They had $1.4 Billion in operating profit.
They don't have any debt and $3.5 Billion in total cash and investments.
The operating margin was 29% !
Remember that this is whole Activision|Blizzard. It includes all kinds of Activision products, that nobody buys, and Call of Duty. The numbers for WoW are much more impressive! (See below)
Quote from page 7:
We continue to heavily invest in our franchises, in new potential franchises, and in our systems and capabilities to bring our products and services to new markets around the world. Yet, we are generating more cash than we can find good uses for. As a result, in 2010, we became the first company in our industry to issue a dividend and we repurchased nearly $1 billion of our stock, bringing our two-year share buyback total to approximately $2.2 billion.
What this means is that over two years they give their shareholders $2.2 billion, instead of investing it! To put some perspective on that: Rift development costs were about $50 million! SW:TOR was rumored to be a financial disaster, because it already required $300 million in development costs!
Also have a look at the quarterly report that is more detailed: I took a screenshot of the most interesting table:
Yet, they add 7 bosses and 60 daily quests in the first major patch after Cataclysm launch. That is 6 months later! And when asked why they don't do more, they say
It's true we don't have infinite resources and that's been true since day one of World of Warcraft. That hasn't changed. I see it come up time and time again that the "good" devs have moved to the new project, but that too isn't true in the way people think it is and is insulting and dismissive to the guys (and gals) who have been on the team for years.
I'm not a professional. But I am pretty sure that 7 bosses and 60 dailies in six months at most cost a million. Probably much, much less.
But, but... they've also recycled two old raid instances into 5 man heroics.
ReplyDeleteAnd they've completely changed the mechanic of holy shield about 17 times (which, btw, completely does not break immersion...).
The only other explanation, beside being greedy, would be that they have such a fucked up organization that they really cannot hire more people. Then again, with $100 million per month you should be able to hire a consulting company to clean that mess up...
I find it quite strange that ffxi with significantly less subscribers has a vastly bigger and more complex endgame than wow.
ReplyDeleteI'm not sure why this is surprising. It is simply good business sense. So long as the lemmings will keep paying their $15 a month for limited and rehashed content, what is Blizzard's incentive to spend more time and resources on developing additional content? The blame here lies with subscribers who are not demanding more for their money, not with Blizzard for providing just enough to keep those players subscribed. I'm not AGREEING with this policy. I'm simply saying this is how a smart company does business. Deliver maximum profits to your employees and shareholders. That's all they are doing here.
ReplyDeleteAracos, I don't think this is smart policy. Blizzard is under heavy attack right now.
ReplyDeleteRift took them by surprise and forced the first officially declared decrease in sub numbers. 5% the quarter after an expansion's release!
SW:TOR is coming and Bioware has the financial strength to pull something off. Especially the typical WoW player, might find SW:TOR to his liking!
GW2 is coming and NCSoft has quite some financial power, too. They already created a hype by being a bit more courageous than the competition.
And then there's the unknown competitors ..
Ever since I looked into the amount of money which Blizzard would make monthly, I'd get frustrated thinking about the rate they release content and products.
ReplyDeleteThey have they capacity to hire an armada of artists and developers to plow through an ambitious project. They have the capacity to take risks and progress the genre.
I can only hope that behind the scenes they are utilizing some of their resources, and we just don't know about it.
Yes RIFT did take them by surprise, but the numbers speak for themselves. WoW still has a subscriber base any other MMO on the planet would love to have. Profits are still in the billions. My sneaking suspicion is that Blizzard is basically done with WoW. The R&D and personnel that would be working on it are slowly being shifted to "Titan." They know WoW can essentially "coast" and still be profitable for several years. Blizzard has never been a company so much about innovation as duplication. Let SW:TOR and GW2 set the standard for the "next generation" of MMO's, and then Blizzard will release "Titan" that does all those things... but better. That's what I think they are planning.
ReplyDeleteAracos, maybe you are right, but then:
ReplyDeleteWhy did they remake the old world in Cataclysm and tried to attract new players? And this at the expense of end game content.
I can't make any sense of it ..
There are, by the way two very long and also very good posts on the US forum:
ReplyDelete(1)
(2)
You can read them for hours. Long and thoughtful posts make up over 50% of it. Also got (useless) blue response.
Nils: my one regret about dropping my WoW sub is I can't post on the forums. There are some posters there I'd like to stretch out my hand to and shake warmly by the throat.
ReplyDeleteHere's part 3 of this series of posts on the official forums.
ReplyDeleteNeowolf2, I have an European account. Guess how often, when I was subscribed, I was tearing my hair when I read really good posts that I couldn't support.
"Dont fix what aint broken". WoW is cash cow which is doing very well. There is no need for changes as long as they hit the numbers
ReplyDeleteThey in fact dont need to do anything at all. They dont have any debt ,anything over cost of servers is pure profit. They can lose 600k subs every year and still it would be profitable for next 15 years
Max, WoW needs continual new content. It is designed this way. It's not a sandbox. People go into dungeons to get new gear and once they have the gear they need new dungeons with new gear.
ReplyDeleteThey clearly use that resources thing as an acceptable lie when the truth is unacceptable.
ReplyDeleteA truth that is unacceptable is often a truth about us.
So, there's something about us players that would make a new content patch every 6 weeks a very bad idea that would offend us to hear of.
I suspect it's simply that gear upgrades don't matter if they're always getting quickly obsoleted. It's an issue Rift is gambling against.
"They [Blizzard] will absolutely not waste any innovations on wow when they can add it exclusively to titan and use that innovation as a sales point. Same goes for armor designs, dungeon designs, etc etc.
ReplyDeleteI mean the re-skinning and rehashing of content has been out of control for years now. All of those innovations are going to Titan, you can bet money on that." (One of replies from the thread Nils provided links for.)
Cataclysm was feature light in terms of end game, and if they wanted to retool the old world I think the needed to do that in parallel with endgame development, not instead of it. I've stopped playing WoW.
ReplyDeleteBut while I'm sure they could if they wanted be investing more resources in WoW, I don't want to jump all over Blizzard for their business model. The thing is, Blizzard became a great company by releasing great games, and they did that by following a release it when it's ready model. Blizzard has become synonymous with WoW these days, but Blizzard has made a lot of incredible games and is not exactly known for having a high-paced release schedule.
Diablo 3 is about to come out 11 years after Diablo 2. Starcraft 2 came out 12 years after Starcraft.
But in each of these cases, they had made games so good that after 11 and 12 years people were still avidly playing them. The Diablo 2 servers may be overrun by bots at this point, but there are still lots of real people playing the game. Starcraft professional tournaments carried on after the Starcraft 2 launch (I don't know if they're still going).
Blizzard releases incredible games that are remarkably bug free by PC game standards. I'm actually really glad they are sticking to their guns in terms of focusing on quality rather than timeliness. I like the way Blizzard does things. I'm done with WoW but I'm really looking forward to the games they are releasing this year because from experience I know that Blizzard games do not disappoint me.
I may have a lot of ideas of what could be done better in WoW, and I even think I'm right. But when it comes to making good choices about game development in general, I think it's pretty fair to guess that the people at Blizzard actually just know better than me. More cooks does not necessarily make the soup better.
After 17 pages on the third post (two earlier ones reached the post limit), Bashiok comes out and tells the player base that he is very understanding, but these threads aren't helpful. And then he locks the thread!
ReplyDeleteThe main complain of these very thoughtful threads has been lack of content. But there isn't even a single word on that from Blizzard. I am astonished, I really am. Locking these threads certainly won't achieve anything.
Here's one reader who is not nearly as unhappy as the blogosphere seems to be as a whole. I think that while being critical is part of the job of the blogger, that it's also easier to criticize what doesn't work than to appreciate what does work. The former is typically far more engaging to a readership as well, so this makes sense. (i.e. I'm not criticizing bloggers.)
ReplyDeleteHowever, I keep hearing about the decline everywhere I go, yet I still haven't felt the impact whatsoever (except a lot more negative energy). Personally, I still love the game. I would love to see some specific improvements, sure, but overall I'm still plenty happy to pay my measly $13 a month. I'm not rich, but that is such a small amount (especially when compared to what I could be spending on other games/entertainment), that I always get a bit of a chuckle when people talk about how their hard earned money is being taken for granted by Blizzard, etc. Would be nice to hear them say the same stuff about the hard earned money they spend on junk food, coffee, cigarettes, and movies! "I spend $6 a day on my latte, Starbucks needs to fix my afternoon crashes already, dammit!!" (Sorry, that got way off topic.)
With regards to Blizzard not spending enough on Warcraft, while I sort of agree, I also think it's far more complex than just throwing more developers at the problem. The bigger problem is a ship that's too big to make a necessary course correction without breaking in half. The reality is, players hate change, even though they're constantly asking for it. I never see so many complaints as when patch notes come out changing something they "liked".
And unfortunately, in order to right the ship, drastic change would be required -- combat mechanics, loot treadmill, lack of individuality, greater exploration incentive, etc. More bosses, or more quests, or more zones... isn't going help if the underlying reason for the boredom isn't addressed. The number of players who have actually completed all the existing content is very small.
I have no doubt that Blizzard has weighed the cost of change against the opportunity cost of change, and found that they can fairly easily continue the cash cow as is, until their next MMO is released. I know I'm not alone in that I see no end in the near future to my own subscription. I still play every day, and love it.
Thanks, Michael. I welcome different opinions and your's is very well articulated. I plan to do a post about.
ReplyDeleteAre casuals genuinely excited about the phased regrowth area in patch 4.2?
ReplyDeleteI was more excited about the coliseum in 3.2 and most people regard that as the worst cotent of all time.
Where is Deathwing?
Are casuals genuinely excited about the phased regrowth area in patch 4.2?
ReplyDeleteI'm more excited by the prospect of everyone being forced to do the squirrel fetching quest to access the new content. :)
Anyway, the things they are adding imagining they will keep casuals happy leave me bemused.
Isn't it a bit of a fallacy to simply say that with hundreds of millions of dollars, Blizzard can afford to just hire more people? Game development isn't a production line, no matter how much more convenient it would be for everyone if it were.
ReplyDeleteObviously, there are artists and developers out there that could be hired, especially in this economy. However, Blizzard got to where it is by an obsessive focus on quality and polish in what it does. That takes a certain culture and personality to do effectively.
It seems likely that a company that has been so successful and effective in it's operation would be reluctant to simply hire more people willy-nilly, without being sure that they are both skilled and good fits to the company.
I would agree, though, that they have been a bit too conservative in their hiring practices. And if it so happens that they're not looking to hire... well then they're out of excuses. Any company doing this well should try to expand, albeit carefully.
@ Michael
ReplyDeleteI loathe that "one-size-fits-all" design mentality. When designing MMOs - bringing players choice is the most important thing. The heck, Blizzard understood this all the way back in 2000 with Diablo2, giving players the option to choose between HC and Normal characters, and that wasn't even an MMO.
In an MMO like WoW, especially one that has it's population shattered on multiple realms and multiple realm types, it would be extremely easy to have different realms with completely different sets of rules. Permanent death? Sure. No LFD? Why the heck not? No flying mounts? Heck ye. Etc. This is where you actually CAN throw more devs(money) at a problem.
The only logical reason Blizzard doesn't implement brand new mechanics and features into WoW is because they're working on a new title that competes with WoW and other MMOs.
To put this in a more understandable form: Imagine that they came up with a profession system / resource system for WoW that is beyond brilliant and elevates the game into new heights and is better than any other MMO has ever seen. Titles that compete with WoW, obviously cut the best things about it and implement a finer version of that in their own games. What did they gain? Sure, WoW players will be happy for a time, but when the new title Titan comes out, it's that much less ground breaking as those designs could've been saved there.