Blizzard Entertainment Inc. is trying to lure players back with a lineup of video games steeped in nostalgia as it ushers in a new era.
The strategy follows a period of substantial subscription losses as more consumers use their mobile devices to play free games on the go and look to other forms of entertainment.
The Irvine-based company is scheduled to release its first free-to-play game in the coming months and has another in development. The first offering, a card game dubbed “Hearthstone: Heroes of Warcraft,” features characters from its World of Warcraft franchise, by far Blizzard’s largest source of revenue.
The game’s initial release will be available on Windows, Macs and iPads—another new outlet for the company. More firsts include the release of the game early next year on the iPhone and Android smartphones and tablets.
Company executives have wrestled with the idea of adding mobile platforms for years, but its real-time strategy games require fast computer processing speeds, lots of memory and key strokes for movement, scrolling, and accessing other screens. All of that adds up to plenty of challenges on mobile devices.
A simple card game avoids those pitfalls, according to Chief Operating Officer Paul Sams.
“This game was contemplated being a multiplatform game,” Sams said. “You won’t see us chasing platforms, and you won’t see us forcing it.”
The company’s other free-to-play game in development, “Heroes of the Storm,” pits favorite characters from its Warcraft, StarCraft and Diablo franchises against each other in online brawls and clashing universes, drawing from two decades of Blizzard lore.
The company hasn’t disclosed the business model, but free-to-play titles typically incorporate some e-commerce mechanism to boost power levels and add weapons or accessories. Game advertising or sponsorships also could be an option, although those could dilute a brand Blizzard has built and spread to comic books, art exhibits, toys and other products.
“We haven’t really (publicly) talked about the business model around that,” Sams said. “From a business perspective, I want to make sure that we’re always making deposits in that brand bank.”
Warcraft Expansion
The company used its annual fanfest
BlizzCon this month to announce other news, including the next installment of the World of Warcraft series.
BlizzCon, an important event for Blizzard, provides its legions of fans with face-to-face encounters with artists, developers and storytellers as it aims to reach gamers who travel the globe to attend the two-day event at Anaheim Convention Center. Some dress as favorite Blizzard game characters and meet fellow gamers they’ve previously played with only online.
This year’s installment drew more than 20,000 fans as thousands of others paid $40 or $50, depending on the outlet, for streaming coverage through DirectTV’s pay-per-view.
“BlizzCon helps our employees recharge their geek batteries,” Sams said. “They live and breathe this just as we do.”
World of Warcraft’s fifth expansion, “Warlords of Draenor,” sends players back to familiar lands inhabited by characters from the game’s early history after its 1994 “Warcraft: Orcs & Humans” debut.
The latest game will allow players to build their own garrisons, or fortresses, and travel through 10 levels of content, double the number of previous installments.
Why is that important?
$15 a Month
WoW players pay $40 for the game and $15 a month to play it online, so more content equals more revenue as players tend to sift through the games quickly.
The “massively multiplayer role-playing game,” a genre Blizzard created, has lost more than 2.6 million subscribers in the past two years as some gamers opted for other entertainment options.
Subscriptions dipped another 100,000 in the third quarter to about 7.6 million. Blizzard released “Mists of Pandaria,” the fourth installment of the franchise, more than a year ago, drawing less interest than previous WoW releases, though it still posted impressive sales figures, with more than 2.7 million units sold in its first month. “Cataclysm” sold 3.3 million copies in the first 24 hours after going on sale in December 2010, a record broken a year later with the release of Blizzard’s “Diablo III.”
“Warlords of Draenor” will give Blizzard a big sales boost next year as it aims to drive up engagement and retain core gamers while providing “a great win-back opportunity to bring back a lot of other players,” according to Sams.
WoW remains the top multiplayer online role-playing game and accounted for about 40% of Blizzard’s $282 million in revenue in the third quarter. Operating profit was $88 million, down 48% from a year earlier.
The ongoing changes at Blizzard follow its Santa Monica parent gaining independence from French conglomerate Vivendi SA last month.
Activision Blizzard Inc. bought back some 429 million shares from Vivendi for about $5.8 billion, while an investment group led by Activision Chief Executive Bobby Kotick and Co-Chairman Brian Kelly bought 172 million Activision shares from Vivendi, roughly a 24.7% stake, for about $2.3 billion.
Vivendi now owns about 12% of the company.
Sams said he doesn’t expect the ownership change to affect the company’s strategy.
“Our plan is to keep doing what we’re doing regardless of what the ownership structure is,” he said. “For us, it doesn’t matter. We want to make the right decisions for our players. We believe when we do that, our players vote with their wallets.”
