Great article in Wired

[Gnimpsh]

http://www.wired.com/gamelife/2009/11/warcraft-anniversary/

[Jono]

Very nice read. :)

[Darnit696]

Thanks for the link, good find.

[Flatty]

I think I'll start playing again when they release Cataclysm...

[Thumponius]

Just when it was getting quiet...

[Gnimpsh]

Just when it was getting quiet...

Thought it was time to spice things up a little. :)

[Vortex]

11.5 Million players, $15 per month = $172,500,000.00 per month..

:faint:
:drool:

[Jono]

$172,500,000.00

Theres too many numbers. I cant count them all because my fingers stop at ten and im wearing shoes. :confused:

[Gnimpsh]

11.5 Million players, $15 per month = $172,500,000.00 per month..

:faint:
:drool:

Actually - that is not very much at all. I wonder if they any other source of income, because I am not sure that is enough to do what they do. Think about it, roughly 4000 people globally work on WOW, so that is a lot of salaries.

Then they also have the massive overhead of running a cloud centre (or three) just to get people to log and play the game. Plus they basically release patches once a month, that's a lot of development and deployment, what about the expansions.

I would be terribly surprised if they rely on that income alone.

[senorblinky]

Well, i can't recall seeing any advertising anywhere.
Aren't they listed? i mean, where can we find their books - if they're listed their financial records should be open for public review, shouldn't it?
Or do you have to be a shareholder?

Would be interesting.

But Candice is right, we only think about the Dollar Bill income and not about the costs. Blizzard has more sophisticated computery than NASA for crying out loud. (I read that somewhere, damned if i can find it again, so rather don't quote me on that)

[Flatty]

Gnimpish....

Even if Blizzard pays each employee $10,000 per month (which is a highly excessive average if you ask me) they have $127,000,000 left to cover their overheads. (I worked on 4500 employees because that is what it is, more or less).

Soooo....

A smart business would lease their server infrastructure because, just as in SA (I am sure), the whole monthly instalment would be tax deductable as an operating expense, thus alleviating their tax burden, as well as reducing the actual costs on maintenance technicians (this would be covered in the service agreement). When it comes to upgrading leased equipment there is really no additional expense incurred - you simply swap the old with the new. If you need additional server capacity, you just add it to you monthly instalment, it's not a whole lump sump investment.

Anyway, that's how I would handle my server requirements if I were them. As for buildings, they probably own everything already.

They sell merchandise all over the world, you get charged for character migrations, etc, they don't pay for the patch releases (we do) AND they charge you for each new expansion.

No, chick....World of Warcraft is a cash cow of note - no pay, no play. They nick all the ideas for their game improvements from the very people that pay them to play this game, without one single royalty being paid.

I am more than confident that World of Warcraft is a self-sustaining enterprise, with massive profits, and that if there was any cash drain on their business it would be their other gaming enterprises.

---------- Post added at 08:59 AM ---------- Previous post was at 08:57 AM ----------

Who's Candice :p

---------- Post added at 09:05 AM ---------- Previous post was at 08:59 AM ----------

"And there's a reason why Blizzard have been and are left well alone - the clout that comes with this mindblowing statistic: "Blizzard Entertainment [which has "over 9.3 million subscribers" to World Of Warcraft] has projected calendar 2007 revenues of $1.1 billion, operating margins of over 40% and approximately $520 million of operating profit (http://www.gamasutra.com/php-bin/news_index.php?story=16458)."

Interesting to note that Vivendi & Activision have merged therefore it is now Activision-Blizzard.

[Gnimpsh]

Aren't they listed? i mean, where can we find their books - if they're listed their financial records should be open for public review, shouldn't it?
Or do you have to be a shareholder?


They don't seem to be listed, unless there is bigger holding company i don't know about. In which case they may not even report individual company figures, since there is no requirement to do so.



A smart business would lease their server infrastructure because, just as in SA (I am sure), the whole monthly instalment would be tax deductable as an operating expense, thus alleviating their tax burden, as well as reducing the actual costs on maintenance technicians (this would be covered in the service agreement). When it comes to upgrading leased equipment there is really no additional expense incurred - you simply swap the old with the new. If you need additional server capacity, you just add it to you monthly instalment, it's not a whole lump sump investment.


So i have started doing some research on what it would cost Blizzard to run on a monthly basis. Basically I am milking my international analyst connections to see if they can give me some detail on how the company runs and what it costs.

Will get back to you asap

[Flatty]

http://www.next-gen.biz/files/imagecache/article_content_360x270/activision_blizzard.png

According to my "international connections" :p :

Blizzard's holding company was previously Vivendi alone, which then merged with Activision.

"The company sold its consumer software operations, Sierra On-line which included Blizzard, to French publisher Havas in 1998, the same year Havas was purchased by Vivendi. Blizzard was part of the Vivendi Games group of Vivendi. In July 2008 Vivendi Games merged with Activision, using Blizzard's name in the resulting company, Activision Blizzard."

Prior to Vivendi's merger with Activision:

"And there's a reason why Blizzard (http://www.gamasutra.com/php-bin/news_index.php?story=16458) have been and are left well alone - the clout that comes with this mindblowing statistic: "Blizzard Entertainment [which has "over 9.3 million subscribers" to World Of Warcraft] has projected calendar 2007 revenues of $1.1 billion, operating margins of over 40% and approximately $520 million of operating profit.""

World of Warcraft is clearly a cash boat. Regardless of their operating expenses, to milk $540million profits in one year is a staggering sum. Yes, they might have 4500 employees, a heap of server clusters & a span of floor space. Salaries in the IT sector are not as lucrative as everyone might expect. A Senior Software Engineer (http://www.payscale.com/research/US/Industry=Entertainment_or_Game_Software/Salary) in the US earns about $100,000 pa, which is below the average of $10,000 pm I allowed per employee. A lot of these employees are earning far less than this amount.

Clearly the bulk of their operating expenses is not salaries, regardless of the "development" taking place. It needs to be remembered that Blizzard pilfers a lot of the new UI ideas from its customers, and any new game engine developments simply require a licensing fee from whichever game engine developer has the best available engine at the time. The costs associated with "development" don't lie with Blizzard, in my opinion. Paying a heap of graphic designers to "feed" information into a modeling engine isn't going to break the bank either. The game mechanics come with the engine, that is sorted - building models requires artists, who don't charge nearly what a software engineer would charge.

Now that Activision has acquired Vivendi-Blizzard, it becomes a bit more difficult to separate the wheat from the chaff, but judging by the approximately $540 million operating profit reported by Blizzard in 2007 (prior to the acquisition), and an increase in the subscriber base, there is no logical reason to assume that the operating profits of World of Warcraft would have red-lined since the acquisition.

"Blizzard's subscription-based World of Warcraft (http://www.edge-online.com/news/analyst-wow-made-up-half-acti-blizz-earnings) business made up about half of Activision Blizzard's earnings for fiscal 2009, one analyst estimated on Wednesday.

Arvind Bhatia with Stern Agee said in a Wednesday research note that he expects WoW subscriptions amounted to earnings per share of about 30 cents out of a total 60 cents, or around $400 million total, in the fiscal year ended in December."

...

"In December, Activision Blizzard reaffirmed its full year non-GAAP outlook of $4.9 billion in revenues and $1.2 billion in operating income.

Stern Agee rates Activision Blizzard shares as "buy." Shares in the publisher were up 1 cent to $9.42 in late afternoon trading."


World of Warcraft is a cash cow, regardless of the massive expenses they incur running server clusters, paying 4500 employees worldwide, and paying for floor space.

To calculate the amount of servers required to run this setup you'd need a seriously qualified network engineer, and systems engineer to put their heads together (unless of course you can find one person with both qualifications) to calculate the systems required to handle this amount of data throughput. Good luck with that :p