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On November 19 2012 23:26 Hider wrote:Show nested quote +On November 19 2012 23:11 paralleluniverse wrote:On November 19 2012 22:59 Hider wrote:On November 19 2012 22:29 Jiddra wrote:On November 19 2012 21:25 Hider wrote:
"Well our focus right now is really on the content in Heart of the Swarm, not around what other things we can add necessarily in terms of micro-transactions or business. I think that it's much more important that we focus on making a great expansion and I think the current model is a viable model."
This is completely wrong, unfortunately. It's not really a viable profit-maximiation business model, and if shareholders/analysts paid as much attention Activision Blizzard as they do with Apple and everyone of their products, they would have demanded Mike Morhaimme to be fired immediately.
But please, Sound like you think HotS is Blizzards only game in dev!  It's very viable model for HotS in relation to all other products being developed within Blizzard. They will sell plenty enough of the game to make it a profitable affair, It's not like they panic over night and say "Ohhh all the plans we have for releases and business dev the coming 5-6 years must be scrapped, we MUST make HotS micro transaction!!!" MM is probably the guy sitting safest on his post within ActivisionBlizzard. He doesn't even need to answer economy questions at the conference calls, they know that isn't his strong side. They look to him to make the great games within Blizzard that then can be monetized by ActivisionBlizzard. Your first point is completely wrong. As someone who have spend considerable amount of time analyzing the financial statement of ATVI (probably more so than most analysts), I know what they are spending their ressources on (Titan), and unfortunately that's the problem. With the current business model ATVI has little incentive to make a esports-supportive game (as they don't make money out of it). Also Sc2 doesn't appear that much to casuals. Right now Sc2 (and HOTS) is an inbetweener and doesn't do anything particularly well. Regarding MM. Your right, he is sitting safely and that's my entire point. Analysts/investors do not spend enough time analyzing the business model of Sc2/Wow/d3 (unfortunately). Compare this to the work they do on Apple, and you realize they analyze every single competitor. Every single product in detail etc. With ATVI, unfortunately, they are just kinda lazy/priortizes larger companies. Eh. It's quite normal that the CFO answers "number" question. But regards to the CEO of Blizzard he should be asked questions regarding business model of each game and how they plan to respond to it. I read probably the most recent 4-5 earnings conferences call. Analysts are not asking the right questions (not just related to sc2). They ask the easy question so they can put a few numbers into their model and then go home early. Even though Sc2 is just a veyr small part of ATVI, a rework of the sc2 business model could still increase shareholder v alue. Why is it that no single analyst yet has asked that question (which a journalist made yesterday regarding a change in the business model of Sc2). And this is the problem. Mike Morhaimme is better as a PR guy than the business guy. Blizzard would improve shareholder value by hiring a few MBA'ers, and as a player the experience would probably be improved as well (even though I would have to pay a bit more though). If analysts/investors spend more time studying/analyzing the company, Mike Morhaimme would be under a lot more pressure. Milking money out of a game is good for the players and good for the game? No, it's good for shareholder's profit though. There could be nothing worse for the game than for it to be turned into the standard free to play microtransaction model that makes DotA 2 heroes look like April's fool jokes, and locks LoL heroes behind a paywall. Or where they basically sell items that add power such as in CoD or in virtually every single MMO, under the excuse that it adds so little power that it's somehow OK. Depends on how they do it. If ATVI just charges a higher price and doesn't offer anything besides that, your right. Bad for customers. But what I suggest is that ATVI needs to monetize esports. In return they give devote more ressources to updating the game etc. Hire progamers as developers. RIght now (despite their constant PR), Blizzard don't have an incentive to do that as they barely make any money out of esports.
I don't think you understand how much money they make from esports. Every tourney that has a prize pool over $5,000 has to split ad revenue with blizzard and big tourneys have to pay a licence fee, thats a crap ton of money right there without having to invest ANYTHING, 100% profit. In addition to that income, they generate game sales from esports. We are always hearing on this forum about someone who just picked up the game after a friend introduced them to sc2 via MLG or the like.
They make plenty of money from esports from many different sources both direct and indirect, there are a plethora of blizzard endorsed SC2 products that are sold at esports events, they are paid for the licence to use their logo's and such on them. Thats not to mention those of us who buy sc2 products because we love the game, most of us because of the esports element.
Anyone who thinks that blizzard aren't making money from esports is kidding themselves, they wouldn't focus so much on SC2 as an esport if they didn't. The better the pro scene is doing, the better the game as a whole does and the more copies they sell.
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On November 19 2012 23:38 paralleluniverse wrote:Show nested quote +On November 19 2012 23:26 Hider wrote:On November 19 2012 23:11 paralleluniverse wrote:On November 19 2012 22:59 Hider wrote:On November 19 2012 22:29 Jiddra wrote:On November 19 2012 21:25 Hider wrote:
"Well our focus right now is really on the content in Heart of the Swarm, not around what other things we can add necessarily in terms of micro-transactions or business. I think that it's much more important that we focus on making a great expansion and I think the current model is a viable model."
This is completely wrong, unfortunately. It's not really a viable profit-maximiation business model, and if shareholders/analysts paid as much attention Activision Blizzard as they do with Apple and everyone of their products, they would have demanded Mike Morhaimme to be fired immediately.
But please, Sound like you think HotS is Blizzards only game in dev! It's very viable model for HotS in relation to all other products being developed within Blizzard. They will sell plenty enough of the game to make it a profitable affair, It's not like they panic over night and say "Ohhh all the plans we have for releases and business dev the coming 5-6 years must be scrapped, we MUST make HotS micro transaction!!!" MM is probably the guy sitting safest on his post within ActivisionBlizzard. He doesn't even need to answer economy questions at the conference calls, they know that isn't his strong side. They look to him to make the great games within Blizzard that then can be monetized by ActivisionBlizzard. Your first point is completely wrong. As someone who have spend considerable amount of time analyzing the financial statement of ATVI (probably more so than most analysts), I know what they are spending their ressources on (Titan), and unfortunately that's the problem. With the current business model ATVI has little incentive to make a esports-supportive game (as they don't make money out of it). Also Sc2 doesn't appear that much to casuals. Right now Sc2 (and HOTS) is an inbetweener and doesn't do anything particularly well. Regarding MM. Your right, he is sitting safely and that's my entire point. Analysts/investors do not spend enough time analyzing the business model of Sc2/Wow/d3 (unfortunately). Compare this to the work they do on Apple, and you realize they analyze every single competitor. Every single product in detail etc. With ATVI, unfortunately, they are just kinda lazy/priortizes larger companies. Eh. It's quite normal that the CFO answers "number" question. But regards to the CEO of Blizzard he should be asked questions regarding business model of each game and how they plan to respond to it. I read probably the most recent 4-5 earnings conferences call. Analysts are not asking the right questions (not just related to sc2). They ask the easy question so they can put a few numbers into their model and then go home early. Even though Sc2 is just a veyr small part of ATVI, a rework of the sc2 business model could still increase shareholder v alue. Why is it that no single analyst yet has asked that question (which a journalist made yesterday regarding a change in the business model of Sc2). And this is the problem. Mike Morhaimme is better as a PR guy than the business guy. Blizzard would improve shareholder value by hiring a few MBA'ers, and as a player the experience would probably be improved as well (even though I would have to pay a bit more though). If analysts/investors spend more time studying/analyzing the company, Mike Morhaimme would be under a lot more pressure. Milking money out of a game is good for the players and good for the game? No, it's good for shareholder's profit though. There could be nothing worse for the game than for it to be turned into the standard free to play microtransaction model that makes DotA 2 heroes look like April's fool jokes, and locks LoL heroes behind a paywall. Or where they basically sell items that add power such as in CoD or in virtually every single MMO, under the excuse that it adds so little power that it's somehow OK. Depends on how they do it. If ATVI just charges a higher price and doesn't offer anything besides that, your right. Bad for customers. But what I suggest is that ATVI needs to monetize esports. In return they give devote more ressources to updating the game etc. Hire progamers as developers. RIght now (despite their constant PR), Blizzard don't have an incentive to do that as they barely make any money out of esports. Blizzard is a big, rich company, yet you act as if they cannot afford to hire pro gamers. In fact, there is absolutely no reason why hiring a pro gamer would be anymore expensive than hiring any random developer. So there's no reason to think that money is holding them back there. Blizzard makes money based on royalties for esports tournaments. How do you know that they "barely make any money out of esports"? And even if that's true, that doesn't mean it's a bad business strategy. They may be trying to increase their market share at the expense of short term profits. This is a common strategy. For example, some game consoles are sold at a loss, the Kindle is also sold at a loss to maximize Amazon's market share.
1) Yeh one would think that they could afford to hire more developers. However it is definitely money that is holding them back. Why do you think WOW has a lot more developers than sc2? My best guess is that Blizzard makes revenue estimates for Sc2 and then use x% of those revenues on developing costs. This is quite normal for business's.
2) Royalities are absolute peanuts. ATVI is a billion dollar company, how much money do you think Blizzard makes out of those tournaments on an annual basis? Barely any right... You can also look at the financial statement. Take Blizzard's revenues and subtract revenues from subscription (related to WOW). You'll notice that there barely are revenue left.
3) This is completelye another discussion, and I think you are comparing apples to oragnes to a 3rd thing. First of all market share is the wrong term for Amazon's kindle strategy. Amazon never expects to make any money out of Kindle, neither long/term nor shot-term. However, what they try to set up is an effective ecosystem. Kindle sales have syngery effects on Amazon's other revenues. Sc2 not so much.
Also remember that the change in business model doesn't necessarily hurt the maket share if the game becomes cheaper to play for casuals.
But in general, the term market share is completely irrelevant in this scenario. Regarding long-term effect; the current business model is really bad for the long-term as the brand value of starcraft has signifcantly deterioated among casuals. My best guess is that sales of Sc3 will be even worse than sc2. With the current business model I am not totally convinced that a potential Sc3 will be profitable for ATVI.
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On November 19 2012 23:47 emythrel wrote:Show nested quote +On November 19 2012 23:26 Hider wrote:On November 19 2012 23:11 paralleluniverse wrote:On November 19 2012 22:59 Hider wrote:On November 19 2012 22:29 Jiddra wrote:On November 19 2012 21:25 Hider wrote:
"Well our focus right now is really on the content in Heart of the Swarm, not around what other things we can add necessarily in terms of micro-transactions or business. I think that it's much more important that we focus on making a great expansion and I think the current model is a viable model."
This is completely wrong, unfortunately. It's not really a viable profit-maximiation business model, and if shareholders/analysts paid as much attention Activision Blizzard as they do with Apple and everyone of their products, they would have demanded Mike Morhaimme to be fired immediately.
But please, Sound like you think HotS is Blizzards only game in dev! It's very viable model for HotS in relation to all other products being developed within Blizzard. They will sell plenty enough of the game to make it a profitable affair, It's not like they panic over night and say "Ohhh all the plans we have for releases and business dev the coming 5-6 years must be scrapped, we MUST make HotS micro transaction!!!" MM is probably the guy sitting safest on his post within ActivisionBlizzard. He doesn't even need to answer economy questions at the conference calls, they know that isn't his strong side. They look to him to make the great games within Blizzard that then can be monetized by ActivisionBlizzard. Your first point is completely wrong. As someone who have spend considerable amount of time analyzing the financial statement of ATVI (probably more so than most analysts), I know what they are spending their ressources on (Titan), and unfortunately that's the problem. With the current business model ATVI has little incentive to make a esports-supportive game (as they don't make money out of it). Also Sc2 doesn't appear that much to casuals. Right now Sc2 (and HOTS) is an inbetweener and doesn't do anything particularly well. Regarding MM. Your right, he is sitting safely and that's my entire point. Analysts/investors do not spend enough time analyzing the business model of Sc2/Wow/d3 (unfortunately). Compare this to the work they do on Apple, and you realize they analyze every single competitor. Every single product in detail etc. With ATVI, unfortunately, they are just kinda lazy/priortizes larger companies. Eh. It's quite normal that the CFO answers "number" question. But regards to the CEO of Blizzard he should be asked questions regarding business model of each game and how they plan to respond to it. I read probably the most recent 4-5 earnings conferences call. Analysts are not asking the right questions (not just related to sc2). They ask the easy question so they can put a few numbers into their model and then go home early. Even though Sc2 is just a veyr small part of ATVI, a rework of the sc2 business model could still increase shareholder v alue. Why is it that no single analyst yet has asked that question (which a journalist made yesterday regarding a change in the business model of Sc2). And this is the problem. Mike Morhaimme is better as a PR guy than the business guy. Blizzard would improve shareholder value by hiring a few MBA'ers, and as a player the experience would probably be improved as well (even though I would have to pay a bit more though). If analysts/investors spend more time studying/analyzing the company, Mike Morhaimme would be under a lot more pressure. Milking money out of a game is good for the players and good for the game? No, it's good for shareholder's profit though. There could be nothing worse for the game than for it to be turned into the standard free to play microtransaction model that makes DotA 2 heroes look like April's fool jokes, and locks LoL heroes behind a paywall. Or where they basically sell items that add power such as in CoD or in virtually every single MMO, under the excuse that it adds so little power that it's somehow OK. Depends on how they do it. If ATVI just charges a higher price and doesn't offer anything besides that, your right. Bad for customers. But what I suggest is that ATVI needs to monetize esports. In return they give devote more ressources to updating the game etc. Hire progamers as developers. RIght now (despite their constant PR), Blizzard don't have an incentive to do that as they barely make any money out of esports. I don't think you understand how much money they make from esports. Every tourney that has a prize pool over $5,000 has to split ad revenue with blizzard and big tourneys have to pay a licence fee, thats a crap ton of money right there without having to invest ANYTHING, 100% profit. In addition to that income, they generate game sales from esports. We are always hearing on this forum about someone who just picked up the game after a friend introduced them to sc2 via MLG or the like. They make plenty of money from esports from many different sources both direct and indirect, there are a plethora of blizzard endorsed SC2 products that are sold at esports events, they are paid for the licence to use their logo's and such on them. Thats not to mention those of us who buy sc2 products because we love the game, most of us because of the esports element. Anyone who thinks that blizzard aren't making money from esports is kidding themselves, they wouldn't focus so much on SC2 as an esport if they didn't. The better the pro scene is doing, the better the game as a whole does and the more copies they sell.
The problem is that you haven't looked at the numbers.
1) Any royality effect is barely noticeable on the income statement.
2) Sc2 sales dissapointed compared to the pre-release expectations.
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honestly didn't get anything all that noteworthy out of the whole thing.
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I was actually impressed about how the latins were the ones with the questions. It's always someone from chile, mexico, or the varios questions from Brazil(including UOL) õ_o
Also I gotta love how mike is a bronze terran  maybe you need to buff terran so you can get out of silver HMMM? (just kidding)
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TL > Other Communities.
CONFIRMED :D
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I really enjoyed reading this, although I do have to say I am a bit surprised that Morhaime is a Bronze Terran.
Then again, he probably does not have much time to really play the game. Hmph.
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On November 20 2012 00:18 Zephirdd wrote:Also I gotta love how mike is a bronze terran maybe you need to buff terran so you can get out of silver HMMM? (just kidding)
i'm sure he is just shy to admit that he is a gm player that crushes noobs all day.
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On November 19 2012 19:52 Ooshmagoosh wrote:Show nested quote +On November 19 2012 19:41 Akhee wrote:On November 19 2012 19:33 Silvanel wrote:
A lot of questoions from people from Spanish/Portugese speaking countries, were they that prevelant at WCS or this is just a coincidence? as a player i can tell you WCS is everything for us WCG doesnt even exist in brazil anymore cause sc2 is not popular enough, counter strike was saving it for a lot of time but its over now, the only offline tournament for us is WCS, and when IEM comes here also, if someone wants to really compete their only hope is to go pro and do well in mlg, iem qualifiers etc the qualifiers for local players in IEM were 1 for national and 3 continental, 2 almost impossible to beat as killer and fenix it gets really difficult for anyone to qualify, so yea, thats why latin people makes it so huge, wcs was the easiest to get into, the most fun and the best everything here for sure Why is esports so weak in Latin America? I can even remember an interview where Major was asked about the Mexican Starcraft "scene" and he just says "there is no scene".
i remember the sc:bw scene beeing fairly big in latin america
lots of good players
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618 Posts
that's a dang long read. but although those are generic answers, i kinda feel like he does care about sc2 so that's a good thing lol. and i guess they really want to expand sc2 to china.
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I watched this the other day I'm glad that he was able to do a press conference and confirm that we will have another BWCS next year completed at Blizzcon :D
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On November 20 2012 00:41 TaShadan wrote:Show nested quote +On November 19 2012 19:52 Ooshmagoosh wrote:On November 19 2012 19:41 Akhee wrote:On November 19 2012 19:33 Silvanel wrote:
A lot of questoions from people from Spanish/Portugese speaking countries, were they that prevelant at WCS or this is just a coincidence? as a player i can tell you WCS is everything for us WCG doesnt even exist in brazil anymore cause sc2 is not popular enough, counter strike was saving it for a lot of time but its over now, the only offline tournament for us is WCS, and when IEM comes here also, if someone wants to really compete their only hope is to go pro and do well in mlg, iem qualifiers etc the qualifiers for local players in IEM were 1 for national and 3 continental, 2 almost impossible to beat as killer and fenix it gets really difficult for anyone to qualify, so yea, thats why latin people makes it so huge, wcs was the easiest to get into, the most fun and the best everything here for sure Why is esports so weak in Latin America? I can even remember an interview where Major was asked about the Mexican Starcraft "scene" and he just says "there is no scene". i remember the sc:bw scene beeing fairly big in latin america lots of good players
oh oh oh I can answer that question
every other week there is a random shitstorm of drama and maphackers where nobody or nearly nobody is punished for it and if you are not a friend of the top players, you never ever ever get a chance of getting into the "scene".
That's how it happens on brazil at least.
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Gotta give that guy props for publicly stating he's bronze. In addition, he's spot on with a lot of his view on eSports, growing the scene and taking baby steps. This guy does not have to work, he could've retired decades ago. Props for him still leading Blizzard and the WCS.
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Mike seems like a good CEO. Blizz could definitely be in worse hands.
I think his Bronze status says more about how busy he is than how skilled he could be at the game. It's good for a CEO to be busy.
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On November 20 2012 00:46 Zephirdd wrote:Show nested quote +On November 20 2012 00:41 TaShadan wrote:On November 19 2012 19:52 Ooshmagoosh wrote:On November 19 2012 19:41 Akhee wrote:On November 19 2012 19:33 Silvanel wrote:
A lot of questoions from people from Spanish/Portugese speaking countries, were they that prevelant at WCS or this is just a coincidence? as a player i can tell you WCS is everything for us WCG doesnt even exist in brazil anymore cause sc2 is not popular enough, counter strike was saving it for a lot of time but its over now, the only offline tournament for us is WCS, and when IEM comes here also, if someone wants to really compete their only hope is to go pro and do well in mlg, iem qualifiers etc the qualifiers for local players in IEM were 1 for national and 3 continental, 2 almost impossible to beat as killer and fenix it gets really difficult for anyone to qualify, so yea, thats why latin people makes it so huge, wcs was the easiest to get into, the most fun and the best everything here for sure Why is esports so weak in Latin America? I can even remember an interview where Major was asked about the Mexican Starcraft "scene" and he just says "there is no scene". i remember the sc:bw scene beeing fairly big in latin america lots of good players oh oh oh I can answer that question every other week there is a random shitstorm of drama and maphackers where nobody or nearly nobody is punished for it and if you are not a friend of the top players, you never ever ever get a chance of getting into the "scene". That's how it happens on brazil at least.
I guess it's time to send in the BOPE then
On a serious note: I at least appreciate that they send out the CEO to answer questions. Although the answers were as expected and I'm still not sure if they really read TL or just pretend to. At least we have some progamers left who post here.
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On November 20 2012 00:24 Gamegene wrote:
TL > Other Communities.
CONFIRMED :D
Well, reddit was tossed in there too , so technically it's TL = Reddit > Other communities.
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monk's questions were really good. I liked the bit about the bronze league especially xD
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On November 19 2012 23:54 Hider wrote:Show nested quote +On November 19 2012 23:38 paralleluniverse wrote:On November 19 2012 23:26 Hider wrote:On November 19 2012 23:11 paralleluniverse wrote:On November 19 2012 22:59 Hider wrote:On November 19 2012 22:29 Jiddra wrote:On November 19 2012 21:25 Hider wrote:
"Well our focus right now is really on the content in Heart of the Swarm, not around what other things we can add necessarily in terms of micro-transactions or business. I think that it's much more important that we focus on making a great expansion and I think the current model is a viable model."
This is completely wrong, unfortunately. It's not really a viable profit-maximiation business model, and if shareholders/analysts paid as much attention Activision Blizzard as they do with Apple and everyone of their products, they would have demanded Mike Morhaimme to be fired immediately.
But please, Sound like you think HotS is Blizzards only game in dev! It's very viable model for HotS in relation to all other products being developed within Blizzard. They will sell plenty enough of the game to make it a profitable affair, It's not like they panic over night and say "Ohhh all the plans we have for releases and business dev the coming 5-6 years must be scrapped, we MUST make HotS micro transaction!!!" MM is probably the guy sitting safest on his post within ActivisionBlizzard. He doesn't even need to answer economy questions at the conference calls, they know that isn't his strong side. They look to him to make the great games within Blizzard that then can be monetized by ActivisionBlizzard. Your first point is completely wrong. As someone who have spend considerable amount of time analyzing the financial statement of ATVI (probably more so than most analysts), I know what they are spending their ressources on (Titan), and unfortunately that's the problem. With the current business model ATVI has little incentive to make a esports-supportive game (as they don't make money out of it). Also Sc2 doesn't appear that much to casuals. Right now Sc2 (and HOTS) is an inbetweener and doesn't do anything particularly well. Regarding MM. Your right, he is sitting safely and that's my entire point. Analysts/investors do not spend enough time analyzing the business model of Sc2/Wow/d3 (unfortunately). Compare this to the work they do on Apple, and you realize they analyze every single competitor. Every single product in detail etc. With ATVI, unfortunately, they are just kinda lazy/priortizes larger companies. Eh. It's quite normal that the CFO answers "number" question. But regards to the CEO of Blizzard he should be asked questions regarding business model of each game and how they plan to respond to it. I read probably the most recent 4-5 earnings conferences call. Analysts are not asking the right questions (not just related to sc2). They ask the easy question so they can put a few numbers into their model and then go home early. Even though Sc2 is just a veyr small part of ATVI, a rework of the sc2 business model could still increase shareholder v alue. Why is it that no single analyst yet has asked that question (which a journalist made yesterday regarding a change in the business model of Sc2). And this is the problem. Mike Morhaimme is better as a PR guy than the business guy. Blizzard would improve shareholder value by hiring a few MBA'ers, and as a player the experience would probably be improved as well (even though I would have to pay a bit more though). If analysts/investors spend more time studying/analyzing the company, Mike Morhaimme would be under a lot more pressure. Milking money out of a game is good for the players and good for the game? No, it's good for shareholder's profit though. There could be nothing worse for the game than for it to be turned into the standard free to play microtransaction model that makes DotA 2 heroes look like April's fool jokes, and locks LoL heroes behind a paywall. Or where they basically sell items that add power such as in CoD or in virtually every single MMO, under the excuse that it adds so little power that it's somehow OK. Depends on how they do it. If ATVI just charges a higher price and doesn't offer anything besides that, your right. Bad for customers. But what I suggest is that ATVI needs to monetize esports. In return they give devote more ressources to updating the game etc. Hire progamers as developers. RIght now (despite their constant PR), Blizzard don't have an incentive to do that as they barely make any money out of esports. Blizzard is a big, rich company, yet you act as if they cannot afford to hire pro gamers. In fact, there is absolutely no reason why hiring a pro gamer would be anymore expensive than hiring any random developer. So there's no reason to think that money is holding them back there. Blizzard makes money based on royalties for esports tournaments. How do you know that they "barely make any money out of esports"? And even if that's true, that doesn't mean it's a bad business strategy. They may be trying to increase their market share at the expense of short term profits. This is a common strategy. For example, some game consoles are sold at a loss, the Kindle is also sold at a loss to maximize Amazon's market share. 1) Yeh one would think that they could afford to hire more developers. However it is definitely money that is holding them back. Why do you think WOW has a lot more developers than sc2? My best guess is that Blizzard makes revenue estimates for Sc2 and then use x% of those revenues on developing costs. This is quite normal for business's. 2) Royalities are absolute peanuts. ATVI is a billion dollar company, how much money do you think Blizzard makes out of those tournaments on an annual basis? Barely any right... You can also look at the financial statement. Take Blizzard's revenues and subtract revenues from subscription (related to WOW). You'll notice that there barely are revenue left. 3) This is completelye another discussion, and I think you are comparing apples to oragnes to a 3rd thing. First of all market share is the wrong term for Amazon's kindle strategy. Amazon never expects to make any money out of Kindle, neither long/term nor shot-term. However, what they try to set up is an effective ecosystem. Kindle sales have syngery effects on Amazon's other revenues. Sc2 not so much. Also remember that the change in business model doesn't necessarily hurt the maket share if the game becomes cheaper to play for casuals. But in general, the term market share is completely irrelevant in this scenario. Regarding long-term effect; the current business model is really bad for the long-term as the brand value of starcraft has signifcantly deterioated among casuals. My best guess is that sales of Sc3 will be even worse than sc2. With the current business model I am not totally convinced that a potential Sc3 will be profitable for ATVI.
Maybe because WoW is a giant game, which has a subscription fee so that new content, such as quests, dungeons, raids, etc can be constantly produced? And SC2 isn't. It's a RTS, no content is produced other than expansions and patches, and fixing up the clusterfuck that was B.net 0.2. SC2 isn't WoW, it doesn't have a subscription fee and 10 million players that require a content patch every few months, so it obviously makes less money.
Here's their financial statement: http://investor.activision.com/secfiling.cfm?filingID=1104659-12-75353&CIK=718877
Subtracting revenue from subscription doesn't give a small number (subscriptions: 226, PC and others: 314). So I suggest you stop making things up about how Blizzard works, with completely unsubstantiated statements like: "Yeh one would think that they could afford to hire more developers. However it is definitely money that is holding them back."
Like Mike Morhaime explain in this interview, free esports is good because it brings people in, which is basically the strategy of making a losses on Kindles and game consoles.
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there definitely was a ton of focus on latin america, kind of disheartening to hear about it not doing so hot and relying on wcs, but at the same time, as someone who's not involved in the LA scene, it became tiresome after the 2nd or 3rd question relating to it. Overall good read, and while people can scream 'being politically correct!' about the topic, he's the fucking CEO, he has to be politically correct, but it's not like he was spindoctoring anything, he was telling people what he knew.
Thanks for posting this TL.
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On November 20 2012 01:52 paralleluniverse wrote:Show nested quote +On November 19 2012 23:54 Hider wrote:On November 19 2012 23:38 paralleluniverse wrote:On November 19 2012 23:26 Hider wrote:On November 19 2012 23:11 paralleluniverse wrote:On November 19 2012 22:59 Hider wrote:On November 19 2012 22:29 Jiddra wrote:On November 19 2012 21:25 Hider wrote:
"Well our focus right now is really on the content in Heart of the Swarm, not around what other things we can add necessarily in terms of micro-transactions or business. I think that it's much more important that we focus on making a great expansion and I think the current model is a viable model."
This is completely wrong, unfortunately. It's not really a viable profit-maximiation business model, and if shareholders/analysts paid as much attention Activision Blizzard as they do with Apple and everyone of their products, they would have demanded Mike Morhaimme to be fired immediately.
But please, Sound like you think HotS is Blizzards only game in dev! It's very viable model for HotS in relation to all other products being developed within Blizzard. They will sell plenty enough of the game to make it a profitable affair, It's not like they panic over night and say "Ohhh all the plans we have for releases and business dev the coming 5-6 years must be scrapped, we MUST make HotS micro transaction!!!" MM is probably the guy sitting safest on his post within ActivisionBlizzard. He doesn't even need to answer economy questions at the conference calls, they know that isn't his strong side. They look to him to make the great games within Blizzard that then can be monetized by ActivisionBlizzard. Your first point is completely wrong. As someone who have spend considerable amount of time analyzing the financial statement of ATVI (probably more so than most analysts), I know what they are spending their ressources on (Titan), and unfortunately that's the problem. With the current business model ATVI has little incentive to make a esports-supportive game (as they don't make money out of it). Also Sc2 doesn't appear that much to casuals. Right now Sc2 (and HOTS) is an inbetweener and doesn't do anything particularly well. Regarding MM. Your right, he is sitting safely and that's my entire point. Analysts/investors do not spend enough time analyzing the business model of Sc2/Wow/d3 (unfortunately). Compare this to the work they do on Apple, and you realize they analyze every single competitor. Every single product in detail etc. With ATVI, unfortunately, they are just kinda lazy/priortizes larger companies. Eh. It's quite normal that the CFO answers "number" question. But regards to the CEO of Blizzard he should be asked questions regarding business model of each game and how they plan to respond to it. I read probably the most recent 4-5 earnings conferences call. Analysts are not asking the right questions (not just related to sc2). They ask the easy question so they can put a few numbers into their model and then go home early. Even though Sc2 is just a veyr small part of ATVI, a rework of the sc2 business model could still increase shareholder v alue. Why is it that no single analyst yet has asked that question (which a journalist made yesterday regarding a change in the business model of Sc2). And this is the problem. Mike Morhaimme is better as a PR guy than the business guy. Blizzard would improve shareholder value by hiring a few MBA'ers, and as a player the experience would probably be improved as well (even though I would have to pay a bit more though). If analysts/investors spend more time studying/analyzing the company, Mike Morhaimme would be under a lot more pressure. Milking money out of a game is good for the players and good for the game? No, it's good for shareholder's profit though. There could be nothing worse for the game than for it to be turned into the standard free to play microtransaction model that makes DotA 2 heroes look like April's fool jokes, and locks LoL heroes behind a paywall. Or where they basically sell items that add power such as in CoD or in virtually every single MMO, under the excuse that it adds so little power that it's somehow OK. Depends on how they do it. If ATVI just charges a higher price and doesn't offer anything besides that, your right. Bad for customers. But what I suggest is that ATVI needs to monetize esports. In return they give devote more ressources to updating the game etc. Hire progamers as developers. RIght now (despite their constant PR), Blizzard don't have an incentive to do that as they barely make any money out of esports. Blizzard is a big, rich company, yet you act as if they cannot afford to hire pro gamers. In fact, there is absolutely no reason why hiring a pro gamer would be anymore expensive than hiring any random developer. So there's no reason to think that money is holding them back there. Blizzard makes money based on royalties for esports tournaments. How do you know that they "barely make any money out of esports"? And even if that's true, that doesn't mean it's a bad business strategy. They may be trying to increase their market share at the expense of short term profits. This is a common strategy. For example, some game consoles are sold at a loss, the Kindle is also sold at a loss to maximize Amazon's market share. 1) Yeh one would think that they could afford to hire more developers. However it is definitely money that is holding them back. Why do you think WOW has a lot more developers than sc2? My best guess is that Blizzard makes revenue estimates for Sc2 and then use x% of those revenues on developing costs. This is quite normal for business's. 2) Royalities are absolute peanuts. ATVI is a billion dollar company, how much money do you think Blizzard makes out of those tournaments on an annual basis? Barely any right... You can also look at the financial statement. Take Blizzard's revenues and subtract revenues from subscription (related to WOW). You'll notice that there barely are revenue left. 3) This is completelye another discussion, and I think you are comparing apples to oragnes to a 3rd thing. First of all market share is the wrong term for Amazon's kindle strategy. Amazon never expects to make any money out of Kindle, neither long/term nor shot-term. However, what they try to set up is an effective ecosystem. Kindle sales have syngery effects on Amazon's other revenues. Sc2 not so much. Also remember that the change in business model doesn't necessarily hurt the maket share if the game becomes cheaper to play for casuals. But in general, the term market share is completely irrelevant in this scenario. Regarding long-term effect; the current business model is really bad for the long-term as the brand value of starcraft has signifcantly deterioated among casuals. My best guess is that sales of Sc3 will be even worse than sc2. With the current business model I am not totally convinced that a potential Sc3 will be profitable for ATVI. Maybe because WoW is a giant game, which has a subscription fee so that new content, such as quests, dungeons, raids, etc can be constantly produced? And SC2 isn't. It's a RTS, no content is produced other than expansions and patches, and fixing up the clusterfuck that was B.net 0.2. SC2 isn't WoW, it doesn't have a subscription fee and 10 million players that require a content patch every few months, so it obviously makes less money. Here's their financial statement: http://investor.activision.com/secfiling.cfm?filingID=1104659-12-75353&CIK=718877Subtracting revenue from subscription doesn't give a small number (subscriptions: 226, PC and others: 314). So I suggest you stop making things up about how Blizzard works, with completely unsubstantiated statements like: "Yeh one would think that they could afford to hire more developers. However it is definitely money that is holding them back." Like Mike Morhaime explain in this interview, free esports is good because it brings people in, which is basically the strategy of making a losses on Kindles and game consoles.
Take a moment and think about what you are writing. Why is WOW a great success? Partly because of the business model.
Also, I never said they should copy WOW. I said they should be inspired. They could also be inspired by COD which make a shitton of money. But they should optimize the business model to sc2, and the current business model is not optimized.
Again regarding the financial statement. Think about what you are reading. Maybe D3 had an impact? Look at quarters prior to D3 release . Also I don't know why you look at PC revenues (as it includes COD). Or include revenue estimate from D3 in your calculations.
According to my estimations Sc2 generated revenues of 1-20 millions (primarily explained by the games sold) on most quarters after the initial release.
I guess they probably make 0.5-3 million on esports on an annual basis. That is relativelye little compared to it's potential. With an improved business model they should probably have been capable of generating 40$/annual basis in revenues from the most active players/viewers on an annual basis. That is roughly equal to 40* 300 = 12 million on an annual basis extracting the purchase price of sc2.
Next time you respond, please take a moment and think about what I am actually writing. A more rational response would question the realism of whether they can succesfully "price discriminate". Like how would they do that in practice?
EDIT:
"Like Mike Morhaime explain in this interview, free esports is good because it brings people in, which is basically the strategy of making a losses on Kindles and game consoles."
Again this is just a bad example.
A better use of the Kindle would be if the game was free, which would lead to increasing e-sports revenue.
But that business model won't be cost effective untill they find a way to succesfully monetize esports. Right now it's not succesfull, its an inbetweener.
Also I never suggested that they should charge customers directly. There are other ways to monetize it.
EDIT 2:
Another thing. Don't use SEC-filings if you want to analyze Blizzard's revenue pre D3 release (which I suspect you will). But you should use the NON-GAAP revenue measures as some of the GAAP-revenues get amortized over the rest of the year.
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