Orange County Business Journal

Blizzard Sales, Profits Down; Subscriptions for Flagship Game Drop

Chris Casacchia Wednesday, November 9, 2011

Irvine-based online game maker Blizzard Entertainment Inc. saw revenue and operating profits drop in the third quarter as its flagship franchise World of Warcraft lost about 800,000 subscribers.

Blizzard, a unit of Santa Monica-based Activision Blizzard Inc., posted revenue of $297 million, down 38% from a year earlier.

The company reported an operating profit of $120 million, down 51% from a year ago.

Blizzard did not release a game this year, which likely accounts for some of the declines in both sales and profit.

The loss of 800,000 subscribers for World of Warcraft: Cataclysm was somewhat of a surprise and amounted to a 7% drop that left the game with 10.3 million subscribers at the end of the September quarter.

Blizzard’s customers pay about $40 for the game and $15 a month to play it online.

The game features two fictional races fighting for control of a fantasy world.

Most of the recent drop-off was in Asia, as gamers consumed the content more quickly than previous extension packs, according to Blizzard Chief Executive Michael Morhaime.

“Once players reached max level, the end-game content in Cataclysm is more difficult,” Morhaime said during a conference call Tuesday with analysts and investors. “Balancing this content for our diverse player base can be very challenging.”

Blizzard still posted two of the top 10 PC games in the U.S. and Europe in the third quarter with Cataclysm and StarCraft II: Wings of Liberty.

Blizzard’s disappointing results didn’t drag down earnings for parent Activision.

The company posted net income of $74 million on revenue of $627 million, both beating Wall Street estimates.

Strong sales of Call of Duty: Modern Warfare 3, released this week, drove the results and led Activision to raise its outlook for rest of the year.

It projects an adjusted profit of about $970 million on revenue of $4.25 billion for 2011.

That’s up from an earlier projection in August of adjusted profits of $877 million on revenue of $4 billion.

Blizzard is the largest software company based in Orange County with yearly sales of about $1.4 billion.

The company is part of France’s Vivendi SA, which bought Activision in 2008 and combined it with Blizzard in a deal valued at about $10 billion.