New World of Warcraft Novel, “Yrel: Heart of Draenor” to be Written by Tara Gilesbie

Written by Ian Bates on . Posted in Activision Blizzard, Blizzard Developers, Blizzard Licensed Products Line Up, Blizzard Products News, Uncategorized, World of Warcraft Pocket Book Excerpts, World of Warcraft: Warlords of Draenor

Update: April Fools’ Day – April 1, 2014
However, a real Yrel short-story may be in the works

I’ve been waiting quite a while for the NDA to wear off on this. I am proud to announce, in a BlizzPlanet Exclusive, the next World of Warcraft novel, World of Warcraft: Yrel: Heart of Draenor! Just as World of Warcraft: Vol’jin: Shadows of the Horde had a writer new to the Warcraft franchise behind it, so will Heart of Dreanor: the famous Tara Gilesbie!

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In the press details I was given by Micky Neilson, Lead Story Developer for Blizzard Entertainment, he explained this novel will bridge the gap between Mists of Pandaria and Warlords of Draenor by giving readers a look into one of the expansion’s lead characters, Yrel. The story will chronicle Yrel’s journey from a simple priestess at Karabor, to her witnessing the formation of the Iron Horde, ultimately leading to her first encounter with the player character (done similarly in Jaina Proudmoore: Tides of War).

“We are incredibly excited to be working with Ms. Gilesbie,” Micky said in regards to the upcoming novel. He also mentioned we may be seeing a forbidden romance in Yrel’s adventures which will heavily affect her role in Warlords of Draenor.

He also clarified that, following another of Shadow of the Horde‘s traditions, Heart of Draenor will be a darker and more mature fare than most Warcraft novels. Due to this, I’ve had to censor the excerpt provided later on in the article slightly for the BlizzPlanet readership.

“We’ve seen how massively popular the pairing of Jaina and Kalecgos was in Tides of War, and Thrall and Aggra presented in-game is still considered one of our best works here at Blizzard. So it was natural to have another unique and well written romance. I wont’ say who catches Yrel’s eye, but I’ll give you a hint: his dad’s the leader of the Iron Horde.”

Just imagine the conflict that’s going to come from that! It looks like Yrel won’t just be Warcraft’s Joan of Arc, but perhaps their Romeo and Julliet as well?

As for our newest Warcraft author, Tara Gilesbie is a world renowned writer who, like many in today’s age, got her start on the internet. She is best known for her novella My Immortal, a Rosencrantz and Guildenstern are Dead-style take on the popular Harry Potter series of books; which chronicles Harry’s adventures through the eyes of a mentally challenged vampire student attending Hogwarts. Originally published for free, the full work can be read here if you want to get a taste of Gilesbie’s unique writing style before Heart of Draenor is out.

While I could not reach Tara herself, I was given this quote from her: “I m sooooo eksited to work on dis story! Fangz (geddit becuz Im Goffik) Blizzurd for givin me the change to work with u guys1″

I was also given a very short excerpt from Yrel: Heart of Draenor, detailing a scene between Yrel and her forbidden lover. As this is a spoiler, I’ll leave it under the read-more.

Patches, Delays, and Legends

Written by Travis Morrow on . Posted in Activision Blizzard, Blizzard Entertainment, Hearthstone: Heroes of Warcraft

Another Hearthstone patch hit a few days ago, guided by development lasers focused entirely on Jaina and her delay tactics. The changes are simple, a delay on the delay – Cone of Cold, Frost Nova, and Blizzard all had their costs increased by 1. A bit more room to maneuver against the inevitable Pyroblast.

And Open Beta is delayed until January 2014. Everyone who opted in the closed before December 16th should be playing and complaining about decks with six legendaries stuffed inside. The closed beta opt ins close January 7th, open beta should follow soon after. The major delays have come from the nitty gritty stuff – server infrastructure and hardware. Settling up the servers, databases and hardware takes time and planning. It doesn’t happen overnight, but it does happen. Be patient and Hearthstone will be out sooner than you expect.

More top ranked players, too. There’s been some fluctuation and rank swapping with the new round. A few of them have streams, too, so watching and learning from the best is a possible path to success. They lack the sheer numbers of Trump, Kripp, Hafu, and the other big name players so they’re more able to answer questions and interact with the audiences. No disrespect intended to the celebrities but the reward of fame is also its price. Consider spreading the Twitch.tv love around. I’m considering starting a channel for myself and give you fellow card slingers another way to waste time.

I also got my first 9 win arena streak the day before the 12 win cap was released. As much as I dislike Garrosh, the warrior and I seem to speak the same language. Rushes, injuries, weapons, sacrifices. Thrall and I don’t, despite my desperate attempts to make it work. Maybe I’m more Warsong than Frostwolf. Regardless, I know I hate Anduin.

See you in game!

Activision Blizzard Q3 2013 Finacial Results Conference Call – Mike Morhaime Transcript

Written by Medievaldragon on . Posted in Activision Blizzard, BlizzCon 2013, Diablo 3 News, Hearthstone: Heroes of Warcraft, Heroes of the Storm, StarCraft 2 News, World of Warcraft News

The Activision Blizzard Third Quarter Financial conference call took place on November 6th, 2013 at 1:30pm PDT.

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Bobby Kotick, Chief Executive Officer of Activision Blizzard, said: “Our third-quarter results exceeded our expectations, and we are able to raise our outlook for 2013 net revenues and earnings per share.

Robust continued engagement with our core franchises drove digi tal revenue, which constituted a majority of all revenue. This quarter demonstrates that games like Call of Duty and World of Warcraft engage and entertain our fans year round.”

Kotick added, “We recently released new titles in two of the most popular franchises in entertainment, Call of Duty: Ghosts and Skylanders SWAP Force. We are thrilled by the quality of those games and we are excited to show what we can do with them on next-generation consoles in the coming weeks. We are also in the process of a beta launch for our first major free-to-play game, Hearthstone: Heroes of Warcraft.

However, we continue to believe that the fourth quarter this year presents a unique and challenging landscape due to increased competition and uncertainties surrounding the console transition.

We are confident in our ability to navigate these challenges successfully, particularly in light of the recent completion of our transaction with Vivendi and the focus and flexibility provided by our return to independence.”

  • As of September 30, 2013, Blizzard Entertainment’s World of Warcraft remains the #1 subscription-based MMORPG, with approximately 7.6 million subscribers.
  • In North America, Blizzard Entertainment’s StarCraft® II: Heart of the Swarm® was the #1 PC game for the first nine months of 2013.

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Morhaime: Q3 was an eventful quarter for Blizzard. We launched our first console game in many years with Diablo III. We also announced an expansion pack for Diablo III — Reaper of Souls.

Additionally, beta testing for Hearthstone kicked off and we released significant content update for World of Warcraft.

All of this activity has netted out to a strong quarter where we ended higher in net revenue and operating income versus Q2 mostly due to the Diablo III console launch on September.

Revenues and income were down year over year — as expected — due to the successful launch of Mists of Pandaria and the ongoing sales of Diablo III during the same quarter last year.

Going into more specific details with World of Warcraft, we’re very pleased with the response to Siege of Orgrimmar — the massive content update we released in September. This update included a huge new raid dungeon with major story elements, as well as a new area to explore and features that improved the game’s accessibility.

Flexible rates now allow groups of variable size to participate in the end-game raiding dungeons. Meanwhile, the Proving Grounds feature trains players to improve their play in specific roles, preparing them to participate in end-game content. Player response to the content has been good, and we saw increased engagement that has contributed to maintaining relatively stable subscribership quarter-over-quarter. We’ll continue to invest heavily in World of Warcraft to deliver frequent, high-quality content to our players.

Moving on to Diablo III, we are pleased with the response to the games launched on PlayStation 3 and Xbox 360. Lifetime sell-through of the game across all platforms has reached over 14 million copies, and reviews have been very positive about how the game plays on console. Much of the praise has been centered on changes we made to the loot system and our decision to keep the auction house off of the console platform. Players and critics alike have noted that these changes have resulted in a more fun and satisfying game experience. That reaction factored in our decision to remove the auction house from the PC version of Diablo III effective next March, which players have also responded very positively to.

We’re building upon those design philosophies for loot and incorporating them into Reaper of Souls, the Diablo III expansion pack — which is coming for PC and PS4 in 2014.

In addition to the new loot system, Reaper of Souls will include an additional player class, the Crusader, and more gameplay modes for the endgame to keep players engaged. The reaction to Reaper of Souls at Gamescom was very positive, and we are looking forward to revealing more about the game at BlizzCon.

It was also a busy quarter for Hearthstone, our free-to-play digital card game for PC and iPad based on the Warcraft universe. In Hearthstone, players build decks of cards that feature familiar spells and creatures from World of Warcraft, and battle against each other using the cards. Players can collect cards simply by playing or by purchasing digital packs. They can also purchase entries into a special competitive mode of play called The Arena in exchange for either in-game currency or a small fee.

We’ve seen a great response from the community with the closed beta test, which kicked off in August. Hearthstone quickly became one of the most popular streaming games on Twitch, and we have been expanding the beta test to encompass more regions and a wider group of players. We’re continuing to work on polishing the game as we drive towards open beta testing.

Rounding out our big announcements since the last call is the name change of Blizzard All-Stars to Heroes of the Storm, which is our take on free-to-play hero brawlers. We’ve done an extensive internal test on Heroes over the past several months, and as the game has evolved, we felt it was appropriate to change the name to something more fitting of the gameplay experience.

We’re looking forward to sharing more details about Heroes at BlizzCon, which is taking place this weekend at the Anaheim Convention Center. This is another sold-out show, with more than 20,000 attendees coming to Anaheim from more than 40 different countries.

Our global community will also follow along through DIRECTV, online pay-per-view on blizzcon.com and partner broadcast in other regions. We will be showcasing our biggest pipeline of games ever and showing our appreciation for our community through contests, meet-and-greets and of course, major eSports spectacles.

The World of Warcraft Arena invitational and the global grand finals of the StarCraft II World Championship Series will be taking place, along with an invitational tournament for Hearthstone, featuring popular community personalities.

All of us at Blizzard can’t wait to get back to BlizzCon and connect with our players. We hope you’ll join us there or follow along online with a virtual ticket available online at blizzcon.com.

We are looking forward to celebrating a shared passion of gaming with our players, hearing their feedback on our newest game content and taking that energy and knowledge back to work as we drive towards an exciting 2014 for Blizzard.

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How many minions again?

Written by Travis Morrow on . Posted in Activision Blizzard, Blizzard Entertainment, Hearthstone: Heroes of Warcraft

Hearthstone provides a useful graph of information when constructing an Arena deck: the mana curve. It’s an invaluable chart that can help smooth out the transition from early to mid to late game, fix problems as you construct a deck (too many high costs cards, or no beefy minions at all). Certain deck strategies can subvert the curve or ignore it entirely, but most decks and their players watch it carefully. I’d like the mana curve added when making custom decks in Play mode because of how useful it is. I consider its absence an oversight and it hopefully appears later.

I’d like to see another graph added to Hearthstone’s deck construction: a minion versus spell chart. While not as vital as the mana curve, displaying a bit of info about the number of minions in your deck as well as the number of spells would be helpful. A mana curve taken at face value can be deceptive because it doesn’t distinguish between card types. Lots of cost spells may keep your curve smooth but a lack of early minions may leave you vulnerable. It’s not too troublesome to count the totals or track them externally but implementing such a feature seems like a natural addition to an already robust and informative UI.

As long as I’m talking about things I’d like added to a free game, how about showing cards by type? Neutrals and class cards, basics and experts, commons, rares, epics, and legendaries. The growing list of charts could be situated across from the deck list, or a button could be added next to the deck list to flip it over and display the information. Swap, swap.

These are minor suggestions from an immensely satisfied customer, however. The game is kinetic and fun, the cards well illustrated and expansive. I’d still really like banter from the heroes to each other. There are potentially more boards in the works, which is great, but I hate waiting for them. Personally I’d love to see an Undercity board with rats scurrying across the play area, maybe dodging cards. And anything from Northrend.

What about you? Any locales you’re waiting for? Any information you’d like Hearthstone to display?

Update: I am a fool. The mana curve is available in constructed: hover over a hero’s image and you can see your current curve.

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Ben Brode Doesn’t Flip Coins

Written by Travis Morrow on . Posted in Activision Blizzard, Blizzard Entertainment, Blizzard Games News, Hearthstone: Heroes of Warcraft

Well, he probably does. Who doesn’t? But he’s careful and doesn’t leave the construction of Hearthstone to chance and whimsy. In a previous column I discussed the issues with the coin that most players are stirred up about. It’s a hot button issue – the coin has proponents and detractors. Hearthstone’s forums are brimming with threads discussing, at length, the impact of that little card.

But none carry as much weight as the words of Mr. Brode. In a post on the Hearthstone forums Brode details the history behind its inception, the logic for its purpose, and the hard numbers of the coin’s actual significance in games. With Hearthstone’s systems closely monitored by developers the figures aren’t amorphous, specific samples from a handful of games but rather a complete and exhaustive data set. And they provide some incredible insight into the coin’s impact.

Across all leagues, 52.2% of wins are for the player who goes first. In master league, where the giants fight, that imbalance shrinks to 50.4%. The advantage of going first isn’t insurmountable and the coin seems to be fulfilling its role as a field leveler. The passionate responses it stirs may be more related to its potential for momentum shifting: dropping a heavy minion a turn before it’s expected or delivering a powerful combo attack (as has been done to me with frustrating regularity).

Arena statistics aren’t provided, but further in the thread a player asks and Mr. Brode answers. The results are similar to standard mode, a slight advantage to going first but it isn’t significant. The coin is here to stay. I’m happy the developers provided numbers about the coin’s use and impact during a game rather than simply stating a position and expecting the players to live with it. The statistics and comments may not convince everyone but it convinces me. It’s not a game breaker, just a light touch on the scale.

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That Contentious Coin

Written by Travis Morrow on . Posted in Activision Blizzard, Blizzard Merchandise, Hearthstone: Heroes of Warcraft

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Hearthstone games are quick. With steady mana, limited defenses, and a heavy slant on offensive power Hearthstone’s contests of cards are about early advantages and constant presses. Laying minions often and early is a great way to stress your opponent – even big guys can only attack once. There are ways to clear the board, like flamestrike and lightning storm, but they’re more common for some heroes than others. This isn’t necessarily an issue; the heroes are designed around the classes of WoW (perhaps vice versa) and their spells are drawn from well known class abilities.

The issue, at least a common point of controversy, is the Coin. On its face the card doesn’t appear to give a significant advantage. The player going second is given a zero cost spell that grants one mana for one turn. It doesn’t sound like huge boon. At best, the second player can put down a minion or cast a spell a turn before the mana actually accrues or play a combination of cards for great effect. The bonus mana isn’t really a problem. Smart players, or players fortunate enough to have a good hand of cards, can take advantage of it and turn the tide or press a advantage further toward victory. The problem is that the Coin currently counts as a spell.

That makes sense. It is a spell. It has a spell effect and it certainly isn’t a minion. But the zero cost spell for the second player provides a secondary, and arguably more powerful, bonus. Cards that take advantage of spells cast that turn are boosted because of an arbitrary turn order, not because clever deck construction. The Coin’s advantage is supposed to be a one time mana bonus. The mechanical advantages for player turn order are already present: player one is one mana ahead, player two is one card ahead. The Coin is a nice bit of gravy; going first is quite an advantage and the bonus mana can switch the momentum. Any other advantage it provides is superfluous. It’s effect as the 31st card is too potent.

The Coin shouldn’t be a spell, it should just be the Coin. A card all of its own.

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Hearthstone Closed Beta Starts Today!

Written by Travis Morrow on . Posted in Activision Blizzard, Blizzard Products News, Hearthstone: Heroes of Warcraft

Travis: It began with a teaser from Zeriyah’s twitter: a mysterious video of a cake, frosted with a Warcraft Hearthstone, and the word “Beta” scrawled on the side. The excitement was almost palpable. Hype Train coming.

And then suddenly, the Americas closed beta started. The forums appeared and expanded, invites began, and new players outside of Blizzard offices began to duel each other. As it is a closed beta, invites are being sent only to those who opt in. Opting in is easy and done from a potential player’s Battle.net account.

By far the highlight from the Beta announcement, aside from the announcement itself, is the lack of an NDA. Players can, and are encouraged to, do livestreams of their games and record videos, post screenshots and write long, winding articles about the mechanics.

Check those inboxes – invites are coming. Lok’tar ogar!

Medievaldragon: The Blizzplanet staff is slowly getting into Hearthstone closed beta. I am going to share with you the installation process. As soon as I downloaded the beta installer client, something that totally got me off-guard is that upon launching the client, the Battle.net launcher automatically kicked in to take over the download process. The beta file is around 500MB by the way.

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HORDE BIAS! A Red Shirt Guy Editorial on the “Faction Bias” Arguments

Written by Ian Bates on . Posted in Activision Blizzard, Blizzard Developers, Blizzard Entertainment, Blizzard Product Reviews, Cataclysm, Lore, Novels, Uncategorized, World of Warcraft - Races, World of Warcraft: Mists of Pandaria

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Hi readers and welcome to my first editorial type article. With the release of Patch 5.4’s trailer (see it here if you haven’t already), the debate on whether or not Blizzard is biased towards the Horde in content development has risen again. Its a subject that really came to a head with the release of Cataclysm, enough so that Blizzard actually had Dave Kosak make a blog post, “Dev Watercooler: Faction Favoritism“. It was very negatively received, and in fact was seen by many as further proof there was faction bias favoring the Horde enough to be detrimental to the Alliance among Blizzard’s developers. So, does this faction favoritism really exist? Is Blizzard ignoring half their playerbase because they can’t muster the effort to to create content for a faction they don’t like? Or is this all overblown outcry from WoW’s notoriously unpleaseable fanbase?

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Hearthstone at Gamescom 2013

Written by Travis Morrow on . Posted in Activision Blizzard, Blizzard Games News, Blizzard Products News, Hearthstone: Heroes of Warcraft

Anxious to play Hearthstone yourself? Are the Twitch specials and Fireside duels not satisfying your curiosity and anticipation? If you’re able to attend Gamescom this year, you’re in luck.

Blizzard and the Hearthstone developers will be hosting the first public playable versions of the game in Germany this year. Blizzard will host several sessions of Hearthstone during the trade fair. Hearthstone’s lead artist Ben Thompson will also be showing off his artistic talents with live drawing and sketching. There are also quizzes, Q&As, developer signings, and a Warcraft dance contest.

Check Blizzards’ complete schedule to find the events that pique your interest: Schedule for Gamescom 2013.

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ATVI – Activision Blizzard 2013 Q2 Financial Results Conference Call

Written by Medievaldragon on . Posted in Activision Blizzard, Diablo 3 News, StarCraft 2 News, World of Warcraft News

Activision Blizzard celebrated today their 2013 Second Quarter financial results conference call where Bob Kotick addressed their independence from Vivendi after purchasing their shares.

activision-blizzard-logoBobby Kotick, Chief Executive Officer of Activision Blizzard, said, “We are pleased with our second-quarter results, which confirm the preliminary results we released last week when we announced our transaction with Vivendi. The agreement we reached with Vivendi will make us an independent company and should deliver meaningful earnings per share accretion to our shareholders. Our solid performance across our franchises and strong digital sales, including continued significant growth this quarter in our Call of Duty® downloadable content business over the previous year, validate our belief that we will enter this new period of independence in a position to leverage the flexibility and focus that it provides.”

On July 25, 2013, Activision Blizzard announced that it reached an agreement under which the company will acquire approximately 429 million company shares and certain tax attributes from Vivendi, in exchange for approximately $5.83 billion in cash, or $13.60 per share acquired before taking into account any future benefit from these tax attributes. In a related transaction, ASAC II LP, an investment vehicle led by CEO Bobby Kotick and Activision Blizzard Co-Chairman Brian Kelly, will purchase approximately 172 million company shares from Vivendi for approximately $2.34 billion in cash, or $13.60 per share. Following the completion of the transactions, which are expected to close by the end of September 2013, Vivendi will no longer be the majority shareholder, but will retain a stake of approximately 83 million shares, or approximately 12%.

 

Main Highlights

  • World of Warcraft subscribers: 7.7 Million
  • Next-Gen MMO Titan is likely to be a non-subscription based MMO
  • Titan staff was moved to World of Warcraft, Diablo III and Blizzard All-Stars

Transcript

The second quarter was a relatively quiet quarter when compared against last quarter, which included the StarCraft II: Heart of the Swarm launch; and Q2 2012 when we launched Diablo III. We’ve been making great progress on Diablo III console and Hearthstone along with other ongoing projects, which I’ll discuss shortly.

Starting off with World of Warcraft, we ended the quarter with about 7.7 million subscribers worldwide, with the declines split about evenly between East and West. The most recent content update in late May has had a positive impact on stabilizing the churn rate in both regions.

Our next major content update, “Siege of Orgrimmar” is currently in the public testing phase. This update includes a massive new raid dungeon and a new questing area, as well as some new features. Proving grounds is a way for players to learn the skills they need for in-game contents and flexible raids allows groups of varying sizes to enjoy in-game rating. This will make it easier for players to experience compelling in-game contents with their friends. In addition to sustaining engagement for existing players, we believe these features can help make the transition back to the game more compelling for returning players as well. We look forward to releasing this update in the coming weeks.

Before I get into the other game updates, I want to say a few words about our unannounced project codenamed Titan. We’re in the process of selecting a new direction for the project and re-envisioning what we want the game to be. And while we can’t talk about the details yet, it is unlikely to be a subscription-based MMORPG. I also want to reiterate that there has not been an official announced or projected release date. What I can say is that the commitment to quality has always been at the core of Blizzard values. And we’ve gone through this type of iterative development process several times in the past on the way to creating genre-defining games. As we continue our assessment, we have shifted some of the resources from the team to our other franchises, including World of Warcraft and Blizzard All-Stars, which we believe will add immense value to those projects.

On the Diablo III side, we announced a September 3rd date for the Xbox 360 and PlayStation 3 versions to the game. Our showing at E3 was a great opportunity to reinsure ourselves to the console gaming audience. The development team has done a lot of work to tailor Diablo III for a living room experience and these subtle changes have been very well-received by the press. We’ll be sharing more Diablo-related news at GamesCom later this month.

Moving on to StarCraft II. We just launched Heart of the Swarm in China a couple of weeks ago and in these early stages have seen a jump in concurrency in the region. In addition, our year-long StarCraft II World Championship Series is currently in its second season with the season finals taking place later this month at GamesCom in Germany.

We’ve also been putting a lot of focus on Blizzard All-Stars, our upcoming free-to-play online game. Action RTS games have become increasingly popular over the years. As we have in the past with games like World of Warcraft and the original Diablo, we’re looking to put our own spin on this genre and challenge some of the existing design paradigms. We’ve reached a significant internal milestone with Blizzard All-Stars going into wider internal testing and we’ll have more to say about the game later this year.

Rounding out our announced game projects is Hearthstone, our new free-to-play digital collectible card game. Hearthstone will launch initially on Windows and Mac PC followed by iPad soon after. We’ve made great progress polishing the game through internal testing and will be reaching the external test phase very soon. Our promotions in the last quarter, which included several live streamed game-play demos have generated great budge for the game since we revealed it at PAX East in March. Not only will this be our first game on iPad, it will also be the first time in a very long time that we have announced a game and launched it within the same year. This reflects the philosophy behind a small team of Blizzard veterans developing Hearthstone to create Blizzard-quality games on a smaller scale.

Looking ahead, we have BlizzCon coming up on November 8 and 9 at the Anaheim Convention Center. The show will be a good one with the latest Blizzard news, hands-on with games and development and of course, the global finals for our StarCraft II World Championship Series. We hope to see you there or following along via the online stream or on DirecTV.

As we enter the back half of 2013, what we’re showing at Blizzard is a broadening of our gaming portfolio. Just 3 years ago, we had one active game. Moving into the rest of 2013 and beyond, we will have several active and vibrant games across 3 major franchises on multiple platforms and with different business models. We’ll continue to work hard on creating epic game experiences for our players and look forward to delivering those experiences in a variety of ways.

 

Q&A

Brian J. Pitz: With respect to the wild sub declines, I think last quarter was more Asia based, now it seems to be ramping up more on the West. Can you just give us a little more color there on the split?

Morhaime: Concerning subscription decline, in aggregate in Q2, we did see a smaller decline than we saw in Q1, and I think it’s very important to note the impact that our content updates have had since the most recent update, mid-May. We have seen a very positive impact on the churn rate, and that’s across both regions.

Brian J. Pitz: Got it. And just one more follow-up on WoW. There’s kind of been rumors in and out of the press on a potential movie set with the WoW theme. Any updates there?

Morhaime: I don’t have any updates other than to say that we are continuing to work with Legendary Pictures. Duncan Jones has been selected as the director, who has been actively working on a movie, and we continue to be very excited about it.

Colin A. Sebastian : In the scenario that WoW were to continue declining, I’m wondering whether your priority, ultimately, would be to protect profitability of the franchise or to continue spending on potential growth initiatives?

Morhaime: Our priority is to continue delivering great contents to our players. We feel the WoW continues to be the top most compelling, possibly multiplayer online role-playing game available, and we think it still has a very long life ahead of itself. We think that over time, we have seen players come and go and return to World of Warcraft, and we recognize that there’s a lot that we can do to make the experience of coming back to World of Warcraft and the transition back into the game and meeting up with your friends much easier than it currently. And so I think that’s a big opportunity for us.

 

Brian J. Pitz (Jefferies LLC, Research Division)
Colin A. Sebastian (Robert W. Baird & Co. Incorporated, Research Division)

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Activision Blizzard Second Quarter 2013 Financial Results Conference Announced

Written by Medievaldragon on . Posted in Activision Blizzard, Diablo 3 News, Hearthstone: Heroes of Warcraft, StarCraft 2 News, World of Warcraft News

Activision Blizzard announced the upcoming Second Quarter 2013 Financial results will take place on August 1, 2013.

activision-blizzard-logoSANTA MONICA, Calif. –(BUSINESS WIRE)– Activision Blizzard, Inc. (Nasdaq: ATVI) intends to release its second quarter 2013 results after the close of the market on Thursday, August 1, 2013 . In conjunction with this release, Activision Blizzard will host a conference call that will be broadcast over the Internet.

Thursday, August 1, 2013

1:30 p.m. Pacific Time ( 4:30 p.m. Eastern Time )

To listen to the call, please log onto:

http://investor.activision.com/events.cfm

Or dial:

U.S. and Canada : 888-339-3466

International: 719-325-2309

Passcode: 3585535

Anyone planning to dial in to the call should RSVP to Pam Beaver at:

E-mail: PBeaver@activision.com

 

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Previous Activision Blizzard Conference Call Transcripts

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Activision Blizzard Announces Transformative Purchase of Shares from Vivendi and New Capital Structure

Written by Medievaldragon on . Posted in Activision Blizzard, World of Warcraft News

Activision Blizzard purchased 85% of shares from majority-shareholder Vivendi for $8.2 Billion. The company continues to be a public shareholder entity. No changes should affect Blizzard Entertainment.

This significant purchase makes Activision Blizzard full owner of itself. Vivendi now owns only 12% of Activision, Inc. according to TheWrap

activision-blizzard-logoActivision Blizzard Announces Transformative Purchase of Shares from Vivendi and New Capital Structure Company to Buy Back Approximately 429 Million Shares from Vivendi for $5.83 Billion. Investor Group Led By CEO Bobby Kotick and Co-Chairman Brian Kelly to Separately Purchase Approximately 172 Million Activision Blizzard Shares from Vivendi for $2.34 Billion New Capital Structure Expected to Drive Meaningful Earnings-Per-Share Accretion.

Activision Blizzard Reports Preliminary Second Quarter Results

SANTA MONICA, Calif. –(BUSINESS WIRE)– Activision Blizzard, Inc. (Nasdaq: ATVI) (the “Company”), a global leader in interactive entertainment, announced today that it reached an agreement under which it will acquire from Vivendi ( Euronext Paris : VIV) approximately 429 million Company shares and certain tax attributes, in exchange for approximately $5.83 billion in cash, or $13.60 per share acquired before taking into account the future benefit from these tax attributes. In a simultaneous transaction, ASAC II LP , an investment vehicle led by Activision Blizzard CEO Bobby Kotick and Co-Chairman Brian Kelly , to which they have personally committed $100 million combined, separately will purchase approximately 172 million Company shares from Vivendi for approximately $2.34 billion in cash, or $13.60 per share.

Following the completion of the transaction, Activision Blizzard will be an independent company with the majority of its shares owned by the public. The Company will be led by Bobby Kotick as Chief Executive Officer and Brian Kelly as Chairman. Vivendi will no longer be the majority shareholder, but will retain a stake of 83 million shares or approximately 12%. ASAC II LP—the investor group which, in addition to Kotick and Kelly, includes Davis Advisors, Leonard Green & Partners, L.P. , Tencent, as well as one of the largest global institutional investors—will own a stake of approximately 24.9%.

Activision Blizzard expects that its new outstanding share count and capital structure (which will include approximately $1.4 billion of net debt) will result in expected pro forma 2013 earnings-per-share (EPS) accretion of between 18% and 29% on a GAAP basis and between 23% and 33% on a non-GAAP basis.

Bobby Kotick , CEO of Activision Blizzard , said, “These transactions together represent a tremendous opportunity for Activision Blizzard and all its shareholders, including Vivendi . We should emerge even stronger—an independent company with a best-in-class franchise portfolio and the focus and flexibility to drive long-term shareholder value and expand our leadership position as one of the world’s most important entertainment companies. The transactions announced today will allow us to take advantage of attractive financing markets while still retaining more than $3 billion cash on hand to preserve financial stability.”

Mr. Kotick continued, “Our successful combination with Blizzard Entertainment five years ago brought together some of the best creative and business talent in the industry and some of the most beloved entertainment franchises in the world, including Call of Duty® and World of Warcraft®. Since that time, we have generated over $5.4 billion in operating cash flow and returned more than $4 billion of that to shareholders via buybacks and dividends. We are grateful for Vivendi’s partnership through this period, and we look forward to their continued support.”

Activision Blizzard will fund the acquisition with the combination of approximately $1.2 billion of domestic cash on hand and approximately $4.6 billion of debt proceeds, net of fees and upfront interest, accessed through the capital markets and bank financing. The Company has received committed financing for the transaction from Bank of America Merrill Lynch and J.P. Morgan . The transaction is expected to close by the end of September 2013 , subject to customary closing conditions.

A special committee of independent directors was formed to represent the Company in negotiating and evaluating the transactions.

Please see the Company’s Current Report on Form 8-K being filed with the Securities and Exchange Commission and the exhibits thereto for further information about the terms of the transactions.

Activision Blizzard’s financial advisor on the transaction is J.P. Morgan Securities LLC and its legal counsel is Skadden, Arps, Slate, Meagher & Flom LLP . The Special Committee’s financial advisor is Centerview Partners and its legal counsel is Wachtell, Lipton, Rosen & Katz . ASAC II LP’s financial advisor is Allen & Company LLC and its legal counsel is Sullivan & Cromwell LLP .

Preliminary Second Quarter Results and Full-Year Outlook

For the second quarter, Activision Blizzard expects to report GAAP net revenue of approximately $1.05 billion and Non-GAAP net revenue of approximately $608 million , with GAAP earnings per diluted share of $0.28 and Non-GAAP earnings per diluted share of approximately $0.08 . In addition, the Company will announce full second quarter results on August 1, 2013 and hold its regularly scheduled conference call for analysts and investors at that time.

For the quarter, Activision Blizzard was the #1 independent publisher in North America and Europe combined, including accessory packs and figures, with the #1 and #2 best-selling titles year-to-date— Skylanders Giants™ and Call of Duty: Black Ops II.¹ Additionally, Blizzard Entertainment’s World of Warcraft® remained the world’s #1 subscription-based MMORPG, ending the quarter with approximately 7.7 million subscribers.²

The Company raised its full-year 2013 GAAP net revenue outlook to $4.31 billion and its earnings per diluted share outlook to $0.77 , up from its prior net revenue outlook of $4.22 billion and earnings per diluted share outlook of $0.73 . Additionally, the Company affirmed its full-year 2013 Non-GAAP net revenue outlook of $4.25 billion and earnings per diluted share outlook of $0.82 . These full-year outlook numbers do not yet account for any benefit of earnings per share accretion from the announced transaction.

Conference Call and Webcast Information

Activision Blizzard will host a conference call and live webcast on Friday, July 26, 2013 at 8:30 a.m. ET , 2:30 p.m. Paris time, 1:30 p.m. London time to discuss this announcement. The company welcomes listeners to the call live by dialing (866) 953-6860 in the U.S. or (617) 399-3484 outside the U.S. using the passcode 14828517. The live webcast of the call can be accessed at www.activisionblizzard.com.

For those unable to listen to the live conference call, an audio replay of the call will be available through August 9, 2013 and can be accessed by calling (888) 286-8010 in the U.S. or (617) 801-6888 outside the U.S. and using the passcode: 30609761. In addition, a webcast replay also will be archived on the Investor Relations section of Activision Blizzard’s website.

 
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Activision Blizzard Q1 2013 Financial Results Conference Call – Transcript

Written by Medievaldragon on . Posted in Activision Blizzard, Diablo 3 News, StarCraft 2 News, World of Warcraft News

Bob Kotick and Mike Morhaime spoke before the shareholders on Wednesday, May 8 to discuss the Activision Blizzard Q1 2013 financial results. Some key details were revealed in this quarter:

  • World of Warcraft subscription dropped 14% down to 8.3 million subscribers worldwide.

  • Diablo III (PS3) will be launched later this year.

  • Blizzard is developing new titles (plural) with new business models, including Hearthstone and Blizzard All-Stars.

  • 1.1 Million viewers watched eSport matches during the Heart of the Swarm launch

  • Hearthstone: Heroes of Warcraft enters beta testing this summer for PC/Mac.

  • Hearthstone will be released in 2013

  • Heartstone for iPad will be released shortly after the PC/Mac launch

I have to note that Mike Morhaime talked about each video game, paused to mention BlizzCon, and then talked about Blizzard All-Stars and the Next-Gen MMO.

It may be nothing, but it’s odd to not mention these last two along with the other games, but chose to mention them right after talking about BlizzCon. Hint?

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Robert A. Kotic – Activision Blizzard CEO

Robert A. Kotick: Activision Publishing’s Skylanders was the leading video game franchise in both North America and Europe, including toys and accessories. Call of Duty was the #2 franchise in North America and Europe combined. Blizzard’s World of Warcraft remains the largest subscription-based MMORPG in the world. However, during the quarter, subscribership declined by approximately 1.3 million subscribers, roughly 14%, and we ended the quarter with approximately 8.3 million subscribers.

Though the majority of our subscriber declines occurred in the East, where we have more subscribers and lower revenue per subscriber, we saw declines in the West as well. And while we do believe further declines are likely and we expect to have fewer subscribers at year end than we do today, World of Warcraft remains one of the most successful franchises in the history of entertainment.

It’s important to note that the nature of online games has changed, and with the environment becoming far more competitive, especially with free-to-play games. To address this, we’re working to release new content more frequently to keep our players engaged longer and make it easier for lapsed players to come back into the game.

We believe in the long-term value of this franchise and will continue to commit substantial resources to World of Warcraft.

During the quarter, Blizzard also launched its expansion to the long-standing StarCraft franchise, with StarCraft II: Heart of the Swarm. The expansion pack launched to strong critical response and was the #1 title for the PC in the quarter.

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Blizzard Entertainment has already launched StarCraft II: Heart of the Swarm and will launch Diablo III for the PlayStation 3 later this year.

In addition, Blizzard is also developing new titles with new business models, including Hearthstone and Blizzard All-Stars. During the remainder of the year, we’ll continue to invest in our established franchises, invest selectively in new opportunities and to manage our costs very carefully.

Mike Morhaime – Blizzard Entertainment President

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Mike Morhaime: On the product side, Q1 was an exciting time for Blizzard as we announced 2 new games: Hearthstone, a collectible card game on Windows, Mac and iPad; and Diablo III for PlayStation 3 and 4. These games not only bring Blizzard into the mobile and console spaces, but in the case of Hearthstone, also represent our first entry into free-to-play.

We ended March with $330 million in revenue, up 31% year-over-year and $135 million in operating income, up 52% from the same quarter last year. This increase was driven in large part by the launch of Heart of the Swarm, as we didn’t have a comparable launch in Q1 2012.

For World of Warcraft, we ended the March quarter at 8.3 million subscribers globally. While we saw declines in the West, the majority of the decline came from the East, which has historically seen greater volatility. Given a more competitive market and the length of time since the last expansion, we do expect further volatility this year.

Looking forward, our objective is to deliver new game content at a quicker pace to improve engagement. Our next content update will release later this month and we will continue to invest in additional updates and improvements to continue to evolve the game.

More specifically, we’re examining ways we can ease the transition back into the game for returning players. We’ve always seen players come and go from World of Warcraft. Smoothing out that transitional period is something we’re studying, as we adjust our approach to player behavior and preferences.

On the StarCraft II side, the highlight from last quarter was a successful launch of Heart of the Swarm. In partnership with popular community personalities, we hosted an unprecedented 21-hour global Internet broadcast to celebrate the launch of the game. More than 1.1 million viewers tuned in to this broadcast to see eSports’ show matches, interviews and community produced content.

By the end of the second day on the market, Heart of the Swarm had already sold 1.1 million copies. And then that weekend, more than 1.1 million viewers watched the first major Heart of the Swarm tournament at Major League Gaming’s Winter Championship.

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We’ve ridden that strong momentum into announcing this year’s StarCraft II World Championship Series, a global partnership between Blizzard and some of the biggest organizations in eSports. As a result of this partnership, world-class StarCraft II eSports can be viewed in prime time online throughout the world during the week. And StarCraft II is now available on Korean cable television 5 days a week. Viewership of the tournament has been consistently high and we look forward to continuing to improve the spectator experience over the course of the year leading up to the global finals at BlizzCon.

Moving on to Diablo III. We announced that the game would come to Sony PlayStation 3 and PlayStation 4 and showcased the demo of the PS3 version at PAX East in March. Press on the PS3 version has been very positive, as we have put a lot of work into adapting the game to take advantage of the console platform’s strength. The controls and interface have been modified to suit consoles and the game will have local and online multiplayer capability. We recently announced pre-orders for the PS3 version, which is scheduled to ship later this year.

Rounding out our game updates, I’d like to talk about Hearthstone: Heroes of Warcraft, our new free-to-play collectible card game for Windows, Mac and iPad. Players will be able to earn cards through game play and have the option to purchase card packs if they want to fill out their collection a little faster. Hearthstone is being developed by a small team at Blizzard, whose goal is to create a Blizzard-quality game experience at a smaller scale and scope than our typical project. At this early stage, it’s already clear that the team is achieving the depth and accessibility of the traditional Blizzard game with Hearthstone. Simply put, it’s a lot of fun.

The announcement at PAX East generated a great deal of interest and excitement from attendees. And thus far, we’ve received a massive response from players interested in trying out the beta. We expect the Windows and Mac versions of Hearthstone to go into public testing this summer and released later this year. The iPad version will be available for download shortly after.

Finally, I want to remind everyone that BlizzCon is coming this November to the Anaheim Convention Center. Ticket sales took place 2 weeks ago and our players enthusiastically claimed all available tickets in a matter of seconds. Details on virtual ticket sales will come at a later date.

As usual, we’ll be sharing the latest news on Blizzard games at the show. We’ll also be hosting the World Championship Series’ Global Finals and crowning a true StarCraft II world champion.

Overall, Blizzard has had a good start to a challenging 2013. We successfully launched StarCraft II: Heart of the Swarm and announced 2 new games that we feel will deliver Blizzard-quality experiences to new players on additional platforms. And there’s still more in the pipeline with our teams continuing to work on Blizzard All-Stars and our unannounced MMO.

With these new games and continued development on existing franchises, we hope to welcome even more gamers into the Blizzard community as we build towards the future.

 
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Activision Blizzard Q4 Financial Results Conference Call – Transcript

Written by Medievaldragon on . Posted in Activision Blizzard, Diablo 3 News, StarCraft 2 News, World of Warcraft News

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The Activision Blizzard Q4 2012 financial results conference call took place today February 7th, 2013.

Mike Morhaime reported World of Warcraft has over 9.6 Million players as of December 31, 2012, and Diablo III has over 12 million players. Details about BlizzCon 2013 will surface later throughout the year.

Mike Morhaime: 2012 was a busy year for Blizzard Entertainment. We had some very ambitious goals, and successfully shipped 2 games: Diablo III and World of Warcraft: Mists of Pandaria. A third game, StarCraft II: Heart of the Swarm, entered public beta testing in 2012, as well. On the year, Blizzard turned in strong financials with non-GAPP revenue of $1.6 billion and operating income of $717 million.

As of the end of the year, global subscribership for World of Warcraft added more than 9.6 million players, down slightly from the previous quarter. The majority of the decline came from China, while subscribership in the West was relatively more stable.

Looking ahead, the next major content update for World of Warcraft is already in testing and should reach players in the coming weeks. The development team continues to stick with the plan of more frequent content updates in the wake of the expansion launch, applying lessons that we’ve learned from past expansions.

Moving on to Diablo III, the launch of the game back in May had a tremendous impact on Blizzard and our community. Diablo III broke PC games sales records and as of the end of the year, had sold more than 12 million copies worldwide.

While this is a humbling achievement, we’re not satisfied with merely breaking sales records. The development teams have worked aggressively to update the games since the launch, adding new content, game systems, features and other improvements. A new update is in testing now, which will add dueling and other new content. Diablo is extremely important to Blizzard and we’ll continue to invest aggressively to support the franchise and its community.

On the StarCraft side, we’ve had a flurry of activity surrounding the game in the past few months. The Battle.net World Championship in Shanghai this past November was a great success. A big congratulations go out again to PartinG from South Korea who was crowned our global champion.

The Heart of the Swarm beta has also been ongoing since last year and the team continues to improve the game with player feedback. Over the past couple of months, we’ve announced numerous new online features for the game, unveiling the opening cinematic, and conducted a global press showcase.

The feedback from the community about the campaign and the new online features has been very positive and excitement continues to grow as we head into launch on March 12.

Lastly, I want to remind everyone that BlizzCon will make its return later this year. We’ll have more details announcements soon and we’re looking forward to reconnecting with our players this year to hear their thoughts, share the latest Blizzard news and share along with them at the Blizzard eSports Global Finals. We hope you’ll be able to join us at the show.

As we head into 2013, we’ll continue to work hard on our pipeline of games and deliver a great experience to our players.

 


Q&A

Brian J. Pitz (Jefferies & Company, Inc., Research Division): What do you think about the World of Warcraft and MMO community? Do you think the audience essentially remains strong and willing to play? Or do you think they’re essentially in need of a new game? Can you talk about, really, the fatigue factor both in the MMO, as well as with specifically for the game, and then, I just have a follow-up question.

Eric Hirshberg (Activision Blizzard Publishing Unit CEO): Well, we have seen an evolution in player behavior since the launch of Cataclysm. Players consume content quickly. There are more apps that come and go from the community, which is why we are targeting more frequent content updates. We are currently testing our second major update since Mists of Pandaria. I think that another thing to note, if you compare the months following Cataclysm and the months following Mists of Pandaria, the trailing months have been stronger with Mists. And we have seen an increase in engagement in all regions with the launch of Mists of Pandaria.

Neil A. Doshi (Citigroup Inc, Research Division): Mike, if you can give a little more color on the China market, it seems like there’s continuously intense competition there and most of the declines seem to come from the East. Is there anything you could do to be more competitive in that competitive market?

Mike Morhaime (Blizzard Entertainment CEO): Yes, so with respect to competition, we’ve always had competition for World of Warcraft in all markets. I think it’s fair to say that competition has increased, but I think it’s also important to point out that World of Warcraft is competing against, really, all forms of entertainment for leisure time. And so that just underscores the need for us to continue creating new content, to keep up engagements. With respect to China, in spite of the decline in subscribership, it is important to note that the engagement levels of the core items did increase with the launch of the expansions and I think that, that suggests increased engagement by our core players.

 

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Previous Activision Blizzard Conference Call Transcripts

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Activision Blizzard Q4 2012 Results Conference on Feb.7.2013

Written by Medievaldragon on . Posted in Activision Blizzard, Diablo 3 News, StarCraft 2 News, World of Warcraft News

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Activision Blizzard announced the next Financial Results conference call will take place on February 7th, 2013 covering the rounds up of earnings and issues throughout the fourth quarter of 2012.

Blizzard Entertainment CEO Mike Morhaime is expected to discuss any relevant details of how World of Warcraft: Mists of Pandaria, StarCraft II: Wings of Liberty and Diablo III held up throughout the quarter.

Speculation

It is very possible, but not guaranteed, that Mike Morhaime might reveal details of BlizzCon 2013. I predict an approximate timeframe when Blizzard expects tickets to be sold. (i.e. end of Quarter X, mid-/or end-[of X-month], etc.)

We might get an update on Blizzard All-Stars. With the release of StarCraft II: Heart of the Swarm in the horizon, Global Launch schedule might go live in the following weeks after the conference call.

Do you have your own predictions? Share them with the community.

activision-blizzard-logoActivision Blizzard to Release Fourth Quarter 2012 Results on February 7, 2013

SANTA MONICA, Calif. –(BUSINESS WIRE)– Activision Blizzard, Inc. (Nasdaq: ATVI) intends to release its fourth quarter 2012 results after the close of the market on Thursday, February 7, 2013 . In conjunction with this release, Activision Blizzard will host a conference call that will be broadcast over the Internet.

Thursday, February 7, 2013
1:30 p.m. Pacific Time ( 4:30 p.m. Eastern Time )

To listen to the call, please log onto:

http://investor.activision.com/events.cfm

Or dial:
U.S. and Canada : 888-427-9414
International: 719-325-2165
Passcode: 3168482

Anyone planning to dial in to the call should RSVP to Pam Beaver at:

E-mail: PBeaver@activision.com

 

Previous Activision Blizzard Conference Call Transcripts

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Activision Blizzard Q3 Financial Results Conference Call – Nov.7.2012

Written by Medievaldragon on . Posted in Activision Blizzard, Diablo 3 News, StarCraft 2 News, World of Warcraft News

The Activision Blizzard Q3 2012 Financial Results conference call was held on November 7th at 4:30pm EST / 1:30pm PDT.

Blizzard CEO Mike Morhaime talked briefly about the overall progress of Diablo III, World of Warcraft: Mists of Pandaria and StarCraft II: Heart of the Swarm. He estimates StarCraft II: Heart of the Swarm is coming out on the first-half of 2013 (January-June range). BlizzCon 2013 and a Diablo III expansion were officially confirmed by Mike Morhaime at this conference as well. Listen to the recording below.

  • For the first nine months, Activision Blizzard was the #1 PC publisher in the U.S. and Europe. Additionally, for the third quarter, Blizzard Entertainment had two of the top five PC games with Diablo III and World of Warcraft: Mists of Pandaria.

  • Since its release in May 2012, Blizzard Entertainment’s Diablo III was the #1 bestselling game in dollars and units on the PC in the U.S. and Europe.

  • On September 25, 2012, Blizzard Entertainment released World of Warcraft: Mists of Pandaria, and sold through approximately 2.7 million copies of the game as of its first week of release. Additionally, on October 2, 2012, World of Warcraft: Mists of Pandaria was released in China, marking what the company believes to be the first time any game has officially released in China as part of a global launch.

  • As of September 30, 2012, Blizzard Entertainment’s World of Warcraft remains the #1 subscription-based MMORPG, with more than 10 million subscribers.

  • Diablo III has already sold an excess of 10 million copies.

Listen to the Conference Call

This recording captures only the portion where Mike Morhaime talks about Blizzard Entertainment’s results.

Transcript

Mike Morhaime: The third quarter for Blizzard was a very successful one, thanks in large part to the launch of Mists of Pandaria at the end of September. As of the first week, more than 2.7 million copies sold through and subscribership had grown to over 10 million at the end of the quarter. We also launched the game in China just one week after the other regions, which as far as we are aware, is the first time any game has officially released in China as part of a global launch. Overall, it was a successful launch and we were very pleased with the reaction from players and critics.

The team worked hard to create a good variety of deeply engaged content for a wide range of players. The challenge mode and the new raids had been very appealing for hardcore players, while our other new features, such as the pet battle system have been popular with players across the board. This breadth of new content, combined with a vast amount of existing content in World of Warcraft, has resulted in the game that has a lot to offer for veterans, as well as newcomers to online gaming.

We’re looking forward to maintaining engagement by providing more frequent content updates. The first major update to Mists of Pandaria is already in public testing, with additional updates to follow. We have other initiatives planned for the holiday season that we hope will maintain momentum from the launch and continued growth in the community.

Moving on to Diablo III, the game continued to sell very well in the quarter, riding the momentum from its record-breaking launch in May. We’ve updated the game several times to add new features and these changes have been received well by the community. Next on the slate for Blizzard will be Heart of the Swarm, the first expansion to StarCraft II. With 6 million copies of Wings of Liberty sold to date, we have a large community of players eagerly awaiting the next installment of StarCraft.

Beta testing for Heart of the Swarm is well underway and the development team has been collecting great feedback from the community. Just last week, we made a major content update to the beta in order to test some important community features, which have been well-received by players. These features are designed to improve the social aspect, as well as the overall user experience for StarCraft players. We’re working hard towards a first-half 2013 launch for Heart of the Swarm.

We plan on closing out 2012 with one more major initiative, our Battle.net World Championship event, which will take place on November 17th and 18th in Shanghai, China. This event is the culmination of months of intense eSports competition, involving dozens of online tournaments and live events across five continents. The global finals will be very much like a World Cup of eSports with more than 60 top pro gamers in StarCraft II and World of Warcraft competing at the event. The sold out Battle.net World Championship will be broadcast online to a global audience. Live streams and information about the tournament can be found at http://www.battle.net/bwc.

In closing, we’re very pleased with the success of Mists of Pandaria and Diablo III continues to be a top seller on the PC chart. Heart of the Swarm is well on its way and we have other exciting projects in the pipeline. BlizzCon will be returning next year as well, adding to what will be a busy 2013 for Blizzard. We continue to build on our infrastructure for long-term growth and remain focused on creating high-quality content for all of our players around the world.

Douglas Creutz (Cowen and Company): You mentioned you’re at above 1 million peak concurrent users in China. I just wondered how that maybe compared to levels that you’ve hit after prior expansion launches. And then secondly, if you could just talk about where you are with DOTA All-Stars?

Morhaime: Let me start with the second one, which is Blizzard All-Stars is in development and we’re doing some great work. Some internal testing is underway. We’re doing a lot of things to experiment with gameplay and I don’t really have anything concrete to announce on this call, other than we’re very excited about the game. So with respect to China, I really don’t have anything to announce in terms of historical comparables. I think — other than to say that the engagement has increased with the launch of the expansion and we’re very happy with the reception.

Stephen Ju (Crédit Suisse AG, Research Division): The prior iterations of Diablo II expansion pack released about 1 year after the game itself came out. So wondering if you have anything you share in terms of whether or not you have a similar plan for Diablo III to keep your users engaged?

Morhaime: We do have a plan. An expansion planned for Diablo. I don’t have any timeline to talk about. I think that the most important thing for us always comes down to the quality of the expansion and the gameplay, and so that will be a big factor in terms of driving our schedule.

Slideshow

Original Post

Starting tomorrow, Activision Blizzard will broadcast its third-quarter financial results conference call. Previous conference calls have been informative, while at other times not as much.

There is a slight chance that Mike Morhaime might announce or provide an approximate internal target for the official StarCraft II: Heart of the Swarm release date. Again, it is a possibility. Not guaranteed.

Micky Neilson was very cryptic on when StarCraft II: Heart of the Swarm would be announced. Check out the New York Comic Con 2012 videos.

Keep your eyes on Blizzplanet for images and details of whatever might come from the lips of Mike Morhaime. If you are able to listen to the broadcast on Wednesday, make sure to read the press release for further details. This news post will be updated tomorrow.

Press Release

Activision Blizzard To Release Third Quarter 2012 Results On November 7, 2012

SANTA MONICA, Calif. , Oct. 11, 2012 /PRNewswire/ — Activision Blizzard, Inc. (Nasdaq: ATVI) intends to release its third quarter 2012 results after the close of the market on Wednesday, November 7 , 2012. In conjunction with this release, Activision Blizzard will host a conference call that will be broadcast over the Internet.

Wednesday, November 7, 2012
1:30 pm Pacific Time ( 4:30 pm Eastern Time )

To listen to the call, please log onto:
http://investor.activision.com/events.cfm

Or dial:
U.S. and Canada: 888-455-2265
International: 719-325-2481
Passcode: 7041557

Anyone planning to dial in to the call should RSVP to Pam Beaver at:

E-mail: PBeaver@activision.com

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Activision Blizzard Q1 2012 Financial Results Conference Call – Transcript

Written by Medievaldragon on . Posted in Activision Blizzard, Diablo 3 News, StarCraft 2 News, World of Warcraft News

The Activision Blizzard Q1 2012 financial results conference call took place on May 8 at 1:30pm PST. Mike Morhaime discussed the latest progress with all Blizzard Entertainment’s upcoming projects.

Michael Morhaime

2012 is already shaping up to be a busy an exciting year at Blizzard, as we’re poised to deliver fresh content to our players in all 4, all of our major franchises. I’ll begin discussing our franchise updates with World of Warcraft.

At the end of Q1, global subscribership for World of Warcraft remained at 10.2 million. Maintaining our subscriber levels puts us in a great position as we drive toward the launch of Mists of Pandaria later this year. We opened the beta in late March and have rapidly expanded testing through a good portion of our community, including the 1.2 million players who signed up for the World of Warcraft Annual Pass.

That program closed at the end of April and was very successful. Thus far, the feedback we’ve collected from the Mists of Pandaria beta tests have been great and development continues to move with a good pace as we open up more of the expansion content to players.

Mists of Pandaria will offer a brand-new continent to explore, a new player class, the monk, and more importantly, new game modes that will help World of Warcraft continue to engage its diverse audience. Scenarios will offer for a more relaxed way of playing at a group that’s less structured than traditional dungeons.

Challenge modes will give hard-core players and guilds new ways to compete with each other while earning cool rewards. And the pet battle system will offer players a light-hearted diversion from regular questing, vengeance, PvP.

On the Diablo front, we are less than a week away from launching. In preparation, we recently conducted an open beta stress test for Diablo III where anyone could download and try out the game. Response we got was huge with more than 2 million people worldwide participating in the open beta.

All the testing we’ve done over the past several months has been critical for us in polishing and preparing Diablo III for launch, particularly in the case with the auction house feature. We believe that having this convenient method for item trading integrated within the game will enhance the overall player experience.

Now all that’s left is to get the game into the hands of our players. Official midnight launch events for Diablo III have been announced for locations around the world, including the United States, Europe, Korea, Taiwan and Southeast Asia.

More than 8,000 retail locations across North America and Europe will also be open at midnight to celebrate the launch. Our players are clearly excited about Diablo III as it’s already set a Blizzard record for pre-orders, including those who signed up for the Annual Pass.

We look forward to providing a more definite sales update in the coming weeks. Most importantly, I’m proud of all the hard work that the team has put into Diablo III. This game has been a long time in the making, and our community has been supportive of us every step of the way. I’m confident that their patience will be rewarded next week when we launch our best Diablo game yet.

Meanwhile, the StarCraft 2 development team continues to forge ahead. The team has begun early testing on the arcade update that will make big improvements to the custom game experience on Battle.net. In fact, the team is already working with map creators in the StarCraft 2 community to update their maps and take full advantage of the new functionality.

We’re aiming to make the new arcade system live in the next coming months.

In addition to the work being done on arcade, development on Heart of the Swarm is going very well. Just a few weeks ago, we announced that we would offer a beta sneak peak of Heart of the Swarm to attend the use of Major League Gaming Spring Championship.

The event will take place at Anaheim Convention Center from June 8 to June 10. It won’t be too long after the MLG tournament that we’ll be ready to announce plans for our beta.

We’ll also be running our own U.S.A. national finals for our own StarCraft dual championship series event at the same event. This is just one of the many such events that we’re running with partners in countries around the world. Our goal is to identify and foster local heroes in various countries and have them compete in the StarCraft II global finals.

New developments from Korea also bode well for StarCraft II eSports. Just last week, we announced partnerships with the Korean eSports Association and OnGameNet, the cable television station, to create new StarCraft 2 leagues in Korea.

These new leagues will complement GOMTV’s successful global StarCraft II league, providing viewers with even more options for StarCraft II eSports. This news has created tremendous excitement in the StarCraft community as many of the popular pro-gamers from StarCraft I are preparing to compete in StarCraft II.

As I mentioned earlier, 2012 is already a busy year at Blizzard. With Diablo III launching next week, Mists of Pandaria well into beta testing and Heart of the Swarm close to beta, we are well positioned to deliver multiple titles in the coming year, which means Battle.net is going to be an even more exciting place to be for online gamers.

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Activision Blizzard 2011 Q4 Conference Call – Mike Morhaime – Full Transcript

Written by Medievaldragon on . Posted in Activision Blizzard, Diablo 3 News, Featured Stories, StarCraft 2 News, World of Warcraft News

This is a full transcript of the speech by Blizzard Entertainment CEO Mike Morhaime during the Activision Blizzard 2011 Q4 Financial Results Conference Call. Let’s start with a few quotes by Activision Blizzard Bob Kotick.

Bob Kotick: 2011 is another record year for Activision Blizzard. In 2011, we generated nearly $1 billion in operating cash flow. And over the last 3 years, we’ve generated over $3.5 billion in operating cash flow, and we’ve returned more than $3 billion in value to our shareholders through dividends and stock repurchases.

In the U.S. and Europe, we remain the largest and most profitable third-party interactive entertainment company and the largest and most profitable third-party interactive entertainment digital publisher. We again delivered better-than-expected financial results and achieved multiple financial and operational records, as we have for the last few years. We achieved record operating margins and record EPS, which grew more than 17% over the prior year, and as I mentioned, we generated nearly $1 billion in operating cash flow, which allows us to continue to invest thoughtfully in our future growth and return capital to our shareholders.

With that in mind, we’re increasing our dividend 9% to $0.18 per share, and our Board of Directors has authorized a new $1 billion stock repurchase program. Our strong performance is a testament to the hard work and incredible talent of all of the Activision Blizzard employees around the world. Their commitment to excellence, teamwork and inspired creativity continues to drive our superior performance.

Today, we’re going to highlight a few important achievements from 2011 and provide some greater detail about our plans for 2012 and beyond, including our strong lineup, our expansion into new markets and new business models, and our development initiatives for new platforms.

2011 was a very competitive year. There were many great products released, and gamers had more entertainment choices on more platforms than ever before. Despite these choices and new competitors, Blizzard Entertainment’s World of Warcraft remains far and away the world’s largest online subscription-based massively multiplayer game, ending the year with 10.2 million subscribers. World of Warcraft has a very loyal group of players and later in the call, Mike Morhaime will share some of this year’s plans for the franchise.

We expect growth from Blizzard. In addition to World of Warcraft, which provides a strong foundation, Blizzard plans to launch at least 2 titles this year, including Diablo III with its real money auction house. Business pipeline has never been stronger, including World of Warcraft: Mists of Pandaria, StarCraft II: Heart of the Swarm, the Blizzard DOTA, and the next-generation MMO.

Morhaime: I want to quickly recap our activity from 2011. We launched both StarCraft II and World of Warcraft: Cataclysm in China and introduced the localized version of World of Warcraft with the fast-growing brazilian market. We also announced the expansion sets for StarCraft II, World of Warcraft, and kicked off the beta test for Diablo III. We’re preparing to launch multiple titles in 2012. And with next BlizzCon scheduled for 2013, our development teams are focused on bringing these games to players as quickly as possible.

World of Warcraft: Cataclysm

Moving on to financials. In large part due to the record-breaking Cataclysm launch in 2010, our results in both Q4 2011 and the year are down versus prior year. Despite not releasing a new game, we still posted approximately $500 million in operating income for 2011 while investing in our strongest pipeline of games ever.

Subscriber numbers for World of Warcraft ended 2011 at approximately 10.2 million, with no significant change relative to the prior quarter. We released a major update in November, which included new dungeons and raids, as well as new features that made our exciting raid content more accessible to a broader audience.

This content update has been well received by the community, and we believe it has contributed to retaining our players in the wake of competitive launches. Another initiative that has been very successful is the World of Warcraft Annual Pass.

This program was announced at BlizzCon this past year. Under its terms, players who commit to being a World of Warcraft subscriber for one year will get a free copy of Diablo III, unique digital items in World of Warcraft, and other benefits. To date, we have signed up more than one million players in the West for the World of Warcraft Annual Pass.

World of Warcraft: Mists of Pandaria

Some of you may have seen recent news about the upcoming World of Warcraft expansion, Mists of Pandaria. Last week, we began inviting global press to visit our office to get a hands-on look at the game.

The press visit will take place next month, and our players will be able to read the latest news on the game on March 19.

We’re looking forward to showcasing the game to our community and collecting more feedback as we prepare for the upcoming beta for Mists of Pandaria.

Diablo III

I mentioned earlier that we began beta testing for Diablo III last year. After receiving feedback from the community and our internal teams, we’ve implemented changes to the game, which we believe will greatly improve the game experience and ensure that the final release will live up to our high expectations.

We have also been testing the auction house functionality. This testing will help ensure a smooth rollout of this feature with the retail launch so our players can safely and securely trade items with each other. Given the popularity of the Action/RPG genre and the keen interest in Diablo III, we expect this launch to be a big opportunity for Blizzard. We can also confirm that we are targeting a Q2 launch for Diablo III. We expect to announce more details about the release schedule in the coming weeks.

StarCraft II

2011 was definitely a banner year for eSports. One of the most popular leagues in the world, Major League Gaming, posted their more successful year ever. MLG has served more than 3.5 million unique viewers over the course of the year, with much of that viewership driven by StarCraft II.

We believe that the excitement for eSports drives longevity and demand for our games. And with the recent announcement of our Battle.net World Championship season, we’re looking forward to taking an even more visible leadership role in this space.

As part of the Battle.net World Championship initiative, Blizzard will work with eSports partners to create grassroots open tournaments at the national level to boost engagement in countries around the world. The reaction from our community on this initiative has been very positive, and we are looking forward to another exciting year for eSports.

StarCraft II: Heart of the Swarm

In the midst of all the eSports buzz, the StarCraft development team has been making great progress on the new expansion, Heart of the Swarm. The feedback we collected on the campaign and multiplayer content from this past BlizzCon has been invaluable. We will share more news about Heart of the Swarm in the coming months.

Blizzard DOTA

Finally, we continue development work on Blizzard DOTA, a new free-to-play online game which we showcased at the last BlizzCon. Blizzard DOTA is being created using the StarCraft II engine and is based on an online gaming style that’s become quite popular in recent years.

We believe Blizzard DOTA has unique design elements that will distinguish it from competitors. More importantly, our game will feature well-known heroes and characters from all Blizzard franchises in the game, giving it instant recognition and appeal among Blizzard gamers. As with Heart of the Swarm, we’re looking forward to sharing more news about Blizzard DOTA at a later date.

Conclusion

We expect 2012 to be a big year for Blizzard, with easily our strongest pipeline of games ever. With multiple titles expected to launch in 2012, we’re committed to bringing our players what they want most, new gaming experiences in all their favorite Blizzard universes. And I speak for everyone at Blizzard when I say that we all can’t wait to join them on Battle.net in the battlefields of Blizzard DOTA, Diablo III, Heart of the Swarm and Mists of Pandaria.

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Official Diablo III Beta Starts End of 2011 Q3

Written by Medievaldragon on . Posted in Activision Blizzard, Diablo 3 News

It is official! Blizzard Entertainment CEO Mike Morhaime announced at the Activision Blizzard Q2 2011 Financial Results Conference Call that Diablo III beta will begin at the end of Q3 2011. Likely before BlizzCon 2011 (Held on October 21-22 at the Anaheim Convention Center). The remaining window of Q3 for Diablo III beta testing to start is anywhere between August and September 30. October is not part of the third quarter.

We are very excited after the recent Diablo III Press Event. For those unfortunate, Blizzplanet will offer livestreams of Diablo III Beta, and will chat with players to respond questions and execute petitions live. We at Blizzplanet got plans to announce a Diablo III beta event that will make fans happy to be able to participate in as a community. Stay tuned.

This page will be updated soon with transcript. Check us back later.

Activision Blizzard Q2 2011 Conference Call Recording

Transcript

Since the last call, we launched Cataclysm in China, and made some exciting announcements on both StarCraft II and Diablo III. I’ll go into a greater detail about those in a moment. First, I’d like to talk briefly about the financial side of the business.

For the first half of 2011, Blizzard is up year-over-year in net revenue as we’ve added Cataclysm and StarCraft II to our product mix and have brought value-added services live in China. In addition, we have increased our investments in service and product development in order to better serve our community and strengthen our business for the long term.

Moving on to StarCraft II, back in May, we’ve invited press from around the globe to get a first look at the upcoming expansion pack, Heart of the Swarm. We showcased a couple of levels from the game’s campaign, and we have seen a lot of positive feedback and coverage about the sneak peak. We look forward to sharing more information and news about Hear of the Swarm at the upcoming the GamesCom later this month, as well as at BlizzCon in October.

We also just released the Starter Edition of StarCraft II this week. The starter edition lets players play through a portion of the single player campaign, and they can also play unlimited multiplayer battles as the Terran race on a few different maps for free. Our hope is that the Starter Edition will encourage more gamers to try out StarCraft II, and they’ll eventually upgrade to the full edition.

On the World of Warcraft side, we experienced a slight decrease in subscribership during Q2, closing the quarter at 11.1 million subscribers worldwide. Since that time, we launched Cataclysm in China and have seen an increase in concurrency within the region. We’re very excited to have delivered the latest expansion to Chinese players, and we look forward to working with our local partner NetEase to continue improving the rate at which we are able to release new content to our players there.

In addition, to the China launch, we also just announced that we will be releasing a Portuguese version of World of Warcraft in Brazil later this year. Aside from promoting World of Warcraft in other regions, we’re taking other steps to bring more players into the community. With the new World of Warcraft Starter Edition, players are now able to play the game for free until Level 20 with no time restrictions. Since the launch of this program, we’ve seen a significant increase in new account creations, which we hope will allow us to continue attracting new players.

The World of Warcraft development team is also working on the next content update, which will include major new raid and dungeon content. We believe that this new end-game content will keep the game fresh for current players and provide compelling reasons for laps players to come back.

Before moving on to Diablo III, I want to thank our World of Warcraft community for their warm response to our recent charity pet, the Cenarion Hatchling. We pledged that Blizzard would donate 100% of the proceeds from sales of this pet through July 31 to help Japan relief efforts. Through this initiative and the generosity of our players, Blizzard will donate more than $1.9 million dollars to support ongoing earthquake and tsunami relief in Japan.

Many of you are already aware of the big news that we recently shared about Diablo III. Alongside the gold-based auction house, we will include an auction house within Diablo III that will allow players to trade items using real money. This auction house will be a secure and safe environment for players to trade their items over Battle.net. In the previous game, Diablo II, we did not offer such a feature, which resulted in many players turning to unscrupulous third-party services to purchase items. We felt that because players clearly wanted such a feature, it made sense for us to build it in the Diablo III so they could trade in a more convenient and secure manner than going through unauthorized third-party.

Players who participate in this optional system will be able to list items on the auction house for a flat fee, with another charge for completed transactions. When listing an item for sale, players will have the ability to direct the proceeds either through their e-balance which will remain on Battle.net, or to cash out through a third-party service. We have not disclosed specific fees, but we plan on keeping them nominal so that more players can participate in it, if they so choose. And so that players will opt to use our secure approved method of item trading and not churn to third parties.

We will also allow a limited number of free listings each week, so players can build up a balance without needing to deposit any funds to get started.

As for the upcoming beta, Diablo III is still on track to go into external beta testing later this quarter. And we are still working hard to ship the game before the end of the year. However, we’re not ready to commit to a release date at this time. What I can tell you is that the press who visited us last week played a near final version of the beta content and the response has been overwhelmingly positive. We are very much looking forward to getting the beta into the hands of our players and collecting their feedback for the final phase of development.

Finally, I’d like to take a moment to talk about BlizzCon, where we will hold exciting StarCraft II and World of Warcraft tournaments and share news about all of our franchises. Once again, this year we sold out the show in a matter of seconds. I’m also very pleased to note that this year’s BlizzCon will host the finals event for the Global StarCraft League (GSL), which is growing in viewership around the world. The GSL recently announced that they served more than 50 million videos-on-demand and live stream this year alone.

Another prominent eSports league, Major League Gaming, held a tournament in Anaheim this past weekend and served more than 30 million online streams of their eSports matches over 3 days. The interest in all of these leagues illustrates that eSports is becoming a truly global phenomenon, and it’s great to see StarCraft II at the center of all the activity.

The rest of 2011 and beyond is looking very exciting for Blizzard. We are making great progress on Diablo III, and the StarCraft II team is hard at work on the Heart of the Swarm. As always, we are continuing to make adjustments to our infrastructure to better support our massive community of players and keep pace on all the products in our pipeline.

Public Q&A

Brian Karimzad (Analyst, Goldman Sachs): Hi, there. Mike, and I know you don’t intend to speak in the same superlatives as Eric does, but can you help us frame how you guys are thinking about the lifetime value of the Diablo III player versus maybe some of your other franchises, or maybe some of the stuff on the publishing side?

Mike Morhaime: What I would say is that Diablo III, at least in the West, is primarily going to operate off of a standard box revenue model, with the box and [expansions] to follow. The Auction House is really a big unknown for us. We really don’t have any predictions on how popular it will be, although we do expect it to be a pretty integral part of the game, and we also expect it to drive engagement and longevity in the life of Diablo III.

Edward Williams (Managing Director, BMO Capital Markets): Good afternoon. A couple of quick questions for you. Can you comment a little bit, Mike, on Cataclysm in China? What have you seen relative to what you’re targeting coming out of it? And can you also just talk a little bit about the subscriber levels? What you think is driving that number?

Mike Morhaime: Cataclysm just launched a couple of weeks ago in China. We have seen concurrency levels increase substantially. I think that there’s still big opportunities in China to continue growing there, especially as we focus more on the Tier 2 and 3 cities.

China represents, in terms of broadband penetration, there are more broadband users in China than any other country in the world, and it’s continuing to grow from there. So I think that presents a huge opportunity for us in the future. Especially as the Tier 2 and 3 gamers upgrade their systems to be able to support World of Warcraft.

In terms of subscriber growth around the world, what I would say is what we have seen is that subscribership tends to be seasonal and driven by content updates, and so as we’re heading further away from an expansion launch, it’s normal to see some declines, where the team is currently working on our largest content update since Cataclysm and that will hit later this year.

We are also doing things to continue driving growth like the recent Starter Edition for World of Warcraft, which lowers the barrier to trial by providing the first 20 levels free. We have seen an increase in new account creations from that. It’s still too early to tell on conversions to subscribership, but I really believe that, that is an important direction for us to continue lowering that barrier to trial and reaching new players around the world.

We’re also looking at new markets. We had great success in Russia. We think that Brazil is really an emerging market that has a lot of potential in terms of the number of broadband users. They’re a top 10 country. Their economy has performed very well compared to the rest of the world during the recession, and we already have some Brazilians playing in English, but we think the market can be a lot bigger in Portuguese.

I think that there are other countries we’re looking at beyond that as well, but I don’t have anything that I can talk about.

Edward Williams (Managing Director, BMO Capital Markets): How much of your subscriber base in China changed with regards to Tier 2 and Tier 3 over the course of the last couple of years? How significant has that become?

Mike Morhaime: That’s an area of growth for us, but we don’t break down those numbers, sorry.

Jeetil Patel (Deutsche Bank Securities): A couple of questions actually. First of all, on Diablo III, what’s the determinant on Diablo III coming out in 2011 versus 2012? Second, you’ve got 11.5 million subscribers, you did about $359 million of revenue which was up nicely versus a year ago. While subs are down, can you reconcile the incremental revenue from a product sales versus value added services standpoint? And I have a quick follow-up.

Mike Morhaime: In terms of the timing of the Diablo III release date, really, it’s just going to come down to there are a lot of moving parts in putting out a content release like Diablo III. We talked about new Auction House technology which has not been fully tested. We’re not yet in beta. And really, it’s just going to come down to when the game is ready for prime time. And so we’ll know more when we hit beta, and we’ll know more when we put some of these new systems into test. It’s a brand new infrastructure and with a lot of complex moving parts. In terms of the World of Warcraft business, clearly, coming off of the Cataclysm launch, we have a lot of momentum coming into 2011, and that has certainly helped the revenue numbers. I think that the value-added services, launching in China is certainly a factor. I think that those are probably the major factors driving revenue. We ended the year slightly up compared to last year. So we’re pretty happy with the result.

We’re increasing our investment in new projects that haven’t necessarily been announced. And we have increased the investment in customer service, but I would say, I think we’re at scale at this point. And there was — we did answer beta for StarCraft II last year during the quarter, which allowed us to capitalize development expenses, and I think that helped us out on the OpEx side on the comparison.

Eric Handler (Analyst, MKM Partners LLC): Is there any opportunity to use an Auction House type of services, or similar value-added services for StarCraft II that you have for Diablo and World of Warcraft?

Mike Morhaime: We really tried to design the features of these games to leverage the needs of the games themselves. Diablo III and previous Diablo games — as well — were very item-centric games with a lot of item trading, without a good mechanism really for doing that. And so, I guess the equivalent type of things for StarCraft II would be our map marketplace where players are able to create their own custom maps, and we do have plans to provide a marketplace where they’d be able to offer them up to other players for sale. Of course it’s very complex system that is still being designed. I think that some of the things we’re doing on the back end to support the Diablo III Auction House actually can be leveraged in StarCraft II to support that system which is great. On the World of Warcraft side, we really don’t have plans to do something similar. It’s a very different game, and it really isn’t designed with this type of item trading in mind.

Douglas Creutz (Vice President and Senior Research Analyst, Cowen & Company LLC): You guys had north of a 20% sequential revenue increase in Asia during the quarter. I know you launched StarCraft II in China and you also launched the added value-added services. I was wondering if you could kind of talk about, directionally, what was the biggest drivers of that revenue increase?

Mike Morhaime: The biggest drivers for that were the popularity of World of Warcraft, especially in China, and the launch of the value-added services.

Bob Kotick: I think one of the things we’re realizing though is that the success that we’ve had which is unique for Western publishers in China, we’ve learned so much about the opportunity that over the next 3 to 5 years, we’ll continue to see investment and real opportunity for us in places like China that are not really opportunities for many of our competitors.

Media

 

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Diablo III Beta Begins Q3 2011

Written by Medievaldragon on . Posted in Activision Blizzard, Diablo 3 News, Featured Stories

It’s official. During the Activision Blizzard Q1 2011 Financial Results conference call held today at 1:30pm PDT (4:30pm EST), Blizzard Entertainment CEO Mike Morhaime officially announced Diablo III beta testing will commence this upcoming Q3 2011. It was not specified if it’s a fiscal Q3, or otherwise. One could extrapolate Diablo III Beta might start in early July, after the Diablo II anniversary, which coincides with the Diablo III official announcement held in Paris at the 2008 Blizzard Worldwide Invitationals. Here is the quote from Blizzard Entertainment CEO Mike Morhaime during today’s Activision Blizzard Q1 2011 Financial Results conference call:

Morhaime: “On the Diablo III front, I’m pleased to report that we began internal company live testing last week. The game is looking great, and we are currently targeting a Q3 Launch for external beta testing. The development team is working hard to try and launch Diablo III this year. But I want to be clear that we do not have an official release date or window yet. As always we won’t compromise the quality of the game in order to hit a window.”

Note: Check back later today and tomorrow for the full transcript and recording sample.

Transcript

Morhaime: Blizzard Entertainment has come up with the most successful year ever in 2010 shipping two record-breaking games in World of Warcraft: Cataclysm and StarCraft II: Wings of Liberty. As we drive deeper into 2011, we are looking to build off that momentum by providing even more epic experiences to our players; and we are also working hard on our exciting pipeline of new games.

On our financial side, we got $357 million dollars in revenue and $170 million dollars in operating income. We’re pleased with the growth in the Blizzard community over the past year, and expect to grow further with the upcoming launch of Diablo III.

Looking at the World of Warcraft side of business, we were pleased to see record sales on the Cataclysm launch in Unites States and Europe which helps drive global subscribership. During the first quarter of 2011, as players have eagerly consumed the new content, we have seen subscribership return to pre-launch levels in the last.

We finished the quarter with 11.4 million subscribers worldwide. Moving forward our objective is to continue delivering new content to players in all regions to further energize our community. Our partners at NetEase are continuing to drive toward launching World of Warcraft: cataclysm later this year, which should reinvigorate that community with some new exciting content.

For all our other regions, we recently launched the first content update for Cataclysm. This update includes new dungeons, special rewards for guilds, and a feature to help players find a guild to join. Player feedback has been positive and as a result we have seen an increase in player engagement and higher daily concurrency.

In addition, we have another major update already in testing that includes new raids and quests content, as well as an exciting new dungeon journal that will make raids and dungeons more approachable for all players.

I also have some news to share in regards to our [?] services. We recently launched several [?] for World of Warcraft players in China, allowing our chinese community access most of the services available to players in other regions.

We also launched a mobile guild chat system. This new feature allows subscribers of our Premium World of Warcraft Remote Service to chat with their guildmates through mobile devices.

Finally, we announced a new premium mount that will be offered in the Blizzard Store in a near future.

Moving on to StarCraft II, the first quarter was an eventful one for this franchise. In addition to releasing new ladder and costume map content for our players, we also launched the game in China. Already, the China region is one of our largest communities for StarCraft II in terms of concurrency, and [effort?] is up to a great start in the region.

We’ve signed with several partners to run StarCraft II Tournaments in China, as well as a Chinese broadcast partner to televise Korean GSL matches in Chinese. As we look to the future of StarCraft II, the development team is also hard at work on the first expansion: Heart of the Swarm. We’ll be showcasing that game to worldwide press later on this month.

On the Diablo III front, I’m pleased to report that we began internal company live testing last week. The game is looking great, and we are currently targeting a Q3 Launch for external beta testing. The development team is working hard to try and launch Diablo III this year. But I want to be clear that we do not have an official release date or window yet. As always we won’t compromise the quality of the game in order to hit a window.

Lastly, I want to talk a little bit about BlizzCon. Tickets will be going on sale later this month, and as in the past we expect it to sold out quickly. We also offer the show via internet stream and DirecTV Pay-Per-View to reach our players who can’t make it out to the show. Last year we had more than 95,000 paid viewers join us via DirecTV or the live internet stream.

As always, we look forward to sharing exciting news with our community at this year’s show.

Thrilled? Excited? So are we. Get your official Diablo III T-shirt to celebrate Diablo III Beta details finally coming your way.

Wanna buff up your Diablo lore in advance? Check out all the Diablo novels:

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Transcript: Activision Blizzard Q4 2010 Financial Results Conference

Written by Medievaldragon on . Posted in Activision Blizzard, StarCraft 2 News, World of Warcraft News

Activision Blizzard, Inc. (Nasdaq: ATVI) released its fourth quarter and calendar year 2010 results after the close of the market on Wednesday, February 9, 2011 at 1:30pm Pacific Time.

Mike Morhaime (president, Blizzard Entertainment) said there will be more details about Diablo III Beta at the next Financial Conference Call, which seems to indicate it might start in 2011, and as a guess-timate I’d say 2012 launch date considering beta testing usually lasts around six months. Sounds exciting.

A few days ago, Blizzard Entertainment announced BlizzCon 2011 will take place at the Anaheim Convention Center this upcoming October 21-22.

In previous conferences, Mike Morhaime announced the approximate date of StarCraft II: Wings of Liberty beta test, the plans for a charity-motivated WoW vanity pet sales: the Wind Rider Cub and the Gryphon Hatchling, and he also revealed the date of BlizzCon 2010. This conference is always a platform for some kind of official announcement by Blizzard Entertainment.

TRANSCRIPT

Mike Morhaime: Before I discuss our performance in 2010, I wanted to note that yersterday was the 20th Anniversary of Blizzard Entertainment. It’s hard to believe that the company has grown from a trio of UCLA engineering graduates to one that serves millions of players around the world.

That success has been fueled by continuity. Many of the original Blizzard employees who joined us in the early years are still with us today, and we have worked hard to pass on our core values and reinforce our culture of excellence with our new employees.

We were a company of gamers back then, and we are still a company of gamers today.

We have assembled some of the strongest and most passionate development teams in the industry, and that positions us well to continue delivering epic entertainment experiences.

Blizzard’s 20th year was our best yet. We shipped two games: StarCraft II: Wings of Liberty and World of Warcraft: Cataclysm that was incredibly successful.

StarCraft II and Cataclysm were the Top 2 selling PC Games in 2010 in retail in North America, and Europe combined. These two games have delivered a record year.

At 2010, Non-GAPP revenues exceeded $1.65 Billion dollars, an increase of 38% from 2009. In addition, our non-GAPP operating income reached $850 million dollars, this year, increasing 53% over the prior year.

As we previously announced, World of Warcraft reached 12 million subscribers worldwide last year, and has grown from there following the release of Cataclysm in December. That release with another record-breaking record-breaker for Blizzard Entertainment.

Worldwide sales as of day one topped 3.3 million units, and one-month sales hit more than 4.7 million units.

These sale numbers are a reflection of the ongoing strength of World of Warcraft and our community. Even as the game has passed the sixth year mark., the critics have also reacted positively with the game currently holding a 90 average of metacritic, and end of the Year Awards.

Our developers have continued to raise the bar for quality, and creativity in the MMO space. The award-winning content they have created in Cataclysm will help us maintain our competitive advantage as new competitors come online in the future.

In addition to Cataclysm, we are seeing continued success with StarCraft II. The game has won several major gaming awards including a spot in the Time Magazine Top 10 Games for 2010, and Wired overall Game of the Year.

Sales continue to be strong with StarCraft II approaching 4.5 Million units sold to date worldwide. With our developers working hard to support this huge new community, we have added new features such as Chat Channels on Battle.net at the request of our players.

We also just released a trio of official custom games a few weeks ago. These custom maps are important to the longevity of StarCraft II, as they showcase pluzzle and party game modes that are popular with casual players.

The new map releases also include a lot of artwork for the community to use in creating their own custom maps. To date, worldwide, StarCraft II community developers have uploaded more than 150,000 maps to Battle.net.

As we head into 2011, we want to build upon the momentum from the launches of Cataclysm and StarCraft II. We will focus on growing our World of Warcraft community by supporting our players. The developers are already hard at work on additional updates for the game. We’re also working with our partner NetEase to prepare Cataclysm for launch in China, which includes getting the proper government approvals. Our goal is to reduce the amount of time between our game launches in China versus the rest of the world.

On the StarCraft II front, we will continue to improve the Battle.net experience, as well as create new content for our players. We recently began public testing on a handful of the ladder maps to keep the game fresh for our multiplayer community. And as with Cataclysm, we’re working with our partners at NetEase to prepare StarCraft II for launch in China.

However, we have no specific updates to share at this time. Finally, the development team is hard at work on Heart of the Swarm, which is first expansion to StarCraft II. We are looking forward to sharing more information about that expansion, as I said, in the coming months.

As for Diablo III, development continues to go well, and we’re very excited about the game. Our most recent public showcase for Diablo III was at the G-Star show in Korea, where demo stations attracted huge lines of players. I’m looking forward to sharing some more news about the game and our upcoming beta on the next call.

Finally, I wanted to remind everyone that we just announced our BlizzCon show for 2011, which will be taking place on October 21 and 22 at the Anaheim Convention Center. Our shows keep getting better and better every year, and we are looking forward to meeting with our players and sharing exciting news about Blizzard at the event.

In summary, 2010 was a great way to cap off an amazing 20-year run at Blizzard Entertainment. We added more titles our stream of best-selling, award-winning games, and more gamers around the world are playing Blizzard games today than ever before.

The next 20 years promise to be even better. The games we operate today and the games we have in the pipeline represent the best and widest slate of content that Blizzard has ever produced. The future looks bright.

As more and more people around the world get access to broadband and become interested in online gaming, Blizzard is in a unique leadership position to attract those players to become part of our community.

Q&A

Jeetil Patel (Deutsche Bank): Your 2011 guidance for the year, you have a comment in there in that it does not yet include a Blizzard title. I guess what is the qualifier to get a Blizzard title out this year? I guess it seems like the commentary seems awfully interesting in that. Are you waiting for some sort of percentage completion, competitive slate? Can you just maybe elaborate more as to why there isn’t a Blizzard title this year? Second, can you or do you plan to leverage your World of Warcraft or Call of Duty kind of user base to reach and offer a services model similar to Netflix? I mean it’s interesting that you’ve got a great content offering as a services offering at Netflix, can you leverage your two major IPs or two significant subscriber bases today to do something similar in gaming? Or do you think you need a new or different platform to deliver content in the form of gaming as a service?

Thomas Tippl: I don’t know how many questions those were but hopefully we kept track of all of them. On the first one, with regards to the commentary around the Blizzard title. As you know and, as we said before, we think that in the long run Blizzard is good for one major release a year. But of course, what always rules is the quality of the game has to be there. And that’s why, for example, we didn’t have a release in 2009, but we had two releases in 2010. And as you can see, the results speak for themselves. I think that has played out well for our shareholders. With regards to Diablo, we don’t have a date yet. So we felt it was prudent not to bake it in, because again we don’t want to find ourselves in a situation where we either disappoint or would have to make any compromises on the game quality which we would never do. If the title ships, obviously, that will present material upside to the outlook that we have provided.

Jeetil Patel – (Deutsche Bank): I guess going back to the Diablo question, I guess can you talk about how far along it is in terms of percentage of completion?

Michael Morhaime: I don’t have a percentage of completion rating for you today, other than to say that the game’s coming along very well. We are very happy with the development progress that the team is making, but until we get to beta and we have the community help us test the game, we aren’t going to lock in a release date. And so I just want to clarify that we are not setting a date. I am not saying that it’s going to be 2012. I am just saying that there isn’t a date yet. And so given that we haven’t locked into a date, we fully support the decision not to include it in guidance.

Activision Blizzard Reports December Quarter and Calendar Year 2010 Financial Results

  • Company Achieves Record CY 2010 Operating Cash Flow of $1.4 Billion

  • CY 2010 GAAP Net Revenues Increase Year Over Year to $4.45 Billion
  • Company Delivers Record CY 2010 EPS
  • 2010 Revenues From Digital Channels Grow Over 20% to More Than $1.5 Billion
  • Company Announces New $1.5 Billion Stock Repurchase Program
  • Company Announces 10% Increase in Cash Dividend to $0.165 per Common Share

SANTA MONICA, Calif. , Feb. 9, 2011 /PRNewswire/ – Activision Blizzard, Inc. (Nasdaq: ATVI) today announced financial results for the calendar year and quarter ending December 31, 2010 . Activision Blizzard reports results on both a GAAP and a non-GAAP basis. A reconciliation of the company’s GAAP and non-GAAP results can be found in the attached tables.

For calendar year 2010, Activision Blizzard’s GAAP net revenues increased to $4.45 billion , as compared with $4.28 billion for 2009. On a non-GAAP basis, the company’s net revenues were $4.80 billion , as compared with $4.78 billion for 2009. Revenues from digital channels for the calendar year were more than $1.5 billion , an increase of more than 20% year over year.

For calendar year 2010, Activision Blizzard’s GAAP earnings per diluted share increased to $0.33 , as compared with $0.09 per diluted share for 2009. The 2010 results include a $0.16 per share non-cash reduction in the valuation of intangible assets reflecting weaker retail sales in the casual and music genres, while the 2009 results included a similar non-cash charge of $0.19 per share. On a non-GAAP basis, the company’s earnings per diluted share grew 14.5% to $0.79 , as compared with $0.69 per diluted share for 2009.

For the quarter ended December 31, 2010 , Activision Blizzard’s GAAP net revenues were $1.43 billion as compared with fourth-quarter 2009 net revenues of $1.56 billion . On a non-GAAP basis, the company’s net revenues for the quarter were $2.55 billion , as compared with fourth-quarter 2009 non-GAAP net revenues of $2.50 billion . Revenues from digital channels for the quarter were more than $470 million , an increase of 40% year over year.

For the quarter ended December 31, 2010 , Activision Blizzard had a GAAP loss per share of $0.20 , inclusive of the $0.16 per share non-cash charge mentioned above. On a non-GAAP basis, the company’s earnings per diluted share grew to $0.53 . For the comparable quarter in 2009, the company had a GAAP loss per share of $0.23 , inclusive of the $0.19 per share non-cash charge mentioned above, and non-GAAP earnings per diluted share of $0.49 .

Robert Kotick , CEO of Activision Blizzard , stated, “Because of focus and disciplined execution, 2010 was another extraordinary year for Activision Blizzard . We made some of the best games we have ever made in over 30 years of being in the interactive entertainment business. We benefited from new content releases for two of the world’s most successful online entertainment franchises: Activision Publishing’s Call of Duty®: Black Ops and Blizzard Entertainment’s World of Warcraft®: Cataclysm™, a new installment in the world’s largest subscription-based massively multiplayer online role-playing game. During the year, we grew our net revenues, delivered record earnings, achieved record GAAP and non-GAAP operating margins of 11% and 29%, respectively, and generated $1.4 billion in operating cash flow.”

Kotick added, “Activision Blizzard’s key franchises have larger audience bases than ever before and we continue to see significantly enhanced user activity and engagement for our expanding online communities. Our revenues from digital channels, which now account for over 30% of our overall revenues, were driven by increased sales of Activision Publishing’s Call of Duty map packs and value-added services for Blizzard Entertainment’s World of Warcraft. Blizzard significantly evolved its direct digital distribution capabilities with the launch of its new Battle.net® service and saw players embrace its service offerings in record numbers. Notably, since Call of Duty: Black Ops was launched in November players have spent an average of 52 minutes per day playing online, roughly equivalent to the 55 minutes that the average user spends each day on Facebook.(1) As of February 2, 2011 , more than 27 million gamers have played Call of Duty games online, logging more than 2 billion hours, or the equivalent of more than 229,000 years of gameplay.(2)”

Kotick concluded, “Online gaming continues to broaden its appeal. Our shareholders continue to be well positioned to benefit from these trends and the focus of our incredibly talented employees around the world continues to allow us to lead our industry. We expect to continue to drive long-term growth, increase our return on invested capital and generate strong cash flow as we have over the last few years. Our strong balance sheet affords us the financial flexibility to invest in games that few companies have the ability to create and allows us to provide our shareholders with value through dividends and share repurchases.”

Business Highlights

  • Activision Blizzard was the #1 publisher overall in North America and Europe for the calendar year.(3)

  • Activision Blizzard was the #1 publisher in North America on the Xbox® 360, PlayStation® 3 and PC collectively for the calendar year.(4)
  • Blizzard Entertainment’s World of Warcraft: Cataclysm, which was launched on December 7, 2010 , sold through more than 3.3 million copies worldwide during its first 24 hours of release, making it the fastest-selling PC game of all time. It continued to sell through more than 4.7 million copies in its first month.(5)
  • As of December 31, 2010 , more than 12 million gamers worldwide are subscribed to play Blizzard Entertainment’s World of Warcraft.(6)
  • For the December quarter, in North America and Europe, Call of Duty: Black Ops was the #1 best-selling console title in dollars ever during a single quarter and the Call of Duty franchise was the #1 franchise overall.(3)
  • In November 2010 , Call of Duty: Black Ops became the first video game ever to surpass $650 million in retail sales in its first five days of release.(2) To date, the game has achieved more than $1 billion in retail sales worldwide.(3)
  • As of January 31, 2011 , total unique gamers playing Activision Publishing’s Call of Duty: Black Ops increased by more than 49% over the number of total unique gamers that played Call of Duty®: Modern Warfare® for the first three months after each game’s release.(7)
  • On February 1, 2011 , Activision Publishing released Call of Duty: Black Ops First Strike, the first add-on pack for Call of Duty: Black Ops, on Xbox LIVE®. The map pack set new Xbox LIVE records with more than 1.4 million downloads in the first 24 hours, an increase of more than 25% over last year’s Call of Duty: Modern Warfare 2 Stimulus Package.(7) The map pack also will be available on the PlayStation® 3 computer entertainment system on March 3, 2011 and on the PC later in the quarter.

Company Outlook

Activision Blizzard will continue to invest its capital and resources in the significant opportunities afforded by online gaming worldwide and will reduce its exposure to low-margin and low-potential businesses. In 2011, the company will allocate the majority of its resources and focus toward opportunities which we expect will afford us the greatest competitive advantages and the greatest potential for best-in-class quality, high-margin digital growth, and long-term success. These opportunities include Blizzard Entertainment’s games currently in development, robust investment in forthcoming Call of Duty titles, the development of a best-in-class digital community surrounding the Call of Duty franchise, a new property from Bungie and an innovative new universe with broad appeal that will be revealed at Toy Fair later this week and will bring the world of toys, video games and the Internet together in an unprecedented way. These investments should better position Activision Blizzard for long-term growth and enable it to continue expanding its position as the largest digital publisher.

At the same time, due to continued declines in the music genre, the company will disband Activision Publishing’s Guitar Hero business unit and discontinue development on its Guitar Hero game for 2011. The company also will stop development on True Crime: Hong Kong™. These decisions are based on the desire to focus on the greatest opportunities that the company currently has to create the world’s best interactive entertainment experiences.

For calendar year 2011, Activision Blizzard expects GAAP net revenues to be $3.95 billion and GAAP earnings per diluted share to be $0.56 . On a non-GAAP basis, the company expects net revenues of $3.9 billion and non-GAAP earnings per diluted share to be $0.70 for the calendar year. Since Blizzard Entertainment has not confirmed a launch date for its next global release, the company’s calendar year outlook at this time does not yet include a new game from Blizzard in 2011.

For the first quarter of 2011, Activision Blizzard expects GAAP net revenues of $1.28 billion , and GAAP earnings per diluted share of $0.28 . The company’s first quarter GAAP earnings per diluted share outlook includes the impact of between $0.02 – $0.03 of expenses related to the restructuring. On a non-GAAP basis, the company expects net revenues of $640 million and $0.07 earnings per diluted share for the first quarter.

Activision Blizzard’s financial outlook is subject to significant risks and uncertainties, including declines in demand for its products, competition, the effectiveness of the company’s restructuring efforts, fluctuations in foreign exchange and tax rates, and counterparty risks relating to customers, licensees, licensors and manufacturers.

The company’s outlook is also based on assumptions about sell-through rates for its products, and the launch timing, success and pricing of its new slate of products. Current macroeconomic conditions increase those risks and uncertainties. As a result of these and other factors, actual results may deviate materially from the outlook presented above.

Board Authorizes Stock Repurchase Program and Declares Cash Dividend

Activision Blizzard today announced that its Board of Directors has authorized a new stock repurchase program under which the company can repurchase up to $1.5 billion of the company’s outstanding common stock. This program replaces the company’s $1 billion stock repurchase plan program authorized in February 2010 , which expired on December 31, 2010 . As of December 31, 2010 , Activision Blizzard had purchased an aggregate of 86 million shares of its common stock for approximately $966 million under the 2010 program.

The Board of Directors also declared a cash dividend of $0.165 per common share payable on May 11, 2011 to shareholders of record at the close of business on March 16, 2011 . This is the company’s second-ever cash dividend and it represents a 10% increase over its first-ever dividend that was issued in 2010.

Conference Call

Today at 4:30 p.m. EST , Activision Blizzard’s management will host a conference call and Webcast to discuss the company’s results for the quarter and year ended December 31, 2010 and management’s outlook for 2011. The company welcomes all members of the financial and media communities and other interested parties to visit the “Investor Relations” area of www.activisionblizzard.com to listen to the conference call and view a brief supporting slide presentation via live Webcast or to listen to the call live by dialing into 877-397-0292 in the U.S. with passcode 8890647.

Non-GAAP Financial Measures

Activision Blizzard provides net revenues, net income (loss), earnings (loss) per share and operating margin data and guidance both including (in accordance with GAAP) and excluding (non-GAAP) the following items: the impact of the change in deferred net revenues and related cost of sales with respect to certain of the company’s online-enabled games; expenses related to share-based payments; Activision Blizzard’s non-core exit operations (which are the operating results of products and operations of the historical Vivendi Games, Inc. businesses that the company has exited or substantially wound down); costs related to the business combination between Activision, Inc. and Vivendi Games, Inc. (including transaction costs, integration costs, and restructuring activities); expenses related to the restructuring of our Activision Publishing operations; the amortization of intangibles and impairment of intangible assets; and the associated tax benefits.

Management believes that the presentation of these non-GAAP financial measures provides investors with additional useful information to measure Activision Blizzard’s financial and operating performance because they facilitate comparison of operating performance between periods and help investors to better understand the operating results of Activision Blizzard .

Internally, management uses these non-GAAP financial measures in assessing the company’s operating results, as well as in planning and forecasting.

Non-GAAP financial measures should be considered in addition to, not as a substitute for or superior to, financial measures determined in accordance with GAAP. Activision Blizzard recognizes that there are limitations associated with the use of these non-GAAP financial measures.

Activision Blizzard’s non-GAAP financial measures are not based on a comprehensive set of accounting rules or principles, and the terms non-GAAP net revenues, non-GAAP net income, non-GAAP earnings per share, and non-GAAP operating margin do not have a standardized meaning. Therefore, other companies may use the same or similarly named measures, but exclude different items, which may not provide investors a comparable view of Activision Blizzard ‘s performance in relation to other companies.

Management compensates for the limitations resulting from the exclusion of these items by considering the impact of the items separately and by considering Activision Blizzard’s GAAP, as well as non-GAAP results and outlook and, in this release, by presenting the most comparable GAAP measures directly ahead of non-GAAP measures, and by providing a reconciliation that indicates and describes the adjustments made.

——————————————

activision-blizzard-logo

Activision Blizzard Announces Better-Than-Expected Third Quarter 2010 Financial Results

Written by Medievaldragon on . Posted in Activision Blizzard, StarCraft 2 News, World of Warcraft News

Third Quarter Net Revenues and EPS Exceed Prior Outlook and Prior Year. Company Increases 2010 Net Revenue and EPS Outlook.

SANTA MONICA, Calif. , Nov. 4, 2010 — Activision Blizzard, Inc. (Nasdaq: ATVI) today announced better-than-expected financial results for the third quarter of 2010.  

For the quarter ended September 30, 2010 , Activision Blizzard ‘s GAAP net revenues were $745 million , as compared to its prior third-quarter outlook of $600 million .  On a non-GAAP basis, the company’s net revenues were $857 million , as compared to its prior third-quarter outlook of $725 million .  

For the quarter ended September 30, 2010 , Activision Blizzard ‘s GAAP earnings per diluted share were $0.04 , as compared to its prior third-quarter outlook of break even GAAP earnings per share.  On a non-GAAP basis, the company’s earnings per diluted share were $0.12 , as compared to its prior third-quarter outlook of $0.08 .  

The company reports results on both a GAAP and a non-GAAP basis.  Please refer to the tables at the back of this press release for a reconciliation of the company’s GAAP and non-GAAP results.

Robert Kotick , CEO of Activision Blizzard , stated, “For the third quarter, we exceeded our net revenues and earnings per share outlook and delivered strong year-over-year growth.  Our better-than-expected results are due to our leadership in online entertainment, including strong performance from Activision Publishing’s Call of Duty® franchise, and Blizzard Entertainment’s World of Warcraft® and StarCraft® II: Wings of Liberty™.  For the nine months ending September 30, 2010 , our digital offerings contributed close to half of our total non-GAAP net revenues and our digital revenues have increased more than 15% over the prior year.  Most importantly, we continue to deliver some of the world’s best games.”

 

Kotick continued, ” Activision Publishing is about to introduce what is likely to be the biggest entertainment launch of the year with Call of Duty®: Black Ops, followed by Blizzard Entertainment’s World of Warcraft: Cataclysm, which we believe will deliver an incredible breadth of new content to the world’s largest massively multiplayer online role playing game (MMORPG) community.  As a result of our over-performance, we are raising our calendar year 2010 net revenue and earnings outlook.  We expect to deliver the most profitable year in our history with record operating margins.”

Business Highlights

For the first nine months of the calendar year, Activision Publishing’s Call of Duty was the #1 third-party franchise in the U.S. and Europe , and Blizzard Entertainment’s StarCraft II: Wings of Liberty was the #1 PC title overall, according to The NPD Group , Charttrack and Gfk.  Additionally, for the third quarter of the calendar year, Activision Blizzard was the #1 PC publisher in the U.S. and Europe , according to The NPD Group , Charttrack and Gfk.  

Other highlights are as follows:

  • During the third quarter of 2010, Call of Duty remained a top-10 franchise overall in the U.S. and Europe , according to The NPD Group , Charttrack and Gfk.
  • On August 3 , Blizzard Entertainment announced that StarCraft II: Wings of Liberty sold more than one million copies within the first 24 hours of its release, instantly making it the best-selling PC game of 2010, and more than 1.5 million copies within the first 48 hours of its release, making it the fastest-selling strategy game of all time.
  • On August 31 , Blizzard Entertainment and NetEase.com Inc. launched World of Warcraft: Wrath of
    the Lich King
    ™, the second expansion for Blizzard Entertainment’s award-winning subscription-based MMORPG, in mainland China .
  • On September 1 , Blizzard Entertainment announced that StarCraft II: Wings of Liberty sold more than three million copies worldwide in the first month of its release.
  • On October 4 , Blizzard Entertainment announced that World of Warcraft: Cataclysm, the highly anticipated third expansion for the world’s most popular subscription-based MMORPG, will be released on December 7 .
  • On October 5 , Activision
    Publishing announced that Treyarch’s Call of Duty: Black Ops will be playable in stereoscopic 3D when the game launches at retail outlets worldwide on November 9 .
  • On October 7 ,  Blizzard Entertainment announced that the subscriber base for World of Warcraft has exceeded 12 million players worldwide.
  • As of September 30 , Activision Blizzard had purchased approximately 55 million shares of its common stock, for approximately $600 million , under the $1 billion stock repurchase program authorized by its Board of Directors on February 10 .


Additionally, on September 7 , advertising industry veteran Eric Hirshberg joined Activision Publishing as Chief Executive Officer, to oversee operational management of the publishing division’s studio, product development and consumer marketing functions.  

Company Outlook

In the fourth quarter of 2010, Activision Publishing expects to release six new titles including Bakugan: Defenders of the Core, a highly anticipated kids title based on the award-winning toy line and television show;  DJ Hero 2®, which delivers an exciting social multiplayer music experience where two virtual DJs can mix together while a vocalist sings along to lyrics from today’s biggest hits; Goldeneye 007™, which was designed to make full use of the Nintendo Wii’sunique interactive capabilities and allows players to channel Daniel Craig ‘s lethal and gritty James Bond in a new take on the legendary Bond adventure;   James
Bond
007
: Bloodstone, a cinematic action game that allows players to experience the brutal and dangerous style of Daniel Craig ‘s Bond as they engage in hand-to-hand fighting, cover-based shooting, and aggressive driving through dynamic environments; and Tony Hawk®: SHRED, which lets kids “ GO BIG ” and feel the exhilaration of skate and snowboarding like the pros using the game’s motion-sensing board controller.

Activision Publishing also plans to release Treyarch’s highly anticipated first-person action game Call of Duty: Black Ops globally on November 9 .  The company expects the title will be one of the top entertainment properties of the holiday season and we expect that pre-orders for the game will set an industry record.  

Additionally, on December 7 , Blizzard Entertainment expects to release World of Warcraft: Cataclysm, the highly anticipated third expansion for the world’s most popular subscription-based MMORPG, World of Warcraft.  

Activision Blizzard ‘s outlook is based on assumptions about sell through rates for its products and the launch timing, success and pricing of its new slate of products which are subject to significant risks and uncertainties, including possible declines in the overall demand for video games and in the demand for the company’s products, the dependence in the interactive software industry and by the company on an increasingly limited number of popular franchises for a disproportionately high percentage of revenues and profits, the company’s ability to predict shifts in consumer preferences among genres, such as music and casual games, and competition.  Current macroeconomic conditions and market conditions within the video game industry increase those risks and uncertainties.  

The company’s outlook is also subject to other risks and uncertainties,  including litigation and associated costs, fluctuations in foreign exchange and tax rates, counterparty risks relating to customers, licensees, licensors and manufacturers.  As a result of these and other factors, actual results may deviate materially from the outlook presented below.

For the full year 2010, Activision Blizzard is raising its outlook for GAAP net revenues to $4.28 billion and GAAP earnings per diluted share to $0.51 , as compared to its prior GAAP outlook of $4.18 billion in net revenues and $0.49 in earnings per diluted share.  On a non-GAAP basis, the company now expects net revenues of $4.45 billion and $0.74 earnings per diluted share, as compared to its prior non-GAAP net revenue outlook of $4.4 billion and $0.72 in earnings per diluted
share.

For the fourth quarter of 2010, Activision Blizzard expects GAAP net revenues of $1.26 billion , and a GAAP loss per share of $0.01 . On a non-GAAP basis, the company expects net revenues of $2.2 billion and $0.47 earnings per diluted share for the fourth quarter.

Conference Call

Today at 4:30 p.m. EDT , Activision Blizzard ‘s management will host a conference call and Webcast to discuss the company’s results for the quarter ended September 30, 2010 and management’s outlook for the remainder of the calendar year.

The company welcomes all members of the financial and media communities and other interested parties to visit the “Investor Relations” area of www.activisionblizzard.com to listen to the conference call via live Webcast, or to listen to the call live by dialing into 877-397-0297 in the U.S. with the passcode 5382478.

Non-GAAP Financial Measures

Activision Blizzard provides net revenues, net income (loss), earnings (loss) per share and operating margin data and guidance both including (in accordance with GAAP) and excluding (non-GAAP) the following items: the impact of the change in deferred net revenues and related cost of sales with respect to certain of the company’s online-enabled games; expenses related to share-based payments; Activision Blizzard ‘s non-core exit operations (which are the operating results of products and operations of the historical Vivendi Games, Inc. businesses that the company has exited or substantially wound down); costs related to the business combination between Activision, Inc. and Vivendi Games, Inc. (including transaction costs, integration costs, and
restructuring activities); the amortization of intangibles and impairment of intangible assets; and the associated tax benefits.

Management believes that the presentation of these non-GAAP financial measures provides investors with additional useful information to measure Activision Blizzard ‘s financial and operating performance because they facilitate comparison of operating performance between periods and help investors to better understand the operating results of Activision Blizzard . Internally, management uses these non-GAAP financial measures in assessing the company’s operating results, as well as in planning and forecasting.

Non-GAAP financial measures should be considered in addition to, not as a substitute for or superior to, financial measures determined in accordance with GAAP.  Activision Blizzard recognizes that there are limitations associated with the use of these non-GAAP financial measures.

Activision Blizzard ‘s non-GAAP financial measures are not based on a comprehensive set of accounting rules or principles, and the terms non-GAAP net revenues, non-GAAP net income, non-GAAP earnings per share, and non-GAAP operating margin do not have a standardized meaning. Therefore, other companies may use the same or similarly named measures, but exclude different items, which may not provide investors a comparable view of Activision Blizzard ‘s performance in relation to other companies.  

Management compensates for the limitations resulting from the exclusion of these items by considering the impact of the items separately and by considering Activision Blizzard ‘s GAAP as well as non-GAAP results and outlook and, in this release, by presenting the most comparable GAAP measures directly ahead of non-GAAP measures, and by providing a reconciliation that indicates and describes the adjustments made.

About Activision Blizzard

Headquartered in Santa Monica, California , Activision Blizzard, Inc. is a worldwide online, PC, console, handheld and mobile game publisher with leading positions across every major category of the rapidly growing interactive entertainment software industry.

Activision Blizzard maintains operations in the U.S., Canada , the United Kingdom , France , Germany , Ireland , Italy , Sweden , Spain , the Netherlands , Australia , South Korea and China .  More information about Activision Blizzard and its products can be found on the company’s website, www.activisionblizzard.com.

Cautionary Note Regarding Forward-looking Statements:  Information in this press release that involves Activision Blizzard ‘s expectations, plans, intentions or strategies regarding the future, including statements under the heading “Company Outlook,” are forward-looking statements that are not facts and involve a number of risks and uncertainties.    Activision Blizzard generally uses words such as “outlook,” “will,” “could,” “would,” “might,” “remains,” “to be,” “plans,” “believes,” “may,” “expects,” “intends,” “anticipates,” “estimate,” “future,” “plan,” “positioned,” “potential,” “project,” “remain,” “scheduled,” “set to,” “subject to,” “upcoming” and similar expressions to identify forward-looking statements.  Factors that could cause Activision Blizzard ‘s actual future
results to differ materially from those expressed in the forward-looking statements set forth in this release include, but are not limited to, sales levels of Activision Blizzard ‘s titles, increasing concentration of titles, shifts in consumer spending trends, the impact of the current macroeconomic environment and market conditions within the video game industry, the seasonal and cyclical nature of the interactive game market, Activision Blizzard ‘s ability to predict consumer preferences among competing hardware platforms, possible declines in software pricing, product returns and price protection, product delays, retail acceptance of Activision Blizzard ‘s products,  adoption rate and availability of new hardware (including
peripherals) and related software, industry competition including from used games and other forms of entertainment, litigation risks and associated costs, rapid changes in technology, industry standards, business models including online and used games, and consumer preferences including interest in specific genres such as music, first-person action and massively multiplayer online games, protection of proprietary rights, maintenance of relationships with key personnel, customers, licensees, licensors, vendors, and third-party developers, including the ability to attract, retain and develop key personnel and developers that can create high quality “hit” titles, counterparty risks relating to customers, licensees, licensors and manufacturers, domestic and international economic, financial and political conditions and policies, foreign exchange rates and tax rates, and the identification of
suitable future acquisition opportunities and potential challenges associated with geographic expansion, and the other  factors  identified in the risk factors sections of Activision Blizzard ‘s most recent annual report on Form 10-K.   The forward-looking statements in this release are based upon information available to Activision Blizzard as of the date of this release, and Activision Blizzard assumes no obligation to update any such forward-looking statements.  Although these forward-looking statements are believed to be true when made, they may ultimately prove to be incorrect. These statements are not guarantees of the future performance of Activision Blizzard and are
subject to risks, uncertainties and other factors, some of which are beyond its control and may cause actual results to differ materially from current expectations.

(Tables to Follow)

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(Amounts in millions, except per share data)

Three Months Ended September 30,

Nine Months Ended September 30,

2010

2009

2010

2009

Net revenues:

Product sales

$

397

$

411

$

2,025

$

1,848

Subscription, licensing and other revenues

348

292

994

874

    Total net revenues

745

703

3,019

2,722

Costs and expenses:

Cost of sales – product
costs

194

185

765

762

Cost of sales – software royalties and amortization

61

54

211

212

Cost of sales – intellectual property licenses

33

45

105

163

Cost of sales – massively multi-player online role playing game (“MMORPG”)

61

55

168

158

Product development

119

122

366

362

Sales and marketing

111

128

294

329

General and administrative

111

106

245

301

Restructuring

(1)

29

    Total costs and expenses

690

694

2,154

2,316

Operating income

55

9

865

406

Investment and other income, net

14

11

15

21

Income before income tax expense

69

20

880

427

Income tax expense

18

5

229

28

Net income

$

51

$

15

$

651

$

399

Basic earnings per common share

$

0.04

$

0.01

$

0.53

$

0.31

Weighted average common shares outstanding

1,212

1,271

1,230

1,289

Diluted earnings per common share

$

0.04

$

0.01

$

0.52

$

0.30

Weighted average common shares outstanding assuming dilution

1,227

1,297

1,245

1,320

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(Amounts in millions)

September 30,

December 31,

2010

2009

ASSETS

Current assets:

Cash and cash equivalents

$

2,123

$

2,768

Short-term investments

726

477

Accounts receivable, net

246

739

Inventories

258

241

Software development

248

224

Intellectual property licenses

26

55

Deferred income taxes, net

419

498

Other current assets

102

327

    Total current assets

4,148

5,329

Long-term investments

23

23

Software development

37

10

Intellectual property licenses

36

28

Property and equipment, net

169

138

Other assets

14

9

Intangible assets, net

566

618

Trademark and trade names

433

433

Goodwill

7,144

7,154

Total assets

$

12,570

$

13,742

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current
liabilities:

Accounts payable

$

238

$

302

Deferred revenues

622

1,426

Accrued expenses and other liabilities

533

779

     Total current liabilities

1,393

2,507

Deferred income taxes, net

231

270

Other liabilities

200

209

Total liabilities

1,824

2,986

Shareholders’ equity:

Common stock

Additional paid-in capital

12,313

12,376

Treasury stock

(1,848)

(1,235)

Retained earnings (accumulated deficit)

290

(361)

Accumulated other comprehensive loss

(9)

(24)

     Total shareholders’ equity

10,746

10,756

         Total liabilities and shareholders’ equity

$

12,570

$

13,742

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES

RECONCILIATION OF GAAP NET INCOME TO NON-GAAP MEASURES

(Amounts in millions, except earnings per share data)

Three Months Ended September 30, 2010

Net Revenues

Cost of Sales –
Product Costs

Cost of Sales – Software
Royalties and
Amortization

Cost of Sales –
Intellectual Property
Licenses

Cost of Sales –
MMORPG

Product
Development

Sales and
Marketing

General and
Administrative

Total Costs and
Expenses

GAAP Measurement

$

745

$

194

$

61

$

33

$

61

$

119

$

111

$

111

$

690

Less:  Net effect from deferral in net revenues and related cost of sales

(a)

112

3

8

4

-

-

-

-

15

Less:  Stock-based compensation

(b)

-

-

(11)

-

-

(6)

(2)

(15)

(34)

Less:  Amortization of intangible assets and purchase price accounting related adjustments

(d)

-

(1)

(5)

(12)

-

-

-

-

(18)

Non-GAAP Measurement

$

857

$

196

$

53

$

25

$

61

$

113

$

109

$

96

$

653

Three Months Ended September 30, 2010

Operating Income

Net Income

Basic Earnings

per Share

Diluted Earnings
per Share

GAAP Measurement

$

55

$

51

$

0.04

$

0.04

Less:  Net effect from deferral in net revenues and related cost of sales

(a)

97

81

0.07

0.07

Less:  Stock-based compensation

(b)

34

21

0.02

0.02

Less:  Amortization of intangible assets and purchase price accounting related adjustments

(d)

18

(5)

-

-

Non-GAAP Measurement

$

204

$

148

$

0.12

$

0.12

Nine Months Ended September 30, 2010

Net Revenues

Cost of Sales –
Product Costs

Cost of Sales – Software
Royalties and
Amortization

Cost of Sales –
Intellectual Property
Licenses

Cost of Sales –
MMORPG

Product
Development

Sales and
Marketing

General and
Administrative

Total Costs and
Expenses

GAAP Measurement

$

3,019

$

765

$

211

$

105

$

168

$

366

$

294

$

245

$

2,154

Less:  Net effect from deferral in net revenues and related cost of sales

(a)

(765)

(198)

(16)

(12)

-

-

-

-

(226)

Less:  Stock-based compensation

(b)

-

-

(51)

-

-

(4)

(6)

(33)

(94)

Less:  Restructuring (included in general and administrative)

(c)

-

-

-

-

-

-

-

(3)

(3)

Less:  Amortization of intangible assets and purchase price accounting related adjustments

(d)

-

(3)

(10)

(33)

-

-

-

(1)

(47)

Non-GAAP Measurement

$

2,254

$

564

$

134

$

60

$

168

$

362

$

288

$

208

$

1,784

Nine Months Ended September 30, 2010

Operating Income

Net Income

Basic Earnings

per Share

Diluted Earnings
per Share

GAAP Measurement

$

865

$

651

$

0.53

$

0.52

Less:  Net effect from deferral in net revenues and related cost of sales

(a)

(539)

(392)

(0.32)

(0.31)

Less:  Stock-based compensation

(b)

94

64

0.05

0.05

Less:  Restructuring (included in general and administrative)

(c)

3

2

0.00

0.00

Less:  Amortization of intangible assets and purchase price accounting related adjustments

(d)

47

12

0.01

0.01

Non-GAAP Measurement

$

470

$

337

$

0.27

$

0.27

(a) Reflects the net change in deferred net revenues and related cost of sales.

(b) Includes expense related to stock-based compensation.  

(c) Reflects restructuring related to the Business Combination with Vivendi Games. Restructuring activities includes severance costs, facility exit costs and balance sheet write down and exit costs from the cancellation of projects.

(d) Reflects amortization of intangible assets, and the change in the fair value of assets and liabilities from purchase price accounting related adjustments.

The per share adjustments are presented as calculated, and the GAAP and non-GAAP earnings per share information is also presented as calculated. The sum of these measures, as presented, may differ due to the impact of rounding.

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES

RECONCILIATION OF GAAP NET INCOME TO NON-GAAP MEASURES

(Amounts in millions, except earnings per share data)

Three Months Ended September 30, 2009

Net Revenues

Cost of Sales –
Product Costs

Cost of Sales –
Software
Royalties and
Amortization

Cost of Sales – Intellectual Property Licenses

Cost of Sales –
MMORPG

Product
Development

Sales and
Marketing

General and
Administrative

Restructuring

Total Costs
and Expenses

GAAP Measurement

$

703

$

185

$

54

$

45

$

55

$

122

$

128

$

106

$

(1)

$

694

Less:  Net effect from deferral in net revenues and related cost of sales

(a)

52

20

31

5

-

-

5

-

-

61

Less:  Stock-based compensation

(b)

-

-

(3)

-

-

(11)

(2)

(20)

-

(36)

Less:  Costs related to the Business Combination, integration and restructuring

(d)

-

-

-

-

-

-

-

(7)

1

(6)

Less:  Amortization of intangible assets and purchase price accounting related adjustments

(e)

-

(1)

(8)

(24)

-

-

-

-

-

(33)

Non-GAAP Measurement

$

755

$

204

$

74

$

26

$

55

$

111

$

131

$

79

$

-

$

680

Three Months Ended September 30, 2009

Operating
Income

Net Income

Basic Earnings
per Share

Diluted
Earnings per
Share

GAAP Measurement

$

9

$

15

$

0.01

$

0.01

Less:  Net effect from deferral in net revenues and related cost of sales

(a)

(9)

5

0.00

0.00

Less:  Stock-based compensation

(b)

36

23

0.02

0.02

Less:  Costs related to the Business Combination, integration and restructuring

(d)

6

3

0.00

0.00

Less:  Amortization of intangible assets and purchase price accounting related adjustments

(e)

33

9

0.01

0.01

Non-GAAP Measurement

$

75

$

55

$

0.04

$

0.04

Nine Months Ended September 30, 2009

Net Revenues

Cost of Sales –
Product Costs

Cost of Sales –
Software
Royalties and
Amortization

Cost of Sales – Intellectual Property Licenses

Cost of Sales –
MMORPG

Product
Development

Sales and
Marketing

General and
Administrative

Restructuring

Total Costs
and Expenses

GAAP Measurement

$

2,722

$

762

$

212

$

163

$

158

$

362

$

329

$

301

$

29

$

2,316

Less:  Net effect from deferral in net revenues and related cost of sales

(a)

(441)

(79)

(20)

(6)

-

-

5

-

-

(100)

Less:  Stock-based compensation

(b)

-

-

(19)

-

-

(28)

(9)

(51)

-

(107)

Less:  Results of Activision Blizzard’s non-core exit operations

(c)

(1)

-

-

-

-

4

(3)

(10)

-

(9)

Less:  Costs related to the Business Combination, integration and restructuring

(d)

-

-

-

-

-

-

-

(24)

(29)

(53)

Less:  Amortization of intangible assets and purchase price accounting related adjustments

(e)

-

(4)

(36)

(75)

-

-

-

(2)

-

(117)

Non-GAAP Measurement

$

2,280

$

679

$

137

$

82

$

158

$

338

$

322

$

214

$

-

$

1,930

Nine Months Ended September 30, 2009

Operating
Income

Net Income

Basic Earnings
per Share

Diluted
Earnings
per Share

GAAP Measurement

$

406

$

399

$

0.31

$

0.30

Less:  Net effect from deferral in net revenues and related cost of sales

(a)

(341)

(274)

(0.21)

(0.21)

Less:  Stock-based compensation

(b)

107

67

0.05

0.05

Less:  Results of Activision Blizzard’s non-core exit operations

(c)

8

5

0.00

0.00

Less:  Costs related to the Business Combination, integration and restructuring

(d)

53

32

0.02

0.02

Less:  Amortization of intangible assets and purchase price accounting related adjustments

(e)

117

49

0.05

0.05

Non-GAAP Measurement

$

350

$

278

$

0.21

$

0.21

(a) Reflects the net change in deferred net revenues and related cost of sales.

(b) Includes expense related to stock-based compensation.

(c) Reflects the results of products and operations from the historical Vivendi Games businesses that the company has exited, divested or wound down.

(d) Reflects costs related to the Business Combination with Vivendi Games (including transaction costs, integration costs and restructuring activities). Restructuring activities includes severance costs, facility exit costs and balance sheet write down and exit costs from the cancellation of projects.

(e) Reflects amortization of intangible assets, and the change in the fair value of assets and liabilities from purchase price accounting related adjustments.

The per share adjustments are presented as calculated, and the GAAP and non-GAAP earnings per share information is also presented as calculated. The sum of these measures, as presented, may differ due to the impact of rounding.

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES

FINANCIAL INFORMATION

For the Three Months Ended September 30, 2010 and 2009

(Amounts in millions)

Three Months Ended

September 30, 2010

September 30, 2009

$Increase

% Increase

Amount

% of Total

Amount

% of Total

(Decrease)

(Decrease)

GAAP Net Revenues by Segment/Platform Mix

Activision and Blizzard:

MMORPG

$

289

39

%

$

306

44

%

$

(17)

(6)

%

PC and other

73

10

27

4

46

170

Sony PlayStation  3

109

15

73

10

36

49

Sony PlayStation  2

6

1

37

5

(31)

(84)

Microsoft Xbox 360

127

16

104

15

23

22

Nintendo Wii

56

8

72

10

(16)

(22)

Total console

298

40

286

40

12

4

Sony PlayStation Portable

3

-

9

1

(6)

(67)

Nintendo Dual Screen

20

3

21

3

(1)

(5)

Total handheld

23

3

30

4

(7)

(23)

Total Activision and Blizzard

683

92

649

92

34

5

Distribution:

Total Distribution

62

8

54

8

8

15

Total consolidated GAAP net revenues

745

100

703

100

42

6

Change in Deferred Net Revenues(1)

Activision and Blizzard:

MMORPG

(7)

(31)

PC and other

141

3

Sony PlayStation  3

(5)

34

Microsoft Xbox 360

(26)

38

Nintendo Wii

9

8

Total console

(22)

80

Total changes in deferred net revenues

112

52

Non-GAAP Net Revenues by Segment/Platform Mix

Activision and Blizzard:

MMORPG

282

33

275

36

7

3

PC and other

214

25

30

4

184

NM

Sony PlayStation  3

104

12

107

14

(3)

(3)

Sony PlayStation  2

6

1

37

5

(31)

(84)

Microsoft Xbox 360

101

12

142

19

(41)

(29)

Nintendo Wii

65

8

80

11

(15)

(19)

Total console

276

33

366

49

(90)

(25)

Sony PlayStation Portable

3

-

9

1

(6)

(67)

Nintendo Dual Screen

20

2

21

3

(1)

(5)

Total handheld

23

2

30

4

(7)

(23)

Total Activision and Blizzard

795

93

701

93

94

13

Total Distribution

62

7

54

7

8

15

Total non-GAAP net revenues(2)

$

857

100

%

$

755

100

%

$

102

14

%

(1)  We provide net revenues including (in accordance with GAAP) and excluding (non-GAAP) the impact of changes in deferred net revenues.

(2)  Total non-GAAP net revenues presented also represents our total operating segment net revenues.

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES

FINANCIAL INFORMATION

For the Nine Months Ended September 30, 2010 and 2009

(Amounts in millions)

Nine Months Ended

September 30, 2010

September 30, 2009

$Increase

% Increase

Amount

% of Total

Amount

% of Total

(Decrease)

(Decrease)

GAAP Net Revenues by Segment/Platform Mix

Activision and Blizzard:

MMORPG

$

890

29

%

$

952

35

%

$

(62)

(7)

%

PC and other

201

7

106

4

95

90

Sony PlayStation  3

595

20

356

13

239

67

Sony PlayStation  2

29

1

121

4

(92)

(76)

Microsoft Xbox 360

751

25

533

20

218

41

Nintendo Wii

267

9

324

12

(57)

(18)

Total console

1,642

55

1,334

49

308

23

Sony PlayStation Portable

11

-

32

1

(21)

(66)

Nintendo Dual Screen

90

3

95

4

(5)

(5)

Total handheld

101

3

127

5

(26)

(20)

Total Activision and Blizzard

2,834

94

2,519

93

315

13

Distribution:

Total Distribution

185

6

202

7

(17)

(8)

Total platform mix net revenues

3,019

100

2,721

100

298

11

Other(1)

-

-

1

-

(1)

NM

Total consolidated GAAP net revenues

3,019

100

2,722

100

297

11

Change in Deferred Net Revenues(1)

Activision and Blizzard:

MMORPG

(13)

(106)

PC and other

81

(26)

Sony PlayStation  3

(317)

(84)

Microsoft Xbox 360

(425)

(145)

Nintendo Wii

(91)

(80)

Total console

(833)

(309)

Total changes in deferred net revenues

(765)

(441)

Other(1)

-

(1)

Non-GAAP Net Revenues by Segment/Platform Mix

Activision and Blizzard:

MMORPG

877

39

846

37

31

4

PC and other

282

13

80

4

202

NM

Sony PlayStation  3

278

12

272

12

6

2

Sony PlayStation  2

29

1

121

5

(92)

(76)

Microsoft Xbox 360

326

14

388

17

(62)

(16)

Nintendo Wii

176

8

244

11

(68)

(28)

Total console

809

35

1,025

45

(216)

(21)

Sony PlayStation Portable

11

1

32

1

(21)

(66)

Nintendo Dual Screen

90

4

95

4

(5)

(5)

Total handheld

101

5

127

5

(26)

(20)

Total Activision and Blizzard

2,069

92

2,078

91

(9)

-

Total Distribution

185

8

202

9

(17)

(8)

Total non-GAAP net revenues(2)

$

2,254

100

%

$

2,280

100

%

$

(26)

(1)

%

(1)  We provide net revenues including (in accordance with GAAP) and excluding (non-GAAP) the impact of changes in deferred net revenues and other.

(2)  Total non-GAAP net revenues presented also represents our total operating segment net revenues.

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES

FINANCIAL INFORMATION

For the Three And Nine Months Ended September 30, 2010 and 2009

(Amounts in millions)

Three Months Ended

September 30, 2010

September 30, 2009

$Increase

% Increase

Amount

% of Total

Amount

% of Total

(Decrease)

(Decrease)

GAAP Net Revenues by Geographic Region

North America

$

406

54

%

$

378

54

%

$

28

7

%

Europe

281

38

287

41

(6)

(2)

Asia Pacific

58

8

38

5

20

53

Total consolidated GAAP net revenues

745

100

703

100

42

6

Change in Deferred Net Revenues(1)

North America

41

26

Europe

53

22

Asia Pacific

18

4

Total changes in net revenues

112

52

Non-GAAP Net Revenues by Geographic Region

North America

447

52

404

54

43

11

Europe

334

39

309

41

25

8

Asia Pacific

76

9

42

5

34

81

Total non-GAAP net revenues(2)

$

857

100

%

$

755

100

%

$

102

14

%

Nine Months Ended

September 30, 2010

September 30, 2009

$Increase

% Increase

Amount

% of Total

Amount

% of Total

(Decrease)

(Decrease)

GAAP Net Revenues by Geographic Region

North America

$

1,675

55

%

$

1,458

54

%

$

217

15

%

Europe

1,142

38

1,088

40

54

5

Asia Pacific

202

7

175

6

27

15

Total geographic region net revenues

3,019

100

2,721

100

298

11

Other(1)

-

-

1

-

(1)

NM

Total consolidated GAAP net revenues

3,019

100

2,722

100

297

11

Change in Deferred Net Revenues(1)

North America

(462)

(287)

Europe

(280)

(147)

Asia Pacific

(23)

(7)

Total changes in net revenues

(765)

(441)

Other(1)

-

(1)

Non-GAAP Net Revenues by Geographic Region

North America

1,213

54

1,171

52

42

4

Europe

862

38

941

41

(79)

(8)

Asia Pacific

179

8

168

7

11

7

Total non-GAAP net revenues(2)

$

2,254

100

%

$

2,280

100

%

$

(26)

(1)

%

(1)  We provide net revenues including (in accordance with GAAP) and excluding (non-GAAP) the impact of changes in deferred net revenues.

(2)  Total non-GAAP net revenues presented also represents our total operating segment net revenues.

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES

SEGMENT INFORMATION

For the Three And Nine Months Ended September 30, 2010 and 2009

(Amounts in millions)

Three Months Ended

September 30, 2010

September 30, 2009

$Increase

% Increase

Amount

% of Total

Amount

% of Total

(Decrease)

(Decrease)

Segment net revenues:

Activision(i)

$

314

42

%

$

415

59

%

$

(101)

(24)

%

Blizzard(ii)

481

65

286

40

195

68

Distribution(iii)

62

8

54

8

8

15

Operating segment total

857

115

755

107

102

14

Reconciliation to consolidated net revenues:

Net effect from deferral of net revenues

(112)

(15)

(52)

(7)

Consolidated net revenues

$

745

100

%

$

703

100

%

42

6

Segment income (loss) from operations:

Activision(i)

$

(43)

$

(43)

-

NM

Blizzard(ii)

246

116

130

112

Distribution(iii)

1

2

(1)

NM

Operating segment total

204

75

129

172

Reconciliation to consolidated operating income:

Net effect from deferral of net revenues and related cost of sales

(97)

9

Stock-based compensation expense

(34)

(36)

Restructuring

-

1

Amortization of intangible assets and purchase price accounting related adjustments

(18)

(33)

Integration and transactions costs

-

(7)

Consolidated operating income

$

55

$

9

$

46

NM

Operating margin from total operating segments

24%

10%

Nine Months Ended

September 30, 2010

September 30, 2009

$Increase

% Increase

Amount

% of Total

Amount

% of Total

(Decrease)

(Decrease)

Segment net revenues:

Activision(i)

$

983

33

%

$

1,211

44

%

$

(228)

(19)

%

Blizzard(ii)

1,086

36

867

33

219

25

Distribution(iii)

185

6

202

7

(17)

(8)

Operating segment total

2,254

75

2,280

84

(26)

(1)

Reconciliation to consolidated net revenues:

Net effect from deferral of net revenues

765

25

441

16

Other(iv)

-

-

1

-

Consolidated net revenues

$

3,019

100

%

$

2,722

100

%

297

11

Segment income (loss) from operations:

Activision(i)

$

(88)

$

(49)

(39)

NM

Blizzard(ii)

559

393

166

42

Distribution(iii)

(1)

6

(7)

NM

Operating segment total

470

350

120

34

Reconciliation to consolidated operating income:

Net effect from deferral of net revenues and related cost of sales

539

341

Stock-based compensation expense

(94)

(107)

Restructuring

(3)

(29)

Amortization of intangible assets and purchase price accounting

related adjustments

(47)

(117)

Integration and transactions costs

-

(24)

Other(iv)

-

(8)

Consolidated operating income

$

865

$

406

$

459

113

%

Operating margin from total operating segments

21%

15%

(i) Activision Publishing (“Activision”) –  publishes interactive entertainment software and peripherals.

(ii) Blizzard –  Blizzard Entertainment, Inc. and its subsidiaries (“Blizzard”) publishes games and online subscription-based games in the MMORPG category.

(iii) Activision Blizzard Distribution (“Distribution”) – distributes interactive entertainment software and hardware products.

(iv) Other represents Non-Core activities, which are legacy Vivendi Games’ divisions or business units that we have exited, divested or wound down as part of our restructuring and integration efforts as a result of the Business Combination. Prior to July 1, 2009, Non-Core activities were managed as a stand alone operating segment; however, in light of the minimal activities and insignificance of Non-Core activities, as of that date we ceased their management as a separate operating segment and consequently, we are no longer providing separate operating segment disclosure.  

ACTIVISION BLIZZARD, INC. AND SUBSIDIARIES
OUTLOOK

For the Quarter Ending December 31, 2010 and

Year Ending December 31, 2010

GAAP to Non-GAAP Reconciliation

(Amounts in millions, except per share data)

Outlook for

Outlook for

Three Months Ending

Year Ending

December 31, 2010

December 31, 2010

Net Revenues (GAAP)

$

1,260

$

4,280

Excluding the impact of:

Change in deferred net revenues

(a)

940

170

Non-GAAP Net Revenues

$

2,200

$

4,450

(Loss)/Earnings Per Diluted Share (GAAP)

$

(0.01)

$

0.51

Excluding the impact of:

Net effect from deferral in net revenues and related cost of sales

(b)

0.44

0.12

Stock-based compensation

(c)

0.01

0.06

Amortization of intangible assets

(d)

0.03

0.05

Non-GAAP Earnings Per Diluted Share

$

0.47

$

0.74

(a) Reflects the net change in deferred net revenues.

(b) Reflects the net change in deferred net revenues and related cost of sales.

(c) Reflects expense related to stock-based compensation.

(d) Reflects amortization of intangible assets.

The per share adjustments are presented as calculated, and the GAAP and non-GAAP earnings (loss) per share information

is also presented as calculated. The sum of these measures, as presented, may differ due to the impact of rounding.

Full Transcript of Blizzard Games 2010 Plans from Activision Blizzard 2009 Q4 Conference

Written by Medievaldragon on . Posted in Activision Blizzard, Blizzard Games News, StarCraft 2 News, World of Warcraft News

The Activision Blizzard 2009 Fourth Quarter Earnings Conference Call held yesterday revealed to fans all around the world the exciting news that Starcraft II Closed Beta will launch in global scale this month of February and their plans for Blizzard games in 2010. Mike Morhaime also revealed their plans to launch Starcraft II: Wings of Liberty for sale on mid-2010, this Summer.

I told you Mike Morhaime would say the sweet words on February 10 during this conference, and he didn’t disappoint us.

We have gathered the transcript of yesterday’s conference to inform you of what’s cooking:

Mike Morhaime: I’d like to begin by recapping the successful year that we had at Blizzard, with some discussion about our performance in 2009, as well as our fourth quarter’s result. I will also touch on our situation in China and outline the exciting plans that we have for 2010.

Overall, we are very pleased with our performance over the past year. Our non-GAPP net revenue for the year 2009 was about $ 1.2 Billion dollars with an operating margin of more than 46%. To the fourth quarter of 2009, our non-GAPP net revenue was $329 million dollars with an operating margin of 49%.

The fact that we have been able to maintain revenue and operating margin at this level is remarkable giving the current state of the economy, and how it has affected the industry, and the fact that we didn’t ship a new game in 2009.

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

Our ability to maintain subscribership at this level in a downed economy could be contributed to a number of factors:

First, we acknowledge the tremendous entertainment value that World of Warcraft offers. We believe our players recognize the huge value they get from World of Warcraft. Especially when they compare our subscription against the rising cost of Cable television and the finite amount of entertainment they could get from other options such as movies or concert tickets.

Equally important is the commitment of our developer team to continue enhancing the game with fresh new content for players to enjoy. We also benefited from successful outreach marketing efforts in the fourth quarter with the new TV commercial featuring Mr. T driving record file and high visibility at online and retail.

And last but not least, we introduced an important added bonus services in the past year which we believe has contributed towards player retention.

At this point I’d like to provide an update in the current situation with respect to World of Warcraft in China. I want to emphasize that NetEase is operating World of Warcraft normally in China right now as they have been since the launch in September 19, 2009.

I mentioned on the last call, that World of Warcraft in China hit an all time peak concurrency after the relaunch. We are still gaining strength in the region with the game as popular as ever. In celebration of the upcoming Chinese New Year holidays NetEase is running a spring festival giveback campaign. As part of this campagin, NetEase has temporarily suspended new account creation for one week and is rewarding our existing players with a 21 hours of free-game time. Three hours per day.

We continue to work hard with our local partner to bring new content to our chinese players. Wrath of the Lich King is currently under review by the relevant chinese government authorities, and NetEase has been cooperating with their very requests so that we can launch Wrath of the Lich King as soon as possible.

Meanwhile, NetEase has resubmited the Burning Crusade to the GAPP for their approval. Now I’ll like to discuss the plans we have for 2010, which promises to be the most exciting year in Blizzard’s history. We have two huge product releases planned: Starcraft II: Wings of Liberty and the Cataclysm expansion to World of Warcraft.

This will be the first time in twelve years that Blizzard has slated to ship two major products in the same calendar year. And on top of that, we will also be releasing the revamp of the Battle.net service, which will be the platform for all future Blizzard games.

I do have an exciting news regarding Starcraft II. We are slated to be in close beta testing later this month. The beta test will be conducted in a global scale, including thousands of testers in North America, Europe, Korea, Taiwan, Australia, and New Zealand.

We expect a tremendous response from our players, and we are eager to begin this phase of development as we enter the final stretch before release.

Aside from gathering feedback from our players, which is a key step of the developing cycle, the beta test will help generate new excitement for Starcraft II, building on a momentum from 2009, when Starcraft II won Game of the Show in Europe from GamesCon.

Starcraft II has also shown up on several Most Anticipated Lists for 2010, including publications like the Wall Street Journal, PCGamer and Europe Gamer. With Starcraft II continuing to receive wide acclaim and recognition in publications and shows around the world, we are very optimistic about our prospect for the game.

We are still tracking toward our goal of a mid-2010 release. In addition to helping our team balancing Starcraft II, our upcoming Beta Test is also important to our development of Battle.net, as we are building Battle.net to be the home of all Blizzard games going forward, this phase of testing will be key for preparing the service for launch.

We are designing Battle.net to be the primary destination for online gaming. When the servers launch, Starcraft II will offer several advanced communication features including the ability for players to chat between Starcraft II and World of Warcraft, or between World of Warcraft realms.

Future games like Diablo III will plug right into that massive communications network. This is significant because the friends network that players have already built with World of Warcraft and add to in Starcraft II will carry forward for all Blizzard games into the future.

The new iteration of Battle.net will help us effectively grow the community of players as each new game release will build on the momentum created by previous games. Keeping players connected to their friends at all times, no matter what games they are playing, will make the online experience more enjoyable extending the life of our games.

Separately, we have news about World of Warcraft: Cataclysm, which we announced at this past year BlizzCon. Today I would like to delve into one of the aspects of the expansion that makes it especially intriguing as it grows driver momentum for the business.

Like previous expansions, Cataclysm will introduce some great content such as new races, new dungeons, and new areas for players to explore. For a feature that will make this particular expansion stand out is that we are completely overhauling much of the existing content in the game, and bringing it up to our constantly rising design starndards.

Let me just take a moment to explain why this is important. Over the past five years since World of Warcraft initially launched, our development team has become much more skilled at creating compelling new content for the game.

The issue is that much of the low level content in World of Warcraft today, remains the same as it was when we launched in 2004. New players to the game, do not in large part, experience the game’s best content and design until they reach the end-game.

Our research shows that trial players who play World of Warcraft past level 10 are much more likely to stick with the game for a long time. Currently only about 30% of our trial players make it past this threshold. So anything we can do to improve the new players’ experience is a huge opportunity for us.

With Cataclysm, we will be overhauling the early gaming experience for players, bring all the content in World of Warcraft to our current design standards and ensuring that even new players to the game will experience the best work of our development team. This will also provide additional replayability for our veteran players as well.

We hope that this effort will capture most players and drive community growth. Development on Cataclysm is proceeding smoothly and we are making great progress to a release in the back half of 2010. In parallel with the development of Cataclysm, we are continuing to create additional value added services for our players.

One of the new services we are looking forward to introducing soon is the ability for players to access the in-game Auction House from outside of the game.

Currently in World of Warcraft, players can use an in-game eBay-like service to buy virtual items for in-game currency. This is the Auction House, and its been part of World of Warcraft since launch. Soon, we will be introducing a mechanism for players to use the Auction House remotely using the web or mobile devices like the iPhone.

Some aspects of this service will be free to use. Some will be premium. We haven’t finalized pricing just yet, so we will be discussing those details at a later date. We are also expanding on the World of Warcraft Pet Store that we introduced last quarter. Just this morning we announced two new virtual pets the Wind Rider Cub and the Gryphon Hatchling, which players will be able to purchase in the store in the coming weeks.

What is unique about these new pets is that players will also receive plush stuffed animal version of their virtual pet.

As I close out the Blizzard portion of the call, I want to summarize the huge year we have ahead of us. Not only are we going to ship two major products: Starcraft II and Cataclysm; but we will be launching Battle.net to be the home of all Blizzard games going forward. This platform is the cornerstone for the future of Blizzard Entertainment and we are very excited to take the first steps toward the future with the beta test of Starcraft II and Battle.net.

With Starcraft II and Cataclysm plans for this year and Diablo III around the corner our product outline has never looked stronger. Thanks.

Official Starcraft II beta on February 2010

Written by Medievaldragon on . Posted in Activision Blizzard, Blizzard Games News, StarCraft 2 News

Mike Morhaime said the sweet words. Starcraft II Beta starts this month. This was announced just now at 5:15pm EST during the Activision Blizzard 2009 Q4 Earnings Conference Call.

Listen to the Conference audio at 38:40 for Mike Morhaime’s announcements. Both Starcraft II and World of Warcraft: Cataclysm are confirmed to be released on 2010, and dubbed it the first time in twelve years that Blizzard ships two games in a single calendar year.

You can read the full Activision Blizzard Financial Call Breakdown at IncGamers.

Blizzard Quote:
Avarius: I know you are all very excited to hear the news about the StarCraft II beta coming soon. In order to help facilitate this discussion, please keep your comments about this announcement consolidated to this thread. Thanks! Emails to those who can participate in the beta will be sent out once it’s ready to start.

1. You should be able to download it to your other computer, however, you must be logged into your battle.net account in order to play.

2. They will exist to give beta participants a place to discuss the beta and report any issues they may find. Only participants of the beta will be able to post, but the forums can be read by everyone.

For everyone asking, we are targeting a global release for the start of the beta.