Tobold's Blog
Tuesday, October 12, 2010
Translating 12 million

The art of public relations is to make things appear better than they are, without outright lying about them. One prime example of this is the recent announcement by Blizzard that they now have 12 million subscribers to World of Warcraft, with a narrow definition basically defining “subscriber” as anyone who actually paid something during the last month. For various reasons having to do with SEC rules and similar legal requirements, we can be certain that this statement is true. But most people are likely to consider the series of similar press releases announcing 11 million and 11.5 million players in 2008, and conclude that World of Warcraft is a game with a very steady subscription base, growing rather slowly nowadays. And that couldn’t be any further from the truth.

During the 2 years where we were playing Wrath of the Lich King on American and US servers, World of Warcraft underwent some major seismic events in China. Blizzard changed their distributor from The9 to NetEase, which caused lawsuits, and subsequently major trouble with the Chinese authorities. During this time the servers were shut down repeatedly, for an overall duration of several months. At other times the servers were up, but Blizzard was forbidden to sign up new players. And during all this time the Chinese servers were still running the Burning Crusade expansion, with the authorities objecting against graphical display of bones in WotLK (not a trivial problem for an expansion about undead). All those problems finally got resolved, and Wrath of the Lich King was released in China late this summer, on August 31st.

Blizzard never released any subscription number data during these troubled times. Obviously if one counts only players who paid for a subscription last month and servers were down for over a month, subscription numbers for mainland China were 0 at certain times. But even if you skip that period, it is obvious that subscription numbers in China weren’t stable during that time. While some players switched from mainland Chinese servers to Taiwanese servers, a large number of players did what everybody would do when there is no new expansion in view and the servers are down: They quit. With China supplying just over half of the World of Warcraft players, it is pretty certain that the number of people who quit WoW in China went into the millions. We just don’t know how many exactly, because public relations wisely didn’t tell us.

When Wrath of the Lich King finally was released in China, and the problems with the authorities resolved, Chinese players again reacted as everybody else would: They resubscribed. The 12 million player press release is in reality a statement from Blizzard saying that they got all the Chinese players who quit back, and then some, by releasing WotLK there.

So what is the best guess about the subscription numbers of World of Warcraft in the near future? Well, Cataclysm is released on December 7th in America and Europe, and the American and European players will do exactly what the Chinese did: They will resubscribe. There will be some press release about some incredibly high number of sales in the first week. And somewhere in early 2011 there will be a press release about World of Warcraft having reached 13+ million players.

So, is World of Warcraft steadily growing? Far from that! It is best to think of the subscription numbers of World of Warcraft as being some sort of wave, with the press releases only announcing the high points, while the valleys between them are kept secret. Even if there are no future major events in China, the WoW subscription number curve will remain wavy. Because as much as Blizzard public relations would like to suggest to players and investors that interest in WoW remains steadily growing, the truth is that interest in WoW peaks with every expansion release, and drops between those releases, with minor variations due to content patches and external circumstances like summer holidays. And because expansions for World of Warcraft are still spaced 2 years apart from each other, the valleys between expansions are deeper than for other games. Speed of content creation is one of the fundamental problems of this game.

If this summer you had the impression that player activity on your server was rather subdued, and there were various problems e.g. getting raids together, you were most certainly right. Some people played alts, other played a lot less, and again others unsubscribed while waiting for Cataclysm. Blizzard never tells us the true numbers, but that must have some financial impact. Part of the player drain due to slow expansions is balanced by new players still flocking towards World of Warcraft in large numbers: WoW has been in the top 20 of PC games sales every month for years now. And it is that which explains why every expansion when it finally comes out results in a new subscription number record, due to ex-players resubscribing.

It isn’t clear how this could be sustainable indefinitely. It is notoriously harder to get an ex-player to resubscribe or a new player to sign up, than to keep existing customers playing. If people get into the habit of playing every expansion for a few months after it comes out, and then cancelling until the next expansion, one day they won’t be back. That might be from having learned the lesson of repeated burnouts, or from there being other games that hold the players interest more strongly than the umpteenth expansion. Continuous slow growth is not only a completely wrong picture of the recent past, it also is unlikely to be the long-term future of World of Warcraft. Press releases on subscription number records are just the tip of the icebergs of a far more complicated picture.
I agree that the picture is much more complex than slow growth would imply. However, even assuming the "subscriber valleys" are 30% below the peaks, it's still fairly remarkable that the game continues to grow.

For what it's worth, my background is in database marketing and there is one complexity you didn't mention. You are right that it is easier to get someone to renew an existing subscription than any other source of revenue. However, it is much easier to get a lapsed subscriber to return than to acquire a completely new subscriber.

As corporate assets go, Blizzard's pool of former WoW subscribers is an incredibly valuable (and growing) database.

I'll be curious how high Blizzard can push the total in the post-Cataclysm peak. The magnitude of that peak will likely be driven by how successfully they can convert people out of their "lapsed" pool. 13 million is probably a so-so result. Getting to 14 or 15 will be a show of real ability to continue to grow.

Any thoughts on what you think the Cataclysm peak will be?
You can See this from two sides. We wouldn't care if Blizzard makes 600 mil or 1 bill per year as long as they continue releasing wonderful games for us, or we laugh at the Activision Ceo which does as much money with dozends of games as does Blizzard with one.
Thanks for bringing this up. The timing of this press release is certainly no coincidence, and I'm sure you're absolutely right that they simply could not have stated something like this before Wrath went live in China.

Still, the timing is awesome for them. To be able to announce hitting a new major milestone two months before the release of the new expansion is a sign of immense strength.

And also, isn't it amazing that a six-seven year old game can have 12 million *active* players? Yesterday you posted about the game of the future. Perhaps the prognosticators weren't so wrong five or so years ago. Even though it's obviously much more a game than Second Life or Project Entropia, WoW has clearly passed from pure gaming entertainment into hobby territory for a huge chunk of people. Certainly something for other developers to emulate (if they can!)

(Sorry for veering off topic!)
Agreed entirely. I do expect a new (higher) number to be released by Blizzard in Cataclysm's wake - but overall interest in the game has passed its peak. It has tremendous momentum, though, which will no doubt keep it hugely profitable for years yet.

I wonder how many people allow their play to lapse but not their subscriptions?
They said before that only 10% of players get past level 10 right? So what is the number of players that are former customers?

I mean, how many people have played WoW and not gotten past level 10? For years it was the best selling PC game, month after month, which means that it could be another 108 million people have played WoW (with 12 million being the 10%). This doesn't sound right to me. Perhaps some percent of that has to be eliminated to account for Goldfarmers and people who were banned and signed up with a new account.
I heard it's even getting subscribers in Japan due to the awfulness of FFXIV..

I would think that after six years of continual top-20 global sales, 100 million would be an underestimate!

Also, if Blizzard can release a series of peaks, each higher than the one before, how does that not show continual growth? The depths of the troughs between the peaks does not invalidate the statement that the game continues to grow.

Bigger numbers are bigger.
Blizzard could have 24 million subscribers if they'd remove the Ninja Looter feature, but people would acutally be able to play the game then, so their sales would decrease because it wouldn't take 3 million years to get (1) item out of a 40man raid.
The thing with WoW is though that by now, many gamers will still keep their subs running when not playing it. even if they go off on holidays or play other games for months, many don't unsubscribe, for various reasons -

-they wanna be able to login from time to time to keep in touch with their guild or mates
- they know they'll be back sooner or later anyway
- they like to have access to "their chars" they played for years

this is what i notice with many players i know - if you've played wow for long years it has gotten the sort of significance that makes you want to have it 'available' even if you dont actively play. it's almost like paying for other services you never use but wanna have at your disposal in case.

I think that tells us a lot about wow and also why blizzard do so well financially. if everyone always unsubscribed when not playing, the numbers would look entirely different. but blizzard managed to make their game more than 'just an mmo'.
@ TheMeanBoss

I'm speechless.

Saying that wow is growing "couldn't be further from the truth" is stretching things a bit. 12 mill subs, are more than 11 mill. Whether or not these people play all the time, is another debate, and i'm sure some of the rise in numbers come from multi-accounts, but 3 months from an expansion, having more subs than you did at the release of the last one, is impressive.
@Dwism: I didn't say it's not growing, I said it's not growing steadily.

@TheMeanBoss: Now that's new: A troll comment where I don't understand a word of it.
There's still 40mans in WoW?
Why did nobody tell me?!! =((
Well, I'd say it's obvious that there are peaks and troughs in subscription. There wouldn't be much point in announcing the troughs though. Just imagine:
"This month we have 10 million subscribers."
"This month we have 11 million subscribers."
"This month we have 9.5 million subscribers."
"This month we have 10.5 million subscribers."
"This month we have 10 million subscribers."

It would make more sense to announce "new" peaks instead.

I would also argue that it's MUCH more difficult to attract new players than to get players to re-subscribe. I had quit WoW at some point due to burnout and I swore that I would never return. More than a year later, I returned.

To get new players it's a lot harder especially considering that the game is so mature and has gone through so many expansions. To many new players it's daunting. I've tried convincing some friends to try WoW but when they hear about how complex it is, they don't want to hear about it. Oh and most of them also don't like the idea of paying a monthly subscription.
Personally, I've let my WoW subscription run out and have no plans to renew, even for Cataclysm. I'm not pleased at all by the broad thrust of the changes that are coming.

I will not be surprised if Cataclysm customer retention is poor. Of course they won't overtly admit it if that happens. I think SW:TOR is going to be well positioned to grab some of the leavers.
The 12 million number is "cumulative", not current subscribers. Notice the number NEVER goes down?

Check the wording in the marketing blurb. It is carefully crafting by stating "now" without actually saying present, or existing, or have existed.

Simple math: let's assume they have 1000 realms (they have fewer), with 5000 players on each (far fewer than that play). That leaves us 5 million CURRENTLY subscribed players.

If we check the armory and/or wow-heroes, the numbers are even worse because we see all the alts and the actual subscribers for those toons would be much less.
There are lies, damned lies and WoW subscription numbers.
I am not so sure about the difficulty in getting people to resubscribe once they have enough history with a game. I know I will be picking up cataclysm simply to check it out, see what has changed maybe reconnect with some old wow friends and see what they have been up to and try out the new races. I genuinely have no desire to raid in the new expansion. I didn't enter Naxx in WotLK but a handful of time early but to fill in for a missing healer. WoW might be unique somewhat among game in its ability to draw people back for a short time.
@Shawno: It isn't cumulative. They count currently active subscriptions. The reason that the number "never goes down" was explained well by Tobold-- Blizzard doesn't make press releases to announce a drop in subscribers. Since they only ever report new highs, it seems as if the game is always growing.

And that is the whole reason for doing it that way. Periodically announcing a new record number of subscribers, while never making a public splash about drops in the numbers, creates the impression in people's minds that the game continues to grow. People gravitate towards things that are popular, out of a fear of missing out or not being part of the crowd. It is a powerful marketing tool.

Still, it's impressive that they can even claim that many active accounts after almost six years of operating the game. The MMO landscape is littered with companies that have been working hard to dethrone WOW, and Blizzard is able to boast record numbers of subscriptions, and they will likely set sales records when Cataclysm ships, as well.
I also wonder, in calculating the numbers. Do they take a whole month like September and say that anyone who was subscribed for a portion of the month would count toward the total even if some didn't technically overlap? That would be a particularly "accounting" way of looking at things but I would suspect that would be the case.

So now considering that possibility. If China gets WotLK on the last day of Aug. Is it possible that it helped to pull some Chinese players back from Taiwanese servers? And is it possible that, in how ever they count their Asian player base, that there was some overlap of counting players as they transition from Taiwan back to China in Sept? If you are going to have especially big numbers in Asia, this last month would have been a pretty good candidate.
"Statistics" is often simply another way of spelling "Lie."
while obviously the numbers are projected in a way to maximize Blizzard's PR, I think it's impressive that every year they seem to reset their own subscription record with every new peak.
There are many things to criticize CCP over, but I give them enormous credit for their openness. Like seeing the exact number of people on the server or the Quarterly Economic report and subscriber count.
This is just a thought I had in response to the previous post were people were worried about Blizzard and I thought I could do evil better than their worries. So my unlikely but in my opinion interesting to consider idea that would smooth out the revenue:

Blizzard goes with in game product placement and fixed price subscriptions. You buy an expansion and you get life-of-the-expansion subscription for $88 up front on after you have paid 12 monthly $15 (so most buy the $88 but can't complain they are being "forced")

This immediately sucks the profitability from competitors. Even big companies who could afford to spend $100 million on a game could be reluctant to enter and listen to market analysis complain about entering a low margin business. It gets rid of the cycle of subscribers, at least through the expansion. And effectively lowering prices increases subscribers.

Which leads to the way to overcome the revenue: product placement. Things like the Pepsi ingame pet was a reasonable way for product promotion that did not involve direct, in-game ads. Product placement is increasing in US TV due to skipping commercials (Some Broadway show spent $400k to get mentioned three times in passing in a TV episode.) Same for movies. And the time and involvement of a WoW player seem far more valuable than a TV viewer. Also product placement has a network effect; it benefits the 12 (or 20) million subscriber game more than the smaller games. (/troll although lawyers and bailbondsmen would prefer to advertise on EVE)

Perhaps in 5 or 10 years, WoW will be more valuable to Google than Activision?
This was the transcript from Activision Blizzard Inc.'s quarterly earning's call (released on February 10, 2010):

Mike Morhaime speaking:
The stability of our World of Warcraft business has obviously played a big role, and we currently have about 11.5 million World of Warcraft subscribers. That subscribership is on par with the last time we announced subscriber figures.

Note the date again. This was said when WoW was not operating in mainland China in any capacity.

So how to explain the numbers? I know from following the raid scene as well as getting to know some Chinese international students recently that a large portion, perhaps the vast majority, of Chinese WoW players simply moved over to Taiwanese servers.

The picture of WoW subscriber flux you're trying to paint here doesn't seem to fit their announced number. While there is certainly a large amount of churn and periods of less activity near the tail end of expansions, half of WoW's subscribers didn't disappear when the servers turned off in China.
By the way, did you read this article "Why Warhammer Failed" by a soon-to-be-laid-off EA artist ?

It's creating a lot of waves in the blogosphere cos he burned the management.
Interesting article, that EA Louse piece. Especially the part where he claims that SWTOR did cost over $300 million and will be the biggest MMORPG failure ever. Which, honestly, wouldn't even surprise me, I voiced my many doubts about their approach before.

There is no doubt that EA Mythic's communication policy and management style had some major flaws which are very evident to anyone comparing the officially promoted hype and promises to the actually delivered game. Nevertheless I'd like to remind you that even if management was bad, it doesn't follow that the people who actually worked on the game were any good.

Why do you think did the old communist east Europe have that "iron curtain"? Because good people tend to react to bad government by leaving, unless they are physically restrained from it. And that isn't any different in companies with bad management: There being no iron curtains, the good people will simply leave. It is generally better to leave a project you see will fail *before* it flounders and everybody gets fired. By leaving yourself you avoid a black spot on your resume, and get a huge first mover advantage over the people who only start looking for a job after the layoffs.

Thus I tend to reply to all those "I just got fired after our game failed, and management is to blame" stories with the question of: "If you were totally aware that your game would fail, and you hated working under that oppressive management, why did you stay until now?"
because it's not exactly an employee's market out there right now, job-wise
This comment has been removed by the author.
My plans for WoW are exactly that. Buy the next expansion and play WoW for half a year. Then stop playing until the next expansion hits 18 months later. It's what I did with Wotlk.

I was wondering about the 12 million but seeing how they launched WOTLK in China it's no wonder.
@Paul D.: Saying that you won't be surprised if they lose customers and conceal it from the public is a lot like saying you are going to be convinced that they lost customers regardless of what facts get in the way. Blizzard doesn't conceal its subscriber numbers or profits from the public because it is a publicly traded company and many things about its operation must be made public.

You may not like the changes they are making but the majority of players probably do. Blizzard has a better record of predicting what players want out of games than any detractors who post on forums. Also, even if players don't like all the changes many will want to see what the new expansion has added to the game.

People still play Diablo 2. There are still professional Starcraft tournaments after more than 12 years despite the release of Starcraft 2. WoW is going to be here for quite a while yet.
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