nWell if he had any real info on how revenues/profits work he'd realize that that kind of large discrepancy in revenues and profits is pretty common. Also, reaching 3 million units sold in the first month in no way disqualifies SC2 from reaching any of those marks the "professional analysts" set (7 million in 5 months, 4 million in 3 months,6.5 mil in 5 months), in fact it probably sets it on course to meet those. And 3 million is anything but a moderate success...
nWell if he had any real info on how revenues/profits work he'd realize that that kind of large discrepancy in revenues and profits is pretty common.
It's an earnings statement. Of course he has "real info". And the margins made by WoW are anything but common - however, games like the Tony Hawk series, the fading Guitar Hero franchise, and Blur are exactly that, common shovelware that drains almost all of those epic profits.
also, the profits of WoW may be high but there are already plans from Blizzard to make it free to play if serious competition happens to be released (i'm guessing they're mostly thinking of Star Wars: The Old Republic).
Starcraft II really skyrocketed Activision-Blizzard's profit this quarter and they definitely plan to have more single-player titles to get more fans interested. Especially the Blizzard franchises being united through the new battle.net will keep people both in WoW and the other games too.
Obviously, payroll on the WoW team is probably more than half that for a quarter, and marketing alone is probably near that (or would be much higher when annualized across quarters, 4Q will obviously see a push for Cat).
But it is sad to see you just attack instead of actually spending five minutes to read the report and come to your own guess of what WoW's margins would be. Of course, just disparaging something is easier than actually using your brain to parse data for a few seconds, right?
And I would understand why someone wouldn't want to ponder just how profitable WoW is compared to a measly one-time $240 million box sale, especially when the total development and marketing cost starts to also reach nine digits - the truth is depressing.
I was gonna post, but then I saw don's post and that pretty much says it all. Blizzard is doing fine and its in the company's best interest to continue releasing and maintaining their games. Anyone who says Activision-Blizzard isn't in the best shape out of any game company, or at least among the top video game companies, is pretty much delirious.
My choice of method probably slightly overestimates the overhead costs for WoW
Well, it's a good attempt at it... sort of. How can you account for amortization etc of something that began development a dozen years and three corporate entities ago? The blogger's original point was that this kind of ham-fisted methodology makes it easy to disguise the fact that almost all of the profits in AB come from WoW, and that those profits aren't growing.
Strip out WoW as a title, and I would bet that the original eye-popping margin is closer to the reality than the not unimpressive 30% you came up with. I would also bet that the subscription nature of it is a huge part of that.
But in any case, just applying the same methodology across a wide variety of projects and departments means you're ready to be a professional accountant! :thumbsup: The key is having a good shredder.
Their overhead costs aren't applied, so I used a rough revenue-based estimation to estimate how much of it was WoW's ('WoW revenue'/'ActiBlizz revenue' = 33,72%).
Costs: $61 million ('cost of sales') $41 million (33,72% of 'product development') $37,4 (33,72% of 'sales and marketing') and $37,4 (33,72% of 'general and administrative') = $176,8 million in costs.
That is $112,2 million in profit, with about 38,8% profit margin.
You used a "rough revenue-based estimation". Meaning you just made up all of the figures?
I see that $61 million is the only true figure that you used from their Earnings Report, then you just pulled "$41", "$37,4", and "$37,4" out of the air. It took me 5 minutes of research and discover the actual costs of WoW development and upkeep, which was directly from Blizzard's mouth. It amounts to less than $51 million per year, and includes development costs, servers, electricity, bandwidth, infrastructure, total upkeep, marketing, all staff costs (entire payroll for everyone associated), etc.
Not only that, but you took the Cost of Sales, Product Development and G&A Costs from ALL of ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES. Niiiiice. The figures in that blog post were related to World of Warcraft alone.
And, of course, he backed down: "“We’re not spending a lot of time thinking about it. It’s not something that’s a reality for us in the near future.” But, sure, you got me. Getting it from an actual executive and not just a designer without the subsequent backtracking would be a little more shocking.
Don G, you are correct, and that's a fine methodology - if you were totally unfamiliar with the games business, AB itself, and the various projects involved.
of course it's not about "near future" since no real competition is up yet, i said it in my first post too. And lead designer is pretty big, it's not "just" a designer. since they already discussed this possibility and thought it might be necessary to make it free to play, it pretty much proves what i said that even though the winnings are pretty big right now, they know it wont be forever and plan ahead, as they always have, investing in their other franchises and expanding their fanbase to keep the money flowing. in a recent interview Kotick himself mentioned that Starcraft II helped increase their income this year and even supported such releases for the future.
PS. use edit when you have to add something, i'm getting tired of merging ur posts.