Parks Associates Blog

Wednesday, January 23, 2008

10 Million Reasons to WOW

Blizzard Entertainment announced that its subscriber/user base has finally broken the ten million mark, including 2.5 million in North America, 2 million in Europe, and 5.5 million in Asia. These are all active users and subscribers who are paying a monthly subscription fee, have an active prepaid card, or are still within the free month of access after game purchase. It's no small feat considering that three years ago, the MMORPG industry generally believed that the pool for potential MMORPG players in the U.S. is less than 1 million. WOW has been extremely profitable and contributed to the resurgence of Vivendi's gaming business. With some simple back-of-the-envelop calculation, WOW pulls in more than $2 billion in annual revenue with its current subscriber/user base if we assume $20, $15, and $5 monthly ARPU for European, U.S., and Asian players.
The subscriber growth has been slowing down a little bit-it took one year to grow from 9 million to 10 million. Churn might have been a reason as many gamers who have reached level 70 may have dropped out, despite Blizzard's effort to create new content and challenges for them. Blizzard is expected to release new content this year, hoping that loyal fans will return. For Asian gamers, the company might open a portion of the world to experiment with free2play, micropayment-supported modles although currently nothing has been confirmed and Blizzard has always been cautious about introducing a primary market exchange into WOW. There has also been rumors about WOW coming to game consoles, especially after the announced merger between Activision and Vivendi Games. We don't believe such a scenario will happen in the near term, unless Vivendi gets to keep the lions share of service revenue and console makers make necessary concessions. In addition, console accessories also need to become more MMORPG friendly.


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