ActiBlizz Q2 – D3 sells 10M copies, WoW subs decline

By Stephany Nunneley
2 August 2012 21:19 GMT

Activision Blizzard has announced in its Q2 report, noting Diablo III has sold 10 million copies, and World of Warcraft lost over 1 million subscriptions, although most were in the Asian sector.

ActiBlizz Q2 – At a Glance

Skylanders Spyro’s Adventure was the best-selling console and hand-held game overall in dollars for the first six months of 2012.

Through July, more than 10M players “have entered the world” of Diablo III’s Sanctuary.

World of Warcraft remains the number one subscription-based MMORPG with 9.1M subs – a drop of over 1M compared to Q3 2011. Most sub losses occurred in the “east”.

Tencent in China to license and operate new F2P Call of Duty game in the country; F2P market in the country is worth $8B.

16.9M players have logged into in the last month.

Revenues declines 45% to $1.08B, compared to $1.15B yoy; digital revenue was $343M, and made up 32% of total revenues.

Q2 notes and highlights

The company reported better than expected revenues during Q2 of $1.08 billion, a 45% decline compared to $1.15 billion for Q2 2011. Revenue from digital channels were $343 million and represented 32% of the company’s total revenues.

“Our performance was driven by strong audience demand for our great games, said CEO Bobby Kotick. “We are very excited to have announced our expanded investment in China through Activision Publishing’s agreement with Tencent to bring the Call of Duty franchise to the Chinese market.

“For the first six months, we had the top three best-selling games in North America and Europe with Activision Publishing’s Skylanders Spyro’s Adventures and Call of Duty: Modern Warfare 3, and Blizzard Entertainment’s record setting Diablo III.”

“For the remainder of the year, we are excited about our product slate which includes Activision Publishing’s Skylanders Giants and Call of Duty: Black Ops II, and Blizzard Entertainment’s World of Warcraft: Mists of Pandaria,” Kotick continued. “While we are increasing our financial outlook for full year 2012, we remain cautious given economic uncertainty, risks to consumer spending especially during the holiday season and the recognition that the majority of our key franchise launches are still ahead of us.”

The firm noted a decline in retail sales, but the top five games have grown 11% in the year, and this does not include digital. Kotick attributed this to the aging console market, and the current lifecyle only supports the best games out there and ones which offer the most re-playability. Because of this the “next few years will be challenging.”

“You have a very difficult macroeconomic environment, when you look at the things that can generally have an impact on the consumption of entertainment – unemployment data is very concerning, and when you look at the challenges in Europe there are a lot of things that are going to affect the macroeconomic outlook. We are also at the late end of the cycle, and the late end of a console cycle is always going to have its share of difficulties,” Kotick said (thanks GI).

“At this stage in the [console] cycle, [the market is] challenging for anything other than great quality products.” – CEO Bobby Kotick

“I also think you’ve had, unfortunately, a stream of products that are less than adequate from some of our competitors. The demand in the marketplace is for great quality products. If you look at the success we’re having it validates that there is an opportunity for great quality products but I think at this stage in the cycle, it’s challenging for anything other than great quality products.

“There’s also a lot of competition for entertainment dollars – you look at mobile games and what’s happening there and the pricing there that’s having an impact, and I also think that a lot of the games we make, like Call of Duty, that are multiplayer games offer a lot of replayability, and when you have the opportunity for replayabiity in an economic environment like this, you’re going to spend more time playing the games that you have.

“But I will say that if you look out at the next five years, there’s a lot of reason to be hopeful and enthusiastic, but the next few years are going to be challenging.”

Diablo III sells many, many copies

Blizzard’s Diablo III released on May 15, and was the best-selling PC game for the first six months of 2012. Through July, more than 10 million players have “entered the world of Sanctuary.”

WoW subs stood at 10.2 million at the start of Blizzards’s Q3 2011 financial period, a drop from Q2 2011’s 11.1 million subs.

Subscriptions now stand at 9.1 million, which is over 1 million subs lost since Q3 2011. The firm expects Blizzard growth due to Diablo III and the release of WoW: Mists of Pandaria.

Q2 was the “best Q2 ever” for Blizzard, said Mike Morhaime. Pre-orders for Mist of Pandaria are “off to a good start.” The opening cinematic will be shown at gamescom.

Heart of the Swarm beta will be “coming soon,” said Morhaime.

Asked to address World of Warcraft’s stuttering subscription numbers, Morhaime pointed to historical downward trends before a new expansion launches – and also admitted many players “took a break” from the MMORPG to play Diablo III.

What’s in store for Q3 and beyond

Black Ops 2 has “several innovations and firsts for the franchise,” pre-order tracking ahead of MW3. It will have the “biggest and best zombie experience ever,” according to publishing CEO Eric Hirshberg.

A la carte DLC sales for CoD are down yoy, and not selling as well as previous years, said Hirshberg. However, Elite will continue to be optimized to meet consumer expectations.

The firm’s upcoming Q3 slate includes: Transformers: Fall of Cybertron, Modern Warfare 3 Content Collection 3 and 4, Ice Age Continental Drift — Arctic Games, Wipeout 3, and the Angry Birds Trilogy.

Blizzard will release World of Warcraft: Mists of Pandaria on September 25, and the firm plans to launch it “as soon as possible” in China.

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