Irvine-based online game maker Blizzard Entertainment Inc. is looking to China for growth in between big releases.
China already is one of the largest markets for Blizzard’s “StarCraft II,” a real-time strategy game in which three races face off in a science-fiction world.
The game, played on computers with others over the Internet, was released in China in the first quarter, about six months behind other markets.
Later this year in China, Blizzard plans to release “World of Warcraft: Cataclysm,” the latest version of its flagship game.
The China push comes as Blizzard waits out time between other big releases.
In December, Blizzard released “World of Warcraft: Cataclysm” in the U.S and Europe., which helped fuel first-quarter results for Santa Monica-based parent company Activision Blizzard Inc.
Company watchers don’t anticipate another major release until the fourth quarter, when new versions of “Diablo” and “StarCraft” are expected.
Those could be followed by “World of Warcraft” updates in 2012 and 2013, “StarCraft” and “Diablo” updates in 2013 and a whole new in late 2013.
That makes China a key interim growth driver for Blizzard, which is pulling a lot of weight as Activision Blizzard wades through a shift away from games for video consoles.
First Quarter
Blizzard saw first-quarter sales of $357 million, up 17% from a year earlier. That drove much of the growth Activision Blizzard saw in the quarter with a 7.6% rise to $1.4 billion in sales.
Blizzard posted an operating profit of $170 million, up nearly 8% from a year ago.
Downloads for the company’s “Call of Duty” console game helped drive sales.
Record “World of Warcraft” sales after the December launch of the latest version in the U.S. and Europe also drove the gains.
The company’s online subscriptions—made up largely of “World of Warcraft,” other Blizzard games, and “Call of Duty” downloads—rose 27% to $395 million in the quarter.
Nearly 12 million people worldwide play “World of Warcraft,” facing off in epic online battles as two fictional races fight for control of a fantasy world.
But Blizzard’s gains from new releases tend to be short-lived as dedicated players jump on updates and quickly play through a game’s new features.
Subscriptions to “World of Warcraft” dipped in the first quarter to 11.4 million.
“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,” Blizzard Chief Executive Michael Morhaime said on a conference call last week with analysts and investors. “That’s why we’re working on developing more content.”
Blizzard recently came out with several custom services for “World of Warcraft” players in China, allowing them to access features available in other countries, including a mobile chat feature.
Although the company faces increased restrictions on its games in China, the country offers Blizzard room for a lot of natural growth.
Some 450 million Chinese are Internet users, more than a third of the country’s population and the largest online population of any country.
Shift to Online
Activision Blizzard is looking to online games to shore up growth and profits. The company expects a shift in its business away from video consoles toward games that are downloaded and played over the Internet.
“We are still scratching the surface when it comes to the role that digital delivery will play in our products and franchises,” Activision Blizzard Chief Executive Robert Kotich said on last week’s conference call.
Online games, which carry better profits, are the fastest-growing part of the industry.
Blizzard expects U.S. and European sales to grow in the double-digits for the year, driven by “higher broadband penetration, increased consumer adoption and additional content,” according to Activision Publishing Chief Executive Eric Hirshberg.
Blizzard Entertainment is the largest software company based in Orange County with yearly sales of about $1.4 billion.
The company ultimately 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.
