It’s just hours before Blizzard Entertainment Inc. releases its fourth World of Warcraft title.
Hundreds of fans—many dressed as video game characters—surround an Irvine Spectrum Center stage that is adorned with giant posters hyping the Sept. 24 midnight launch of Mists of Pandaria.
Chief Executive Michael Morhaime is taking in the scene behind the stage.
“It’s a good time, because the people who come out to these things are so excited about the new content, getting the new expansion and celebrating the launch with us,” Morhaime said.
The launch party at the Spectrum—the only one in the U.S.—took on more importance this year.
Blizzard cancelled its annual fanfest Blizz-Con this year at the Anaheim Convention Center for the first time since it launched the event in 2005. Instead it’s holding the 2012 Battle.net World Championship, a global eSports event in Shanghai featuring tournaments for competitive gamers who play the company’s StarCraft II.
BlizzCon isn’t a money-maker, but it is a big part of the culture Blizzard shares with its gamers.
“So far it has lost money each year, but I still think it’s worth it,” Morhaime said. “Going out to BlizzCon is a real invigorating experience. It’s a great event for us, and it’s a great way to say thank you to our players.”
BlizzCon will be back next year, he said.
That question was one of many Morhaime answered as he weighs the long-term health of Orange County’s largest software maker with quarterly pressures of Wall Street.
Blizzard is part of Santa Monica-based parent Activision Blizzard Inc., which is a unit of Vivendi SA in Paris.
“There are pressures on public companies to show consistent, linear exponential growth, and I think one of the things we’ve done really well at Blizzard over the years is balance a desire for short-term gains with a desire for doing what’s right in the long-term interest of our company,” Morhaime said. “It’s an interesting industry to be in. Certainly technology advances and we need to be flexible and open to various ways of doing things.”
Blizzard management has considered a free-to-play model, but WoW’s online subscriptions generate the bulk of sales.
The company posted revenue of $634 million in the June quarter, up 103% from a year earlier.
Operating profit topped $371 million, up 175% from a year ago. Gains were driven in large part by record-breaking sales for the company’s Diablo III.
WoW lost 1.1 million subscribers in the quarter, marking the first time in more than a year that subscriptions dipped below 10 million. Blizzard’s customers pay about $40 for WoW and $15 a month to play it online.
The company typically sees subscription drops before a new title is released, so it bears watching how successful sales will be for Pandaria. Blizzard finished the first six months of the year with 9.1 million WoW subscribers, which is still the most of any online role-playing game.
Morhaime said the company is not married to any particular business model.
“What we always try to do is make a game we want to make,” Morhaime said. “A lot of times the business model comes pretty late in the process.”
Blizzard is testing Diablo III for console play, which would be a substantial evolution for the company.
“In the case of Diablo III, we think there might be potential on the consoles, so we’re doing internal evaluations to see if that makes sense,” Morhaime said. “We think that style of game actually could work very well on consoles.”
The online role-playing game has tallied more than 10 million sales since its May release, smashing PC records along the way.
The company also is working with Burbank-based Legendary Pictures LLC on a feature-length movie based on the WoW series.
“It’s a slow process but is moving along,” Morhaime said. Talks first surfaced about bringing the fantasy world to the big screen in 2006.
