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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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