World of Warcraft drops 100K subs, Actibliz buys Candy Crush dev for $5.9B

Strange things are afoot at Blizzard Activision.

Even while the studio is preparing for BlizzCon and the trailer reveal for the Warcraft movie, it announced that World of Warcraft has dropped another 100,000 subscriptions during this past quarter to end at 5.5 million. The studio said that this puts the game’s population in a “relatively stable” state. WoW lost almost 3 million subs between Q4 2014 and Q1 2015 and another million and a half by the Q2 2015 report.

For those counting along at home, that brings the total to 4.5 million subs lost in 2015, meaning the subscriber base has dropped by 45% in nine months.

Blizzard says this is “the last quarter that [it] plan[s] to provide subscriber numbers” because “there are other metrics” — so-called “engagement” metrics — “that are better indicators of the overall Blizzard business performance.”

Those 5.5 million players have a new baby brother in the Blizzard family, as the studio acquired Candy Crush developer King Digital Entertainment (with its 1,600 employees) for $5.9 billion in equity value. Yes, billion. Activision Blizzard CEO Bobby Kotick said of the acquisition, “Mobile gaming is the largest and fastest-growing opportunity for interactive entertainment and we will have one of the world’s most successful mobile game companies and its talented teams providing great content to new customers, in new geographies throughout the world.”

The studio said that Hearthstone continues to do incredibly well, setting a new quarterly record and improving 77% year-over-year. Diablo III isn’t doing too shabbily, either, having passed two million units sold in China since its debut in that country.

Finally, Blizzard revealed that seven million fans signed up for the Overwatch beta — which doesn’t include China.

Source: Business Wire, BBC, via Blizzard Watch. Thanks to Gibbins, Savage87, and Balsbigbrother for the tips!
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201 Comments on "World of Warcraft drops 100K subs, Actibliz buys Candy Crush dev for $5.9B"

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Cyroselle
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Cyroselle

They pay per character don’t they? That would certainly inflate numbers a smidge.

Cyroselle
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Cyroselle

ESO is Buy to Play. WoW could go B2P though, if they packaged all the expansions into a single client to make the investment a little less onerous.

DrowNoble
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DrowNoble

NobleNerd Yes, because WoW itself is generation less and less revenue.  The whole picture is that they are a vast company with a portfolio of many games.  If Game A is making a lot of money, they can funnel that money into Game B that needs the revenue.
However, WoW is their largest game and has a consistent revenue (subscriptions).  Diablo 3, as an example, won’t be making them much money going forward unless they decided to do another expansion.  Sure they’ll got some sales here and there, but not very much overall.   So if I was an investor, I’d want to know how ALL their assets are performing.
All the more reason for WoW to fully convert to a F2P game.  That business model has been consistent in showing a greater profitability than sub-only.   If you disagree, go look at ESO or Wildstar.

NobleNerd
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NobleNerd

Blizzard does not rely on subscription numbers to maintain a profit for WoW anymore. There are even WoW Tokens now you can purchase in game for subscription time. If you see the whole picture it makes sense they report on their total earnings from all sources.

DrowNoble
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DrowNoble

wjowski They need to do something to try and stabilize WoW subscriptions.  It’s a steady source of income they can count on, but with their flakiness and lack of content output, players are going away. 

D3 is pretty much done, I don’t think they’ll get significant income from that.  Legacy of the Void will get them a nice surge for Q4 2015, but then that will drop off.

DrowNoble
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DrowNoble

Quote:
Blizzard says this is “the last quarter that [it] plan[s] to provide
subscriber numbers” because “there are other metrics” —
so-called “engagement” metrics — “that are better indicators of the
overall Blizzard business performance.”
Meaning, they know their sub numbers are still declining, so they’re going to fudge numbers to make it seem like they’re not.  They could say something like “between Q2 2015 and Q3 2015 we have 98% retention rate on subscribers”.  Which is correct and sounds better than “we lost 100k subscribers in same quarter”.   If stockholders want to know subscriber numbers though, I think they legally still have to provide them.  Not sure on that as I’m not a corporate lawyer.  :)

dorn2
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dorn2

Kodimus dorn2 SallyBowls1 wjowski Sorenthaz

Cyclical means that it goes up and down.  Except in this case the next peak isn’t going to even match former dips. For Cyclical to be healthy the peaks can’t keep getting smaller and smaller.

Critical mass issues have nothing to do with the in game situation.  People play Warcraft because other people play Warcraft.  They literally only play because their friends play.

wjowski
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wjowski

SoMuchMass wjowski 
 Mobile companies rise and fall with the seasons.  There’s no proof that King will be able to maintain that kind of profitability in the next few years and a lot of data suggesting that they won’t.

SoMuchMass
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SoMuchMass

wjowski Are you accounting for King’s revenue?  They made 600 million in revenue in Q1’15 alone.

wjowski
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wjowski

For reference Acti-Blizz will need to remain as financially successful as it is now for the next twelve years to pay this off.

McSleaz
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McSleaz

Dookii NobleNerd China runs a different subscription model than we do, they don’t pay individual subs to Blizzard like we do.

LordSolarMacharius
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LordSolarMacharius

Rumm Look at ArcheAge. Almost everything of real import is a gambling minigame (like crafting the best end-game stuff).

Dookii
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Dookii

NobleNerd china so far has always been included in their subscriber numbers.

NobleNerd
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NobleNerd

wahnsinnicK Nothing wrong with CGI. Avatar had a ton of it and it was a huge success. LOTR movies and The Hobbit all had it. Heck, it is a common practice in a ton of movies these days!

NobleNerd
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NobleNerd

With the implementation of the WoW Token many players do not have to subscribe the traditional way anymore, plus China is probably not even included in those numbers to give an accurate income value of the game.

Hey, I know it is fun to hate on WoW, but even I have come back for a bit to get familiar with it in light of the expansion release. So, even with 5.5 million subscribers and other sources for the game to make an income it blows 90% of the other MMOs out of the water!

Kodimus
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Kodimus

wjowski SallyBowls1 Sorenthaz And you’re still showing you don’t know what cyclical means.

Kodimus
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Kodimus

Radfist Kodimus …did you even read what I said?

wjowski
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wjowski

SallyBowls1 wjowski Sorenthaz 
 ‘Cyclical’? That’s fucking high comedy there.  The game’s at it’s lowest numbers since Vanilla, with Blizzard all but bluntly admitting that it’s planning on obfuscating its numbers from here on out and it’s just ‘cyclical’.  You’re either a hired shill or outright delusional.

Wratts
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Wratts

SoMuchMass Wratts The rumors at least are that Destiny is the output of what was supposed to become Titan.  With the 25M users reported on what’s basically a B2P MMOFPS, you can’t tell me that Titan would have been a lost cause if those rumors are true.  
Could they have made that into a true, unique MMO?  Oh yeah, there’s potential there

Radfist
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Radfist

Kodimus Radfist  Based on your expert analysis the genre should be packed full of subscription games, instead of WoW, FFXIV and a handful of niche games.

Captain Crash
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Captain Crash

I’m guessing they’ll be factoring in the money made from Race Changes and Faction Swaps into their new metrics

Dobablo
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Dobablo

Craywulf Kodimus I hope the new metrics come with historical data included so we can compare them with old subscriber numbers. The most important thing that this sort of data can do is allow for <cough>constructive debate on blogs and forums around teh interwebz.

JudgeDavid101
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JudgeDavid101

breetoplay ManastuUtakata JudgeDavid101 Sorenthaz

The jaw is still dropped. Why did they do that really? Is it because they lost half of their sub base in less than a year, their largest sub decline in a short amount of time compared to normal sub loss wastage over the course of an expansion, and don’t want people to view other negative numbers costing them reputation? Is it because they have a Warcraft movie out next year and the loss of subs are making them nervous as they might now have less of an audience that they thought they would have? 

Have Blizz got another reason to shroud sub numbers? Maybe because FFXIV have more subs now and Blizz don’t want to look like the lesser MMO maker, possibly GW2 is growing and SWTOR might be seeing an increase in account registrations or returners, among other games? 

Maybe it’s Candy Crush related and they want to look more confident after emptying their piggy bank to buy King dot com. Time will tell.

Vagrant Zero
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Vagrant Zero

Zukkitude  But all these other companies do that because they don’t have Blizzard’s sub numbers so they can’t really go out and trumpet the fact that they are distant (like Pluto to Sol distant) #2.

Now even Blizzard doesn’t have Blizzard sub numbers.

Vagrant Zero
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Vagrant Zero

RooWoods JayPower  Naw I believe it. He spends most of his time dealing with the small minority of assholes on FF14, and from there extrapolates that all the players must be like that. It’s confirmation bias, his job largely brings him into contact with the bad part of the playerbase and from those people he forms his opinion. Ask a cop what he thinks of “mankind”. Word is vaguely like that. Watch the barely controlled contempt come flying out.

TLDR: If I were a GM of game X…I would hate the fuck out of game X’s playerbase.

Rahzel
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Rahzel

thatchefdude Oh, how I wish that were the case in regards to UO. If it were, the MMO landscape today would be quite different.

SallyBowls1
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SallyBowls1

DaGhostDS Blizzard’s definition of subscriber is “Internet Game Room players who have accessed the game over the last thirty days are also counted as subscribers.”

Kodimus
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Kodimus

Radfist Games generally transition to F2P to avoid having to be shut down. Any game that is actually successful in their business model will likely not find more success by transitioning to a different business model, assuming their user base is at a certain threshold.

Basically, as the number of subscribers for a game increases, you would need paying players to pay an increasingly higher amount of money monthly to bring in similar revenue if you transition to F2P–something that is generally not going to happen, most games see a decline in ARPPU as they increase the number of people paying. See my admittedly light analysis above for more detail.

Kodimus
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Kodimus

thatchefdude Ran out of time to edit, so an additional thought:

I am guessing they have crunched these numbers time and again and have not found them to be compelling. I certainly wouldn’t if I was able to maintain a subscriber base in the millions when most other games can’t even charge a subscription for their game.

Kodimus
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Kodimus

thatchefdude 2-3M might be a little low. I imagine we’re starting to see the subscriber loss wane. I could see it hovering around 5M for the remainder of its life online.

And I sincerely doubt they will convert to free-to-play. Even at the best conversion rates, you’re looking at 20-25% of players paying. The average paying player would have to spend anywhere between $50-$75 a month depending on subscription price fluctuation between regions to account for the same amount of revenue they make off of the game being pay-to-play.

They would likely need to have a Average Revenue Per User (ARPU)–that’s users, not paying users–of $12-15. In 2014, World of Tanks was the highest ARPU free-to-play online game in the world and it only clocked in at $4.15. Why am I ranging higher than the average subscription price? Because of the Blizzard Store pets/mounts/optional character & account services.

thatchefdude
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thatchefdude

WoW will still have 2-3M subs probably even in 2017/2018, I am sure of this.
In S Korea, the first Lineage game still has over 2M active players and that game came out in 1998!!!!
Can you imagine 2M people playing Ultima Online today in NA and EU???

WoW will eke out a market until at least 2020, when it may just shutdown or remain on maintenance mode.
Either way, it will likely continue with sub to make some money off committed people in maintenance mode (like FFXI is about to do), or it may go F2P in the next couple years to try and rape the wallets of whales.

Craywulf
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Craywulf

Kodimus You’re absolutely right…it’s silly to report ANY subscriber metric. It does nothing but create divisive bickering because there hasn’t been and never will be an all-inclusive answer to whether a game is succeeding or failing it’s subscribers. But then again…sites like Massively are very much entitled to report silly and non-conclusive facts. I just wish they were more clear on that.

Kodimus
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Kodimus

dorn2 SallyBowls1 wjowski Sorenthaz Two things:

1) You clearly don’t understand what cyclical means.
2) Critical mass issues have already been addressed with cross-realm zones, group finder and raid finder. They would literally have to have a meltdown to fall below “critical mass”–to the point of only having 10-15k people playing actively.

dorn2
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dorn2

SallyBowls1 wjowski Sorenthaz 
Tell me it’s cyclical when it gets back to 12 million.

Kodimus
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Kodimus

It hasn’t been a secret at all that the movie has heavy use of CGI. There’s a reason they’re working with the FX studio that created The Hulk in The Avengers.

Kodimus
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Kodimus

You guys are grasping for straws by attempting to highlight how many subs it’s lost in the last year when it only lost 2% in the last three months. The tone of this article is exactly why the subscriber metric is silly to report when they could focus on play time / concurrency / revenue instead.

Radfist
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Radfist

I’m betting on a F2P transition just before the movie to capitalise on easy money and cross promotion.

drypulse
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drypulse

Silverbourne i just want blizz to get the hell out of a relationship with shitivison

RooWoods
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RooWoods

Less that I thought it would be . It’ll probably rise again come the next expansion for a bit but I think the general trend will still be down . Even so I think Blizzard can milk this cash cow for another decade at least .

RooWoods
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RooWoods

JayPower  To say the good ones stayed with WoW just seems like something a child or someone in his early teens would say . I have my doubts given the tone of your comment that you would be employed as a full time GM on FF14 . Its an obvious WoW fan boy comment you must think we were all born yesterday .

Badd Blud
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Badd Blud

Open beta for Legion starting soon. Much like MoP. 

They need to have a good final quarter. Nothing better than getting people to come back and pay to play early!

ManastuUtakata
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ManastuUtakata

breetoplay ManastuUtakata JudgeDavid101 Sorenthaz 
I must of missed the memo on that one. But that’s considerably disingenuous of them. I guess they won’t mind then that my wallet has quietly stopped supporting them. And I may not be the only one in that boat.

Nate Woodard
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Nate Woodard

That, I can understand!

SallyBowls1
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SallyBowls1

Siphaed NCSoft just didn’t want Nexon to own them.  NCSoft is pushing hard into mobile, they just started sooner than ATVI.  They invested 380 BKW in Netmarble “”Netmarble promised to help us successfully enter the mobile game market and we will support Netmarble by providing our global online game intellectual properties,” NCSOFT CEO Kim Taek-jin said” NCSoft made a couple of smaller acquisitions and opened the San Mateo mobile studio.  ATVI’s push in mobile is bigger and splashier than NCSoft’s mobile expansion but both are increasing their mobile presence although both appear to be behind EA Mobile.

Gottphoenix
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Gottphoenix

Siphaed 500 million user data, that’s why.

Siphaed
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Siphaed

Well this makes for an interesting month. NCSoft does everything possible to get away from and buy out of dealing with a mobile sleaze company that is Nexon.   Preventing an aggressive attempted take-over, they forced Nexon to sell their large share of the company at a lose compared to what they bought it at.

Meanwhile we have Blizzard spending huge amounts of money to get into bed with one of these mobile sleaze companies (King).  Spending huge chunks of their company’s money to cozy up to a company that has such distasteful tactics that Southpark had to compare it to being thought up by the [Canadian] Devil. 

What I don’t understand is WHY Blizzard had to buy King?  Their card game and MOBA are both already designed as ‘freemium’ to similar despicable points as that of many mobile games (and Hearthstone IS mobile too).  Why didn’t they just snipe hire some of the head people out of King to be able to steal some of their ‘whaling’ talent without having to pay so much money?

JayPower
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JayPower

They’ve all gone to FFXIV. And mostly the bittervets, griefers and elitists. The “good” ones  have stuck with WoW. Just my observation working as a full time GM on FFXIV.

SallyBowls1
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SallyBowls1

ManastuUtakata It’s not just WoW – ATVI has done a poor job on mobile across the brands.  5% Mobile revenue the previous year. I hate to think what it would have been without hearthstone.

MikedotFoster
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MikedotFoster

SallyBowls1 I doubt Acti-Blizz is looking for a direct return on the King investment (like, King making another huge game or Candy Crush continuing to reap enormous profits). Instead, they are probably focused on the value of King’s expertise (research, marketing, etc.) in the niche, which they will translate for future properties.

SallyBowls1
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SallyBowls1

Re King:

In the recent Newzoo report, King was the only one of the top ten video game companies to show a revenue decline from the previous year. While it is not at all cheap, Blizzard is paying $4.5 per share less than Kings’s IPO price, the price the shares sold for when it went public.  Blizzard was very late to mobile and is now having to spend to catch up.

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