Posts with tag profits

I just posted a little while back that the Darkmoon Faire needed a change, but apparently there's still some benefit to be had over there -- Valdesta of WoWGrrl has found at least one way to keep the Faire interesting. She's been keeping a character over there, apparently, and periodically checking in on what the vendors have. They sell not only little pets and miscellaneous items like the Heavy Leather Ball (which often sell for a tidy profit on the AH, since people aren't always aware that the Faire vendors sell them), but there are also vendors there who sell profession items like herbs, motes, eternals, leathers, and so on.

And as anyone who's ever levelled a profession knows, those are often worth their weight in gold, not just on the AH, but in terms of leveling up your own alt professions as well. As Valdesta says, it's worth camping an alt over there just to check in during raiding downtime or on a flight path with your other character, for the same reason you should always check and see just what other vendors around the world might have for sale -- sure, you won't make much with just one buy, but over time, picking up cheap crafting mats from the DF can lead to some solid profits on the AH.

A few days ago we tried to estimate how much Blizzard was making from those 10 million accounts, but now we know for sure: it's actually around $1.2 billion (which is up 58% from 2006). Now, you can probably see that that's only $500 million short of the estimate that we were trying to prove was wrong, but don't forget that the $1.2 billion isn't just subscription fees-- it includes all those sales of Burning Crusade last year at full release price. What Blizzard earns from subscription fees is just part of that total.

Still, a $1.5 billion year for Vivendi (especially when their other games divisions actually dropped by almost 30%) is good news for them. Of course, the question they (and more specifically, Activision Blizzard) have to be wondering about is if the success can continue. If Blizzard can release a new expansion this year and hold off the coming threats in the MMO industry, they'll be looking at even bigger numbers in 2008. But that's a lot to ask-- there's no question Vivendi (and Activision) will come up with huge amounts of profit this year, but growth of this magnitude will be a tough hill to climb.

An article on Playfuls.com (which I found via Incgamers) tried to take the news about Blizzard's ten million subscribers from earlier this week, and suss out just how much money they're making. They do what most people would do, which is multiply their $15 subscription rate per month times ten million, which would mean that Blizzard is raking in $150 million a month, or about $1.7 billion a year is gross profits.

Except that's not right. Because while North American and European players pay about $15 a month, many Chinese and Asian subscribers don't pay monthly-- they pay hourly, at a much lower rate than what other players around the world pay. With 2.5 million and 2 million subscribers in North American and Europe respectively, Blizzard is still making $810 million a year (not to mention the cost to purchase the original game and the expansion pack, which at this point is probably negligible at this point given how much retailers like to take out) in those places. But that leaves 5.5 million players in other countries, and their payment plans aren't as rigidly defined.

Of course, obviously these are all estimates as well, and they're gross, too-- you have to remember that Blizzard pays a huge group of people money to keep up content, customer service, promotion, and administration, as well as maintenance on what must be a huge number of servers (each realm has at least three or four servers running on it, for each continent and all the instances). And Blizzard has other income coming in as well-- licensing fees, fees from The9 (the company that actually runs WoW in China, and likely collects subscription fees there), transfer fees from players, and so on.

Don't get me wrong-- Blizzard is still making a lot of net money on the deal, easily into the hundred millions. But it's not as easily as multiplying what you're paying by ten million, because that's just not the case.

According to Next Generation, World of Warcraft is a nice little cash cow for publisher Vivendi. With first-quarter earnings of $30m this year, an increase of 109% from the same period last year, Vivendi's financials have beaten analyst expectations.

A report from Vivendi says that "this dramatic improvement was driven by a growth in revenues, with an increased proportion relating to the higher margin of World of Warcraft business". While increased development costs are also cited, it seems clear that a fair amount of the money pouring into Vivendi's pockets is staying there.

While players suffer from server and infrastructure problems, is this entirely fair? Well, publishers don't get into the MMO business to make losses. Without seeing a complete breakdown of where our subscription money is going, we're not placed to judge.