Hello friends and welcome back!
First, let me say sorry for the delay in putting this post together. I had some real life things take over for a week or two that included a flight across the country and being somewhat unplugged. However, that's behind us now and fortunately, it has given me time to really think about some of the events that took place while I was away.
Blizzard/Activision had their Q1 investor earnings call. By now I'm sure if you are still stopping by my page then you have seen the info and heard some views and opinions on what it means. I want to go through it and use it to look at the big picture. It may only be a small synopsis but I think it speaks volumes about what we can expect going forward as Blizzard fans.
First, lets touch on the small stuff we already knew about. Overwatch Beta is coming this Fall, and Starcraft 2: Legacy of the Void is in closed beta. I will say that Blizzard's decision to make Legacy of the Void a standalone game is a great decision for the longevity of the game. Starcraft is already an intimidating game for new players to get into, so leaving cost of up to $100 to pick up the three games would only compound that. The hype around Overwatch continues to be strong despite no real news since PAX East. There are rumors of a friends and family Alpha beginning due to Overwatch strings in the Battle.net client becoming active, but we don't have any way to confirm that at the moment.
Heroes of the Storm had 11 million beta sign-ups and launches on June 2nd. This isn't that important for a free to play game. What truly matters is how many people stick around after playing. Heroes of the Dorm was a nice start into showing people the depth the game has to offer. Any time a non-traditional sport is given air-time on ESPN there is negative feedback. The original airing of the World Series of Poker was met with some skepticism and is now a mainstay every summer. It caused a boom in the game that led to a jump in attendance from 839 in 2001 when it originally aired, to 2,576 the following year. That number has seen a steady increase to 6,683 in 2014. Now it would be foolish of me to think that Heroes of the Storm is going to become a regular part of ESPN's weekend line-up, but we have to start somewhere. The League of Legends World Championships got up to 8.5 million concurrent viewers last year. Compare that to the World Series game 1 which pulled in 12.2 million. An esport pulling in 2/3 of the viewership of a World Series game is nothing to scoff at. Especially when you factor in that the traditional form of viewing League of Legends matches is through streaming services and VODs. Despite the negativity from some of ESPN's fans and analysts, the network is smart to want a piece of the esports pie. Maybe eventually we will see Heroes of the Storm or League of Legends instead of Bowling on ESPN2 on Sundays during football season.
I want to tie the Hearthstone and World of Warcraft numbers together because I think they are intertwined. World of Warcraft is down 3 million subscribers from the last earnings call. This shouldn't be a surprise to anyone. People come back to check out the new content and once they've seen it, they leave again. Warlords hasn't done much to keep the interested but not invested around for long. I touched on a lot of this in a previous post so I won't repeat it now, but I'm less shocked by the 3 million loss than I was by the jump back up to 10 million at the start of the expansion. I expect we will see this trend to continue as the game continues to age. When the next expansion hits we will see a spike to the 8-9 million range then a drop back off to 6-7 million. Hearthstone going up to 30 million players worldwide helps to stem the bleeding of the Warcraft revenue loss. If 1% of Hearthstone players purchase the 40 pack bundle Blizzard makes $15 million (ignoring exchange rates and all that). I can guarantee that 99% of the player base is not going free to play. When you add in the adventure modes at $25 each and just normal player purchase habits, it is safe to say that Hearthstone has outperformed Blizzards loftiest expectations.
Hearthstone has given us a window into the future of Blizzard. They can no longer remain the MMO company, or the World of Warcraft company, and they know that. They have expanded full force into Hearthstone and Heroes of the Storm and soon Overwatch. By broadening their scope of games they are bringing in potentially new players to their franchises, and from there it has a ripple effect. How many people began playing Starcraft because they enjoyed Warcraft 2 and the same company was making a sci-fi version. How many WoW players picked up Hearthstone because it was something new that was at the same time familiar. In just 2 years they have doubled the number of games in their stable, and with Overwatch on the horizon they potentially have four IPs that their players are invested in. There will undoubtedly be another game in the Starcraft universe after Legacy of the Void. World of Warcraft will get continued support as long as people are willing to pay for it. And as long as people care about the characters in all of these worlds, players will be drawn to Heroes of the Storm.
Despite the negativity surrounding the WoW side of the earnings call, the diversity of their portfolio is beyond exciting. We have games and expansions to look forward to for the foreseeable future, in varieties for nearly everyone. And as the world of esports grows Blizzard has solidified their place in the forefront of it. All in all we have a ton to be excited about.
Thanks again for reading,
Chris
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