World of Warcraft subscriptions steady, says Activision

Activision Blizzard says the number of subscribers to its World of Warcraft online video game has stabilised.

The publisher said the seven-year-old title had 10.2 million members at the end of March - the same as at the turn of the year.

That supported its claim to be the most popular subscription-based title of its kind.

World of Warcraft (WoW) had lost nearly 1.8 million players over the previous 12 months.

The announcements were made following the release of the publisher's first-quarter earnings.

Panda pets

Its net income for the three months was $384m (£234m), a 24% drop on the previous year.

It linked the fall to the decline in the number of people playing WoW - its most profitable business - as well as the fact that its most recent Call of Duty first-person shooter game was experiencing lower sales than its predecessor.

However, it noted that revenue of $1.2bn for the period was better than expected and raised its forecasts due to what it described as a "highly innovative product line".

This includes the forthcoming WoW Mists of Pandaria expansion pack, which introduces a new continent populated by martial-arts-skilled pandas and their pets.

"We expect to see increased engagement with the launch," said Michael Morhaime, chief executive of the firm's Blizzard division.

The release should help WoW compete with its newer big-budget rival, Star Wars: The Old Republic, which lost about a quarter of its subscribers between February and April.

Both titles face challenges from MMORPGs (massively multiplayer online role-playing games) Guild Wars 2 and Elder Scrolls Online.

Cash for equipment

The company also highlighted next week's launch of Diablo 3.

Activision said that the horror-themed role-playing game had already set a new pre-order record for its Blizzard unit.

The sequel features an auction house in which users can trade objects with other players using real-world currency. Activision can take a cut of each sale, potentially creating a significant new revenue stream.

The company also said it had high hopes for November's release of Call of Duty: Black Ops 2, as well as a Call of Duty "micro-transaction game for China", for which details remain scant.

It added that it thought a "new universe" from developer Bungie - creator of the Halo series - could also become a "potential mega-franchise", but did not give any further details.

Going forward, Sozzi believes that Call of Duty will continue to be Activision's strongest franchise. "When I think Activision, I think Call of Duty," he said. "I don't think World of Warcraft at all. To the casual person watching TV commercials, I think Call of Duty has always been Activision Blizzard. The matter for them is to continue to build out that universe around Call of Duty, try to mitigate the subscriber loss of World of Warcraft through new content editions, and maybe even try to create another title."

Creating a new title is easier said than done, however. "A couple of years ago they ran into a brick wall when they hyped up True Crime and they discontinued that title," Sozzi recalled. "It's hard for them. They're essentially what Take-Two (NASDAQ: TTWO) is with Grand Theft Auto, but Activision has created a whole amazing universe around two titles that Take-Two doesn't have."

Guitar Hero Out, Skylanders In

While the success of Guitar Hero and Tony Hawk's Pro Skater might be a distant memory, Activision was successful in creating one new hit franchise last year.

"I like Skylanders," said Sozzi. "That speaks to Activision. I like that they continue to innovate. Toys with video games — that was neat. It was a really strong seller. I think that has given them another bankable franchise that they needed. Ultimately it gets them into a part of the store where they weren't and where many video game companies aren't. They're just in packaged goods. Now you have Activision selling, again, a whole other entire universe."

As a game targeting kids, I asked Sozzi if he thought Skylanders could face the same kinds of challenges that THQ's (NASDAQ: THQI) uDraw encountered during its second year at retail.

"I would say no," he said. "I think uDraw was a bad product from the get-go. I never warmed up to it. I didn't think it was interactive enough. It didn't have that cool-factor. I think these [Skylanders] toys do have their wow-factor."

"Five years from now, will we be talking about this particular game and them selling toys?" Sozzi questioned. "I don't know. But I think in terms of this holiday season, I think it will be another big franchise for them."