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Much speculation surrounds the profitability of SC2, particularly in the context of Blizzard's licensing of broadcast rights.
For example: Blizzard vs. KesPA: an analysis
Since Blizzard is part of a publicly company in the United States, it is required to publish quarterly and annual financial statement. Specifically, ACTIVISION BLIZZARD, INC. is traded on the NASDAQ under the symbol ATVI, and has a market cap of $14.6 billion. The financial statement for the 3rd quarter (July 1 - September 30) are available that incorporates SC2 sales since the release date of July 27th, 2010.
Blizzard's 2010 Q3 Report: http://www.sec.gov/Archives/edgar/data/718877/000110465910056564/a10-20489_110q.htm
The most interesting information occurs on pages 16-17, where results are broken out by division (Blizzard vs. Activision) and by region (NA vs. EU vs. Asia). While the data does not have SC2 sales specifically, using the year-to-date vs. quarterly differences the impact of SC is clear. Below are a few observations.
1) SC2 is a very big deal for the Blizzard division as the game's release almost doubled the division's revenue stream.
2) Blizzard sold about $200 million worth of SC2 in the first two months for a $130 million increase in net income. We know that Blizzard sold 3 million units in the first month alone, so the revenue increase seems plausible. The net income increase also makes sense the marginal cost of selling an additional SC2 game is very low, just hit the copy button! (The overall profitability of the SC2 is harder to determine as the development costs need to be subtracted, but that data is not available.)
3) Asia sales are a very small fraction of sales and profits. (While region data is not specific to Blizzard, the numbers are small for either the Blizzard division or the entire company.) This concurs with a recent Blizzard employee statement that, 'Blizzard Korea is only 5% of worldwide sales.'
(Note: I will repost with updated financial data when it becomes available in a few month.)
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Nice Work, Korea may make up a small percentage atm of sales but they were extremely slow to adopt sc2 over Brood War. I think the sales will become steadier in Korea until it becomes around even with EU/NA if not higher.
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When did/is the new WoW expansion coming out / does it factor into this data?
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Is there any discussion of profits from licensing fees, either in this quarter specifically or looking forward?
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The new WoW expansion was released today so it wouldn't appear on Blizzard's 3rd quarter statement, but you could do the same thing with Blizzard's Q4 report to see how it affected Blizzard's financial data.
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United States3678 Posts
The WoW cataclysm comes out this week so the impact won't show until the 4th quarter financial statements..should be huge though!
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WoW expansion came out today qxc. Was released at midnight. They had to take down all of their websites to devote them to account management. No forums or websites were available to make room for the massive flow of traffic, so I would assume that WoW sales will boost their profits quite a great deal.
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United States3678 Posts
In addition, Blizzard's main source of revenue comes from the monthly fees that players pay for WoW services, so not only will their Q4 boost up because of actual game sells, but they would also get a nice additional stream of revenues until 2011, with a lot of returning and new players starting to pay monthly again after stopping play of WoW.
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On December 08 2010 11:04 Mecha_cl wrote:
Nice Work, Korea may make up a small percentage atm of sales but they were extremely slow to adopt sc2 over Brood War. I think the sales will become steadier in Korea until it becomes around even with EU/NA if not higher.
Sales may go up in Korea but their population is still less than a sixth of US and i don't even know what small percentage of Europe. Steadier Korean sales will be great, but wont drastically up their share of the total market.
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On December 08 2010 11:05 qxc wrote:
When did/is the new WoW expansion coming out / does it factor into this data?
It came out today.
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[B] For example: Blizzard vs. KesPA: an analysis2) Blizzard sold about $200 million worth of SC2 in the first two months for a $130 million increase in net income. We know that Blizzard sold 3 million units in the first month alone, so the revenue increase seems plausible. The net income increase also makes sense the marginal cost of selling an additional SC2 game is very low, just hit the copy button! (The overall profitability of the SC2 is harder to determine as the development costs need to be subtracted, but that data is not available.) (Note: I will repost with updated financial data when it becomes available in a few month.)
Your facts are incorrect about SC2. Take a look at page 18. Under "revenue by platform," the increase in revenue for "PC and Other" was only $46 million for Q3 of 2010. I can imagine that the majority of that revenue was from SC2, but this means that SC2 is still a very small % of the revenue stream for Activision / Blizzard compared to the WoW money tree.
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Did you guys all take accounting as one your high school or University subjects to understand the financial statements or was it more or less "Common sense"? or did you happen to have a financial statements for dummies book with you when you click this thread?
I'm curious here, that is all :D, sorry if this is derailing the thread.
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7.144 M in good will, holy sh*t!! Blizzard must greatly appreciate us fans ^_^
Does anyone with a good finance / accounting background know if it is common for a company to have so much of its assets in the form of good will? Also, how does a company properly evaluate this number?
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More than half the sales of SC and BW were in S Korea. This is well known info and requires no source. And it is amazing considering how small S Korea is.
That during the 3 years before the release of SC2 Blizzard didn't sell much in S Korea isn't a surprise, nur relevant.
That SC2 isn't doing that well in S Korea isn't a surprise either. It wasn't ever going to sell as much as SC BW and the way Blizzard marketed SC2, made it difficult for PC bangs, prevented mainsteam SC2 esports on TV because of the war with the established esports scene, this is maybe what one would expect.
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korea is blizzard's biggest market for bw/sc2 by far
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They distribute a bit differently in S.Korea... Seeing how it's completely free if you have a WoW subscription. As well as places like Brazil(?) where it's pay to play or something like that.
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On December 08 2010 11:05 qxc wrote:
When did/is the new WoW expansion coming out / does it factor into this data?
New expansion came out today so that shouldn't factor in but the previous expansion just released in china during that period.
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On December 08 2010 11:51 Sultan.P wrote:
7.144 M in good will, holy sh*t!! Blizzard must greatly appreciate us fans ^_^
Does anyone with a good finance / accounting background know if it is common for a company to have so much of its assets in the form of good will? Also, how does a company properly evaluate this number?
Goodwill on their balance sheet is generally the excess of the purchase price over fair values of net assets after the net assets are marked to fair value, of the subsidiaries they purchase.
It just means how much more they paid to acquire other companies.
Has nothing to do with fans or anything else.
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United States3678 Posts
On December 08 2010 11:42 KezseN wrote:
Did you guys all take accounting as one your high school or University subjects to understand the financial statements or was it more or less "Common sense"? or did you happen to have a financial statements for dummies book with you when you click this thread?
I'm curious here, that is all :D, sorry if this is derailing the thread.
I am pretty sure everything discussed on this thread could be known by just taking a high-school accounting class if that was your point/question?? Or else contribute something meaningful next time...
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On December 08 2010 11:42 KezseN wrote:
Did you guys all take accounting as one your high school or University subjects to understand the financial statements or was it more or less "Common sense"? or did you happen to have a financial statements for dummies book with you when you click this thread?
I'm curious here, that is all :D, sorry if this is derailing the thread.
In Western Australia (and probably Australia but it varies), its common for high schools to give year 10 students basic financial training which covers interpreting the important parts of financial statements as well as essential calculations such as being able to calculate the EAA or APR.
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EPT
