Sunday, January 25, 2009

Cost reduction at Blizzard?

With World of Warcraft having more subscribers now than half a year ago, plus Blizzard making wagonloads of money from selling millions of copies of Wrath of the Lich King, one would assume Blizzard to be in great financial health. Unfortunately Blizzard is not a stand-alone company, but part of Activision Blizzard, whose share price dropped by half in that timeframe, from $18.80 to $9.40. That could very well have to do far more with the general financial crisis than with the company itself, but companies don't tend to take such drops lightly. While we heard from Mythic and other game companies reducing staff, there have been no news of people fired at Blizzard. Nevertheless we have to ask ourselves whether Blizzard isn't in the process of reducing cost.

The most visible indication for cost reduction is that obviously World of Warcraft doesn't have enough server capacity right now. People can't enter instances because there are no instance servers available, and many raids suffer from lag. Yesterday our raid group had to give up on Heigan, because we had about 3 seconds lag, and it was just impossible to avoid the flames, as where you thought you were and where the server thought you were turned out to be rather different places. Other players report problems with being frequently disconnected when in instances.

And as strange as it sounds to have "Blizzard" and "rushed" in the same sentence, Wrath of the Lich King is still obviously missing some development time. If you look at the expansion critically, you'll find that Blizzard shipped it without any major new raid dungeon. There are a few one-boss dungeons, and one raid dungeon recycled from 2 years ago, and that is it. How hard raid content is doesn't matter as much as how much there is of it. The current version of World of Warcraft also has obvious big problems with class balance. And I'm not talking about subjective feelings of underpowered classes, but of facts of classes being boosted in one patch, just to be "nerfed to the ground" in the next. Several classes have seen their power level yoyo all over the place.

If we look closer, the year 2009 doesn't look all that good for Blizzard financially. There will be less subscribers at the end of this year than there are now. That isn't a prediction of doom, but just the natural cycle of subscriber numbers, that peaks shortly after a new expansion, and then slowly falls off. And unlike 2008, there will be no new expansion to sell at the end of 2009.

So, is Blizzard foreseeing all this and already started to reduce costs? If they count on there being less players soon, they could well decide to not add all the hardware needed to make World of Warcraft run perfectly smooth during peak times now. They might not have fired people, but how many did they move to other projects, like Diablo III or their next MMO? So, is Blizzard treating WoW as a cash cow to finance other projects, while investing only the strict minimum into it?

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