Wednesday, November 9, 2011

Predicting Blizzard's doom since 2005

If you ever get a job in management, you are quite likely to be given some sort of training course in which the difference between stating a fact and making a judgment is explained. Usually with lots of funny exercises to teach you to talk in facts and avoid judgments. Of course facts only would make for rather dry blog writing, so people on the internet deal nearly exclusively in judgments, rumors, and speculations, with very little regard to facts.

The current facts about Blizzard are that the official World of Warcraft subscription numbers are down to 10.3 million, down 1.7 million from the peak shortly after Cataclysm was released. And 8 Blizzard employees changed their Facebook status from "working at Blizzard" to "worked at Blizzard". So this being the internet, and Blizzard being very much hated by some people, the headlines go something like "Massive Layoffs at Blizzard. Titan in Trouble. Company Doomed."

There is a lot of journalistic dishonesty involved in that sort of reporting. If you get a number like the 10.3 million WoW subscribers from a source, the Activision Blizzard earning call, then why not also use all the other facts cited in that source? It turns out that most of the lost subscriptions were in China, and because Chinese subscriptions aren't all that profitable for Blizzard, the loss of those subscriptions didn't have a major impact on quarterly profits. What did have a major impact was not having release any new games lately, a situation which will obviously change in Q1 2012 with the release of Diablo 3.

The selective reporting is due to people wanting to connect their personal dislike of Cataclysm with the drop in subscription numbers of World of Warcraft. Thus if they would be honest and mention that the drop is primarily Chinese, their argument would weaken a lot. Cataclysm isn't even released yet in China. [EDIT: Ooops, it was released on July 12 2011 in a censored form in China.] Personally I don't think that Cataclysm was a great success of player retention, but that is based on personal opinion and anecdotal evidence, and we don't really have all the numbers on the matter.

The prediction of Blizzard's doom and rumors on massive layoffs on the Titan project are pure asshattery. The earnings call made it clear that World of Warcraft is still an extremely profitable product, and that Blizzard overall is an extremely profitable part of the Activision Blizzard company. The idea that Blizzard is running out of money and can't afford people to work on Titan any more is ludicrous. People are let go in all companies all the time, and laying off 8 people is at best a minor reorganization in a team of hundreds of people in a company of 5,000 people. This is far from the same situation at CCP or other small companies. You just need to look how the same people judged 20% layoffs at CCP as a healthy refocus on their core values, while Activision Blizzard laying off 0.2% of their staff is judged as a sign of certain doom, to see how much these judgments are made based on personal likes and dislikes of the games these companies produce, and have nothing to do with economic reality.

Shortly after World of Warcraft was released one guy in the online game community I was frequenting at the time predicted how their release sales were just a fluke, and that subscription numbers of WoW would drop quickly, and Blizzard go bust as a consequence. I hope he wasn't holding his breath waiting for that to happen for the last 6+ years. And I wouldn't advise you to hold your breath while waiting for Blizzard's "certain" doom today either. The economic signs for Blizzard aren't universally positive, and there are certainly problems with their aging main product. But the company will rake in crazy amounts of money in 2012 with the release of Diablo 3, the next part of Starcraft 2, and the Mists of Pandaria expansion.

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