willing to pay.) In the West, Standard SC2 will include full online play with the purchase price. In regions like Russia, Latin America, and Asia, time-based play options to increase revenue. These options will be discussed in more detail, by market, before launch.
Lots of talk about B.net. Real ID friends; you see your friend’s real names and play with them online. Tie ins to FaceBook will work with that. SC2 players will immediately be able to communicate with friends playing WoW immediately upon launch.
WoW:CaT. Internal testing underway. They expect larger public beta to begin shortly. No date given. They are still on track to launch before the end of the year. They hope to draw old players back in with all of the original areas and dungeons being upgraded and improved; most had not been touched since 2004 launch.
New Value Added Services. Remote auction house will allow players to log in without logging into the game; browser or iphone. It’s well into internal testing; more details coming soon. Paid char transfers, pet store, and faction changes are doing very well. First mount in the pet store was a tremendous success.
No specifics about Diablo 3; just that it, and their unannounced MMO, continue to make great internal process.
Questions & Answers
Q: First question is about WoW subscribers.
A: Blizzard says it’s still over 11.5m, but not close enough to any other milestone to make an announcement.
Q: Can Blizzard can maintain their two games a year release schedule?
A: Mike Morhaime won’t commit to anything; just says they’re very happy with their production pipeline and that they’ve already announced their plans for two Starcraft 2 expansion packs. No specifics given beyond the 2010 SC2/WoW:Cat plans.
Q: Mobile game plans? Ipad has already 1m users.
A: Nothing even approaching specifics in reply. “Great opportunities for more gaming options…” Blah blah.
Q: Questions about Activision stuff and Call of Duty, or something like that.
A: TLDR. Games I care nothing about. I got a snack or petted my cat or something.
Q: Question about B.net being integrated into non-Blizzard games.
A: No comment from Morhaime.
Q: Question about Korean PC caf? revenue structure in Korea.
A: No details announced yet. Players will be able to purchase access to SC2. 69,000 Korean won price. Will be alternative pricing options, and other options for current WoW subscribers. Won’t give more details.
Q: More SC2 in Korea. What % of revenue from subscribers? How much in the rest of Asia, and selling games via digital download?
A: Morhaime won’t reply anything for their projections of sales of retail vs. download via Blizzard Store. Won’t give any breakdown of revenue by region, but says that SC is very strong in Korea and Blizzard is very strong in Asia. War3 is bigger in China than SC1.
Q: Will Call of Duty quality decline?
A: Of course not, we do everything top quality, would never do that, we have the most talented developers working on it that we’ve ever had, etc.
A: Another question really trying to drive into the “What % of SC2 revenue will come from game sales, vs. all the DLC and subscriptions and merch, etc.”
A: SC2 launch will look similar to previous launches. Profits will be driven by sale of unlimited client, either store or DLC. But we will tailor our financial system to the region. Will give more flexibility to markets that can’t afford the regular retail price. The same game comes with different prices; the cheaper one gives you limited B.net time. In Russia the $33 version gives you a year of B.net while the $16.50 version gives you 4 months of B.net play. And you can upgrade to more time or lifetime, etc. We don’t set our financial plans in advance, we just make games and then see what we can charge once they get closer to launch, depending on various factors.
The conference ended there. Nothing on Diablo 3, as expected, but lots of happy talk about SC2, WoW:Cat, and the various Activision titles.