Orange County Business Journal

Blizzard Reports Q1 Profit, Revenue Drop; Warcraft Subscriptions Flat

Chris Casacchia Wednesday, May 9, 2012

Irvine-based online game maker Blizzard Entertainment Inc. staved off subscription losses for its flagship World of Warcraft franchise in the first quarter as revenue and operating profits slid for the third straight quarter.

Blizzard, a unit of Santa Monica-based Activision Blizzard Inc., posted revenue of $251 million, down 106% from a year earlier.

The company reported an operating profit of $89 million, down 81% from a year ago.

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

It will release the highly anticipated Diablo III title May 15, which will give it a big financial boost in the coming quarters.

Blizzard said preorders for the game have set a record at the company.

Diablo II, released in 2000, sold more than 1 million copies in the first two weeks, making it the fastest-selling game in history at the time. More than 4 million copies have sold to date.

Blizzard ended the first quarter with about 10.2 million World of Warcraft subscribers, flat from the end of the fourth quarter.

The fantasy game remains the top multiplayer online role playing game, but had seen some 900,000 gamers drop Warcraft subscriptions the preceding two quarters.

Blizzard’s customers pay about $40 for World of Warcraft and $15 a month to play it online.

Blizzard's StarCraft II: Wings of Liberty was among the 10 top PC titles in North America and Europe in the first quarter.

The company also said it signed a three-year license extention with NetEase Inc. to distribution World of Warcraft in mainland China.

In late March the company launched beta tests for World of Warcraft: Mists of Pandaria.

Parent Activision’s solid financial results were driven by strong sales for Call of Duty: Modern Warfare and Skylanders Spyro's Adventures.

The company posted adjusted profit of $6.7 million on $557 million in revenue, beating Wall Street expectations on both targets.

Activision raised its 2012 outlook on the stronger than expected results.

It now projects sales to hit $4.53 billion, up from $4.5 billion from the company’s February guidance and in line with Wall Street expectations.

Adjusted profit projections increased to about $106 million, up from $105 million and slightly below Wall Street estimates.

Analysts on average forecast adjusted profits of about $108 million this year.