Thoughts on Legion Info From Blizzcon and Ding, Level 100 #18

So I could spend the next several hundred words going completely nuts over this and that gameplay element that was introduced at Blizzcon and that we can expect in Legion.  But I went back and looked at reactions that I'd written after the last couple of Blizzcon intros of new expansion content, and it seems I pretty consistently missed the mark.  What I was most excited about in each case either never happened, or ended up being something disappointing.

So I'm going to go with these general comments:

• The idea of zones scaling to fit where you are and give you more choice about which order you quest in is fantastic.  How it actually works in practice will likely depend on if you are able to leave one of the zones out completely and still hit max level (which I'm guessing will be possible with full heirlooms and other xp boosts).  If that's the case, then I'm a huge fan.  Otherwise, I'm not sure the ability to just change the order in which I quest does all that much for me.  But we'll see.
• Transmog stuff.  I know this is going to bug most of you immensely, but I'm just not a big transmog guy.  Can't be bothered.  So I honestly don't care.  Big fan of freeing up tabard space though!
• Artifact weapons.  Sounds cool.  Reserving judgment until I see how it works.  My main worry here is if you'll have the ability to go back and complete an artifact for a second spec on the same character without it being too insanely time consuming.  In the meantime, I'm almost feeling like I need a separate character for each spec.  Of course, that's absurd.  But, we may try that anyway.
• Class halls.  Same deal.  Sounds cool.  But so did garrisons.
• Profession overhaul.  Anything that you can do to fix professions at this point will be hugely welcome.  That being said, I'm also going to reserve judgment on this one until I see it in action.

I also managed to hit level 100 on my mage this week, making him my 18th max level character.  Technically my rogue is up next.  He's currently sitting at level 69 in Borean Tundra, so he's got a ways to go.  The mage was fun, but started to feel extremely squishy toward the end of the leveling train.  After the rogue, it'll be shadow priest, then warrior then monk (how did the monk end up last?).

There is a big part of me that wants to go ahead and start another warlock and level them all the way up on another server.  We'll have to see how that goes. If I get around to leveling a third set of toons (probably Horde side, either on Thrall or Drenden), it'll be warlock for sure and then hunter.  After that, not as sure.

Cheers,

Joar

Analysis of Q3 Earning Release and King Entertainment Acquisition

Activision-Blizzard released their third quarter earnings last night followed by an earnings call this morning.  A few highlights from the release:  GAAP Warcraft revenue was down 5% for the quarter.  Non-GAAP revenue was down 26%.  See my post on the second quarter release for explanation of what the differences between those two are.  On a year-to-date basis, GAAP revenues were up 14% but non-GAAP revenues were down 18%.  Note that based on discussions in the slide deck that they went through in their earnings call, it appears that foreign currency is actually driving a lot of these decreases rather than any real decrease in results.

For those of you wondering how the whole foreign currency thing works, I'll use an average European subscriber to illustrate.  The subscription rate in Europe is €12.99 per month.  Last year, during the third quarter, the average exhange rate was 1.32 dollars per Euro, so last year, in the third quarter, that subscriber would have shown up on Blizzard's financial statements as generating US$17.15 per month.  This year, the average exchange rate in the third quarter was 1.11, so that same subscriber paying the exact same thing shows up as US$ 14.42, a decrease of 16%.  On a year-to-date basis, that decline would work out to 17.8%.  So that's what I'm referring to above.

Total Blizzard revenue was down 5% for the quarter with operating income down 22%.  Unlike a lot of multinational companies, the currency declines may have a bigger impact on their bottom line, because a lot of their expenses are in the U.S. in dollars, so don't benefit from the same foreign currency changes decreasing expenses as well as revenue.

Year to date, total Blizzard revenue was down 7% with operating income down 30%.

Despite those results, for Activision Blizzard as a whole, it was still an extremely profitable quarter with year to date earnings per share up more than 50% over prior year.  They are sitting at the end of September with almost $4.4 billion of cash on their balance sheet and $4.1 billion of debt, or $300 million of net cash.  Of course, the transaction with King Entertainment, which I'm going to discuss a bit more is going to cause cash to go down, and debt to go up.

One other interesting point came out of the earnings call itself.  The Company noted that they would no longer be disclosing total subscriber metrics for World of Warcraft after this quarter.  What they said on the call was that they believe there were better metrics out there for tracking "engagement."  I suspect this means that rather than information on subscribers, we'll begin to see data disclosed on Monthly Active Users ("MAU's") which is the metric that they use for most of their other platforms, along with information on play time per day per user.

Last but not least, there were absolutely no Warcraft related questions in the Q&A session following the call, which is not completely surprising given the King transaction.

King Entertainment Transaction

So in terms of the King Entertainment transaction, here are a few highlights.  The total purchase price of $5.9 billion is going to be paid using $3.9 billion of cash that they have on hand and $2.3 million of new debt (that is basically just being issued under their existing credit facilities).  They will inherit almost $1 billion of cash from King, so their cash balance following the deal should still be in the $2 billion range.

For the first six months of the year, King Entertainments revenue has been declining at a rate of around 11%.  However, their SEC filings are reported in US dollars, so they are subject to the same foreign currency issues mentioned above for Blizzard.  Their monthly active users grew at about a 3% rate over prior year.

King Entertainment is a little bit more profitable overall than Activision Blizzard.  Here is a great slide from their call this morning that shows how the two companies compare in terms of revenue and EBITDA for the previous twelve months:

Following the completion of the transaction, the combined company will have approximately $6.4 billion of debt.  However, the two companies combined generated around $1.8 billion of free cash flow in 2014, so there should be some really strong opportunities to pay down debt over the next few years.  Even at $6.4 billion, their debt stands at only 2.5x their expected EBITDA, which is a very reasonable ratio.

As further evidence, Activision Blizzard's debt was actually upgraded to investment grade by Moody's following the announcement last night.  Some very interesting comments below from Moody's in connection with the upgrade:

"Activision Blizzard's upgrade to a Baa3 senior unsecured rating reflects its leading position in the growing and fragmented gaming industry, strong diversification across multiple genres and gaming platforms, and strong track record of developing profitable and sustainable franchises with international appeal. The ratings and stable outlook take into account our expectation that management has the ability to make strategic investments to create new intellectual franchise properties to replace aging ones which face the potential risk of decline over time, and leveraging existing ones across various platforms."

The only other interesting point to note, is that unlike a typical transaction like this, there doesn't appear to be any kind of break-up fee built into the deal if the transaction doesn't close.  In the press release, they indicated that they expect the deal to close in Spring 2016 and they expect it to improve Activision Blizzard's earnings for 2016 by 30%.

So all indications are that this is a good deal for both companies.  It gives Blizzard access to a big player in mobile gaming as well as shfiting up their demographic a bit (King has a much larger percentage of female users than Blizzard, something both companies highlighted on the call).  For King, it gives them a partner than can hopefully help reignite their growth.

What will this mean for the average World of Warcraft player?  I'm sure there will be a lot of discussion on this in the coming months, but my initial reaction is probably not much.  They plan to continue to manage King Entertainment as a separate business unit, much as they do with Blizzard now.  While there is certainly some opportunities for cross promotion and increase mobile interfaces, that was something that Blizzard was working on anyway.  There isn't currently much of anything in terms of cross promotion between Activision and Blizzard, so not sure that aspect of how they operate will change adding one more party to the equation.  So while this is a great overall strategic move for Activision Blizzard as whole, it may not have much impact down in the trenches with individual titles.

One interesting data point that I ran this morning.  If you had chosen to invest 11 years worth of your subscription dollars in Activision Blizzard stock back in late 2008 / early 2009 after they acquired Blizzard from Vivendi, that $1,980 would be worth $8,400 today.  And things continue to look up for Activision Blizzard from here.

Loremaster Update

So I have managed to make a crazy amount of progress on Loremaster in the past week.  Part of this progress was actually a little bit of discovery and memory rather than actual questing, but there was a ton of that as well.

So first to the discovery and memory part.  After talking about my progress with some guildies, I was gently reminded that the overall zones achievements are in fact account wide, and that there was one character - my warrior - that I leveled AFTER Cataclysm.  I even talked about it here in this very blog:   Love That Warrior Blog Post

So not only had I leveled this character after the old world reboot, but I did it in Eastern Kingdoms.  (I fortuitously discovered this at the point that Joar was almost completely done with Kalimdor)  So perusing through the epic Joarmama's achievement list, I discovered he had made enormous progress on many many of the zones in Eastern Kingdoms.  By the way - Joarmama - great name for a goblin warrior, am I right?

In the meantime, I had been feverishly working through completing Kalimdor on my warlock and managed to get through all of that last week.  After that, I went back to the warrior and did the last few quests in each zone that he needed to finish them up.

So last week, I was sitting at 890 quests to go, with 397 in Kalimdor and 493 in Eastern Kingdoms (or so I thought, but not really as it turns out).

As of this morning, Kalimdor is done and I have a total of 97 quests to go in Eastern Kingdoms in the two Stranglethorn zones.  And that's not going to take me long at all.

The process itself has been a lot of fun.  Quite a few really cool quests that I hadn't done before and really enjoyed.  A couple of challenging spots as well - typically any quest that involves "weakening" an NPC and then capturing him doesn't work really well when you're one-shotting things immediately.  Main issue in Kalimdor was a quest in Feralas that involved capturing an Ogre-Mage.  The key, unfortunately seemed to be getting naked and giving myself rez sickness, and that seemed to do the trick.  That was only one quest out of hundred, but I would not have been able to complete that zone without it (I tried).

Oh, and Ghostland sucks.  Combine having to run with a serious of quests that don't seem to be well organized geographically, and it was probably my least favorite zone of all.  That one needs a revamp.

So that's it for this week.  Assuming I'm done in the next few days, I'll go back to leveling my alliance toons.  Mage is up next.  He's currently sitting at 78 or so.

Cheers,

Joar

Revisiting Loremaster

So back in the fall of 2010 I decided to take a crack at finishing up Loremaster on my main.  I got pretty close too.  Within 40-50 quests or so.

I had been planning on it changing with the release of Cataclysm and was planning to get it finished by then.  But then the pre-patch for Cataclysm dropped, and the ability to finish it actually died a couple of weeks before I had anticipated, so I never got it done.  Everything in Eastern Kingdoms and Kalimdor effectively completely reset except for a handful of zones on each continent.  And I never went back.

So now I'm taking another look at it again, anticipating a long drought of new content between now and when Legion drops in early 2017 (joke!).

As of this morning, I have 890 quests to go, 397 in Kalimdor and 493 in Eastern Kingdoms.  So I think I'm going to work on it a bit, in between fiddling with leveling on my Alliance toons.  I had my 17th toon hit 100 last week, so I now have 5 to go to have a max level of each class from each faction.  And given how fast the leveling process is now, I could finish those 5 easily in 2 months or less, so I've got plenty of time to finish this up.  The mage is up next, who will be further boosted by a nice shiny new heirloom ring out of my shipyard missions.

So that's it for my Warcraft entertainment these days.  I'm going to be going back and doing some old school questing rather than worrying about more and more garrison missions to accumulate more and more gold that I'm not actually sure what I'm going to do with anyway.

Cheers,

Joar

Too Much Speed for Immersion

So I've discovered that the downside of leveling my alliance lowbies one at a time is that it really brings home just how incredibly fast leveling is these days.  Most place, I'm only getting in one or two quest chains in any given zone before I'm ready to move on to the next.  In Uldum for example, I managed to unlock Ramkahen and went to talk to the first guy, killed some scarabs and some raiders and I was done and off to Twilight Highlands.

In Twilight Highlands, after babysitting Anduid around Stormwind for a while, I didn't even get far enough in the actual zone to unlock the portal back to Stormwind before it was time for Pandaria.

And I'm doing absolutely nothing unusual to boost my leveling speed.  Just wearing my heirlooms and queuing for dungeons regularly.

It makes me glad that I did all of those zones at level when they were current, because it sometimes feels a bit sad that I'm missing out on the story.  On the other hand, given that this would be my 17th time reading this particular story, it's probably not all that critical for me personally.

It does make me want to go back and finish up Loremaster on my main.  I got really really close before Cataclysm dropped.  I was down to less than 50 quests to go to get it completely knocked out and I just never quite got it over the finish line, so all of that work effectively evaporated once Cataclysm launched.  I think I'll probably finish up the druid before I take that on though.

In the meantime, I'm still just enjoying playing the game.  There's not much in the way of news, so rather than get upset over every little twist and speculation, I'm just focusing on playing.  As much as I love my various Warcraft podcasters, it also means I'm not listening to much these days.  I'll pick things back up once the beta goes live.  Hopefully that's before March.

My druid is sitting at level 87 now and on his way to Kun-Lai.  It's at least possible I'll have him all the way to 100 before the end of this week.  Then it will be time to decide if I want to move on to the mage, or take on the Loremaster challenge on Joar.

Cheers!

Joar

On To The Lowbies! And Ding, Level 100 #15 and #16

So I managed to get my last two alliance level 90's pushed through to 100 over the last couple of weeks - my shaman and my paladin.  Both came in right at that 9 - 9 1/2 hour mark on played time which seems to be pretty consistent.  Note that I'm not doing anything extraordinary to cheese these - just using garrison potions and full heirlooms.  Their are clearly opportunities to level much faster than this using stacked bonus objectives and the huge xp boost potions.  But I still enjoy the questing process, so this is basically just straight questing with some bonuses added in.

So with all of my previous max level toons now sitting at 100, I'm moving on to working through some lowbies.  Rather than the previous approach that I've taken of leveling them each a bit at a time to maximize rested xp, I've decided I'm just going to bang them out one at a time, so that rather than having a bunch of toons stuck at some mid to high level but not max when the next expansion launches, I'll instead have several more hopefully sitting at 100.  We'll see if I can get all of them there in that amount of time.

Next up is my alliance druid, who is currently at level 76 and working his way through Northrend.  After that, I will probably do my alliance mage, just to leverage a shiny new heirloom ring I got from a shipyard mission.

Garrison Gold-Making and Ding, Level 100 #13 AND #14

So it's been a couple of weeks since my last blog post, and most of what I've been doing during that time has been leveling my various toons and working on odds and ends.  All 11 of my Horde max level toons now have fully productive level 3 Garrisons which are netting me a metric ton of cash every day.

I've managed to get 2 more of my Alliance toons to max level as well, so I'm now starting the process of getting my alliance garrison and gold-making operations up and running as well.

For both of the alliance toons that I recently finished, I focused on questing as quickly as possible rather than flying around gathering treasures, and I found that did actually make the leveling process go a bit faster.  Both finished around the 9 1/2 hour mark, or about an hour and a half faster than the flying around looking for stuff approach.

My enhancement shaman is up next.  He's already worked his way through Shadowmoon and is heading for Gorgrond now.  Will probably do the Fight Club version rather than Lumber Mill, just for something different (Blacksmith, Farm and Lumber Mill...Go!)

I'm really interesting in seeing in what the payback period is for an investment in max level garrison, because these things aren't cheap to get started.  I had enough of a gold base on the Horde side that it wasn't really noticeable, but alliance side, I can definitely see the total cash levels drop when I invested the money to start them up.

So here is what it is costing to get a Garrison up and running for some basic gold-making (note that the way that I'm questing, I'm generally not finishing with any Outpost Building Assembly Notes and usually have at least one Comprehensive Outpost Construction Guide, which allows me to get my Level 2 Dwarven Bunker / War Mill for free.)

Level 3 Garrison - 5,000g
Level 2 Salvage Yard - 750g +300g
Level 2 Inn - 1,000g +300g
Level 2 Dwarven Bunker / War Mill - free with Outpost Guide +300g
Level 3 Salvage Yard - 1,000g +500g
Level 3 Inn - 1,000g +500g

So that's an investment of a total of 10,650g to get your garrison up and running.  Once you've got your staff of followers outfitting with a good complement of treasure hunters, you can generally be generating at least 500g per day, which means you're looking at just under 3 weeks for a full payback.

What I'm generally doing is making sure that I have at least two followers with the scavenger trait to keep the garrison resources rolling in and then recruiting the rest as treasure hunters.  I check the other traits when recruiting to make sure that I still have a good overall balance for other mission types.

Then, once or twice a day, I'm collecting my missions, opening my salvage crates, DE'ing any Warlords gear, which goes to my enchanter and then either vendoring or sending other gear to an AH alt to sell.  I'm generally only worrying about trying to sell other gear if it looks like it has a market value of at least 500g.  It's just not worth my time to try to manage 100's of relatively low value greens.

I'm also putting in War Mill work orders to help with gearing up my toons for the Highmaul and Blackrock Foundry mission gear.  Mostly to make sure that these alts will be relatively well geared to start the next expansion.

Now one thing to clarify is that this approach lets you gear up your followers to get raid gear as well as just gold making, very few of which require specific item levels for your followers, so if you want to do the bare minimum, all you absolutely need is the Inn at level 3, which will cost you 7,800g, so a faster payback on that one.

You could also include a trading post to make some money off of garrison resources, and I may actually start adding that to a few of my Horde toons now that I've got several at cap for garrison resources.

Legendary Ring Complete and Level 100 #12

So this week, I managed to finish up both my legendary ring on Joar as well as get my 12th character to level 100.  I will admit, I must have taken a bit of time away from some of the major news sites, because (and I'm not going to spoil it for those of you still working on it) but the quest chain that leads up to receiving the ring was actually a surprise for me.

So now I have my styling new legendary ring, but I'm pretty tired of HFC at the moment, so not sure when it's going to actually get used.

In leveling news, pretty much as soon as that was done, I fired up my last Horde class sitting at 90 and drove for 100 to see what impact flying would have on his leveling speed.  The sad answer to that question is essentially none.

He came out exactly in the range as the previous sets of characters that I'd leveled with both full heirlooms and garrison xp potions.

Boo.

So here is my theory on this one.  The one difference that I did notice is that taking the exact same approach, I ran out of rested xp much faster than I had on the previous characters.  On the others, I'd run out about half way between 99 and 100.  On this particular run, I ran out towards the end of 97.  In theory it's because I'm getting to and killing things much faster using it up more quickly.  That's my theory anyway.

I've got 4 alliance toons up next, so we'll see if we get any different results out of those.

Cheers,

Joar

Bite Me Archimonde

So with Archimonde opening up on LFR this week, I decided to jump right in (after reading the Icy Veins guide and watching a few videos, of course).

So I won't be doing that again.

We had what I would characterize as a very strong group.  Both tanks knew the fight and had done it on heroic.  The DPS was really good.  Heals were strong.  It still took until 5 stacks of determination.  And after all that, I didn't get a single Tome, leaving me at 32/33 for the week.

The interesting thing that keeps occuring to me, is that I'm working really hard on this raid instance in order to get the legendary ring, and after that's done, there's really not much incentive for me to raid anymore, making the legendary ring more or less useless.

So why am I bothering.  I don't have a good answer to that yet.

And I know, I know.  This is me:

In the meantime, as soon as flying drops next week, I'll finish leveling the rest of my level 90's to 100.  In the meantime, I've been working on my 6 lower level alliance toons and have pretty much all of them moved on to Northrend at this point.

Not sure if I'll get all of those to 100 before Legion comes out, but if I do, I'll be starting another set of Horde toons somewhere.  So that's the plan for now.

Cheers.

Joar

A Look Back on Warlords Expectations

So I always feel bad that I don't do a more detailed analysis on my blog about new expansion announcements when they come out.  I guess my general feeling is that there are a lot of sites out there that are able to provide a lot more detail on it that I really care to.  I also tend to be of the perspective that, yes, this all looks shiny and pretty and everything that you're talking about sounds really good.  But I'm going to hold judgment until I see what makes it to live and how it plays live.

As part of contemplating a post, I went back and looked at what I wrote almost two years ago on the eve of Blizzcon 2013 about my expectations for the expected new expansion announcement.

Here was my list then:

Most of what I'd like to see in the next expansion are really pretty minor game mechanic type items, so here they are:

• The ability to send BoA items cross server.
• Solutions to the bank and bag space issue.  More bank tabs, bigger bags, more void storage, and a system for storing tabards, similar to the key chain of old.
• A new primary profession.  It's been too long since we've had a new one.
• It would also be nice to give players the ability to do quick catch ups on professions similar to the way they handled cooking in this expansion.
• The ability to run old content at scaled down gear levels to give the feel of doing it at level.

The interesting thing with this list is that with the exception of a new primary profession and tabard storage, Blizzard delivered on pretty much all of these items at some point during Warlords.  And yet it was still a disappointment.  How about that.  In general though, I think my general thoughts on Legion was, yeah, looks cool, I'll give it a try.  Please don't fuck it up.

Of course my other thoughts was - 36 different artifact weapons?  Does that mean I need a new set of 12 new max level toons to level up somewhere so I can be sure to try one of each.  

So in other updates, I haven't had a whole lot of steady play time in the last few weeks.  I've been working on the legendary questline on my warlock.  He's finished the shipyard piece of it and is sitting at something like 24/33 tomes (although because of some personal travel last week, I only did 2 of the 4 LFR wings available last week).

I've also hit exalted with both Vol'jin Headhunters and the Order of the Awakened and finally picked up enough claw thingys to grab one of the mounts from the Sabergrinders.  Screw those guys.

So I've got a couple of styling new pigs to show for my trouble.  I think this one is my favorite:

So for Winter Veil this year, my plan is to dress Joar up in his standard Santa outfit and parade around Orgrimmar in a sleigh pulled entirely by pigs.

So that's it for now.  If flying gets released any time soon, I'll be switching off from leveling the lower level alliance characters and getting those last few 90's on to 100.

Cheers,

Joar

Analysis of Activision-Blizzard's Q2 Earnings Release

Activision-Blizzard released their Q2 earnings after market close this afternoon, followed shortly by their quarterly call with analysts and investors.  Overall for the company, it was an extremely good quarter, with both revenue and earnings beating expectations and prior year.

A couple of interesting overall points to note.  Blizzard typically provides a bullet point list of highlights for the quarter and a similar bullet point list of outlook items.  Warcraft was #6 on the highlights and #7 on the outlook.  I'm not intending to imply that's the end of the world as we know it.  It may just be an interesting indicator of where Warcraft stands in their overall corporate priorities at this particular moment in time.

It's also very possible that that says nothing about priorities and they just tend to lead with the Activision stuff because that's the order that they're used to seeing things and that's how they manage things.  I went backed and looked at their press release for Q4 2008, the quarter of the Wrath of the Lich King release.  World of Warcraft was presumably riding high then with 11.5 million subscribers.  It was still #6 on the bullet point list

They have about $4.4 billion of cash on hand and increased their dividend by 15%.  Right now, their dividend is sitting at slightly more than 50% of their free cash flow year to date.  And even with a 15% increase, the yield on the stock is still less than 1%.

They also specifically mention in the release that patch 6.2, released in late June, helped to stabilize subscriber numbers for the quarter.  It does raise the question if subscriber numbers had dropped significantly below the 5.6 million that they disclosed in May or early June.

Last overall point is that there was a significant emphasis, both for Activision and Blizzard, on overall customer engagement.  There was a new metric quietly rolled out this quarter in the release called "Monthly Active Users" or MAU's.  Comparisons to prior year was given for that new metric for Activision and Blizzard each as a whole.  It seems that they're doing a lot more to track their overall customers across a variety of platforms.

So here is the specific financial detail for Q2:

Let me talk for just a minute about the difference between GAAP and Non-GAAP revenue (and for those of you that aren't sure, GAAP stands for Generally Accepted Accounting Principles.  It's basically the set of rules that people have to follow in keeping their books and preparing their financials.

For a subscription type product like Warcraft, on a GAAP basis, you'll spread your revenue over the life of the subscription and recognize it when actually used.  For people that are just paying monthly, it doesn't make a difference, but for people paying 6 months or a year at a time, or for token sales, those transactions get deferred and don't get recognized until actually used.

So as you can see from the chart above, GAAP revenues were up 13% over prior year for Warcraft, which is good, but non-GAAP revenues, which really just reflects current orders and purchases, were down by 22%.  What you are likely seeing there is the impact of token sales in prior periods being recorded as the monthly subscriptions represented by those tokens are used.

They don't break out details on their balance sheet by segment or by platform, so there is no way to tell what the deferred revenue balances for Warcraft were as of the end of this quarter compared to the same quarter in the prior year.

So here is another interesting chart:

One thing that I want to point out is that this chart is in the opposite order from the first one.  So when it says "segment net revenues" on here, that's on a non-GAAP basis.  The interesting thing here is that while non-GAAP revenue for Warcraft was down, non-GAAP revenue for Blizzard overall was up 13%, which really points to a lot of strength in their upfront "orders" in their other product lines.   However, the income from operations for Blizzard was actually down 19% despite that increase in revenue.

So after the official press release, the next item up was the actual earnings call.  For those of you that may not be familiar with these, typically the company will go through a series of slides and prepared remarks (the slides are available on their website if you'd like to see them).  They'll then spend 15-30 minutes taking live questions from key analysts and institutional investors.

Most of what they said in the prepared remarks related to Warcraft were just a rehash of what was in the press release, focusing on Hellfire Citadel being one of the largest non-expansion content patches ever.  They mentioned the upcoming mini patch to bring flying to Draenor and also mentioned changes in that patch to PvP matchmaking.  Finally, they also addressed Thursday's upcoming announcements at Gamescom.  It was pretty brief, but basically what they said was that they've heard the players feedback from Warlords, and we're going to be very excited by what we hear on Thursday.  A lot more time was spent on the other Blizzard platforms.

In the Q&A, the vast majority of the questions related to other platforms.  Their Merrill Lynch analyst, however, asked them about the outlook for Warcraft given the subscriber loss and asked if they could provide some breakout of the subscriber decline by geography (which isn't something they disclose, so they politely declined).  Addressing the subscriber loss, Mike Morhaime had some really interesting to things to say about how they plan to address it.  He said, "Great content is what draws players in, keeps them engaged and brings them back."  He mentioned that there were more developers working on World of Warcraft than ever before and also mentioned plans around faster content releases.  Finally, he also said specifically that they view the movie as a "key inflection point."  He sounded very confident that their plans around new content would lead to a subscriber rebound.

Of course, they also thought Twitter integration and some new Harrison Jones quests qualified as a "content patch" so it's possible that interpretations vary of what qualifies as content.  (Sorry, so much text without any typical Joar snark...I just couldn't resist).

So overall, all of this still fits with the view that I've laid out previously of them treating Warcraft as a cash cow.  They're investing in it because they want to maintain that cash flow, and a steady subscriber base is key to that, but it's not a growth engine for them anymore.  There is definitely a lot more interest and attention going to the other platforms at the moment.  It will definitely be interesting to see if the "inflection point" created by the movie might change that.

Cheers,

Joar