Tuesday, November 3, 2009

Blizzard's Chinese adventure

Reuters reports that Blizzard's troubles in China aren't over yet. The General Administration of Press and Publication (GAPP) regulator ordered the Chinese distributor of WoW to "suspend charging users to play the game, and disallow new account registrations". Activision shares promptly dropped 4.3% yesterday. But analysts said that "the Chinese market for World of Warcraft accounts for 5 to 6 cents a year of Activision's earnings", which is less than 10 percent.

This is a good opportunity to clarify something about numbers: It isn't the number of players that counts, but the amount of revenue from these players. Thus, if WoW China is shut down again, and World of Warcraft player numbers drop from 11 million to around 5 million again, this might look like a big drop. But as the 5 million players are contributing 90% of the revenue, while the 6 million Chinese players only contribute the remaining 10%, the actual impact is a lot smaller.

You have to be very careful with the numbers that companies announce. Champions Online recently announced 1 million ... characters created, not active subscribers. As this counts all the people who bought the game and quit since release, and also counts every player who created several characters multiple times, the "1 million" number gives a completely inaccurate picture of the success of Champions Online. The same thing is true with free Facebook games, like FarmVille having 60 million players: This counts everyone who ever signed up, played 5 minutes and left. And even from those who actively play, only a small minority pays anything. The company running these games is making millions in revenue, but compared to the billion dollar revenue of World of Warcraft that still isn't that impressive.

If you disagree, and think that big numbers automatically mean big bucks, I have a blog with 3 million visitors to sell for you.

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