As we move into Blizzcon 2017, yesterday Activision-Blizzard held its Third Quarter Earnings Call, releasing the made-for investors summary of its performance from July 1 through Sep 30 of this year. I sped through the call transcript, but did not really find anything more than is in the short MMO-C summary:
The quarterly Activision Blizzard earnings call was today:
- Activision Blizzard had 384 million Monthly Active Users in this quarter.
- Blizzard had the biggest third quarter online player community in its history, with a record 42 million Monthly Active Users.
- Overwatch and Hearthstone Monthly Active Users grew year-over-year.
- The Overwatch community rose to over 35 million registered players.
- The company achieved a new milestone with players spending over 50 minutes per day in Activision Blizzard games.
- Hearthstone: Knights of the Frozen Throne expansion led to double-digit percentage growth in time spent year-over-year for the franchise.
- World of Warcraft released a new content update in the quarter, leading to stable Monthly Active Users for the franchise quarter-over-quarter and continued participation in value added services.
- Activision Blizzard delivered a Q3 record of over $1 billion of in-game revenues, with record performance year-to-date.
Like a lot of WoW players, I get annoyed with those who continually predict the imminent end of the game. It is still a robust leisure experience, it still has a lot of players, and Blizz is still pumping considerable resources into it. But this quarterly report did give me pause, in particular:
- Blizzard is doing very well overall, but most of its success is due to franchises other than WoW.
- When it suits their purposes, Blizz is perfectly willing to publish numbers of players, rather than strictly MAU — for example, they said that Overwatch has 35 million “registered users”.
- The best they could say about WoW is that the game had “stable” MAUs for the quarter, and that Blizz was successfully marketing “value added services” to the player base. I do not find this to be an optimistic statement.
- And the most interesting statement of all, because it perfectly encapsulates the entire Blizz approach now: The company achieved a new milestone with players spending over 50 minutes per day in Activision Blizzard games. If we needed any more insight into what WoW will look like in the next expansion, this is it: Every possible aspect of it will involve endless grinds.
As a little thought experiment, I tried to apply a fascinating technique first devised several decades ago by J. Richard Gott, a Princeton University astrophysicist. (Check out my source on this, a Washington Post article from a few weeks ago. You can also find Gott’s technique written up in scholarly papers. It forms the basis for his Doomsday Argument, a fun springboard for some lively debates.)
You have to bear with me on this, because it takes a bit of setting up, but here we go:
Gott visited the Berlin Wall in 1969, and he began to wonder how long the wall dividing that beautiful city would last. Some people thought it was just a transient political aberration that would be gone in short order, others thought it could last hundreds of years. So Gott laid out a rudimentary timeline, marking 1961 as the beginning point and “unknown” as the end point. He divided the line into equal quarters, though of course he could not say how long each quarter represented.
He reasoned that his 1969 visit fell somewhere on that timeline, and statistically there was a 50% chance that his visit occurred in the second or third quarters of the wall’s existence (the middle half, if you will). He had no way to tell if his visit occurred at the beginning of that middle half or at the end.
However, if it fell at the beginning of the 2nd quarter, that would mean that each quarter was eight years long, in which case the total life of the wall would be 32 years, thus it would come down in 1993.
On the other hand, if his 1969 visit occurred at the end of the third quarter, that would mean each quarter was a bit less than 2.7 years long, and the wall could come down as early as 1971. Thus, he calculated there was a 50% chance that the wall would come down between 1971 and 1993. In reality, it came down in 1989.
The beauty of this technique was that it relied on statistics only, not on any political calculations or predictions of human behavior. Now, of course, a 50-50 chance is not always the odds we want if we are trying to predict something of huge importance — we would like somewhat better odds in those cases.
The technique allows for this, although you lose some precision in the process. You simply extend the part of the line any given point of time is. For example, instead of assuming a 50% chance that his visit occurred during the middle 50% of the timeline, Gott could have assumed there was a 95% chance his visit occurred during the middle 95% of the timeline. This was almost a sure bet, but it meant the calculations would have predicted the Berlin Wall would last somewhere between .2 and 320 years. Even taking into account it had already lasted 8 years at the time of Gott’s visit, the most he could have said about it with 95% certainty is that it would come down sometime between 1969 and 2281. Not all that helpful.
Still, I find the technique fascinating. So I decided to apply it to the question of how long the game of WoW will last.
Using 2004 as the start point and an unknown as the end point of the game, we are now at point 2017. Applying Gott’s technique, there is a 50% chance that WoW will end sometime between 2021 and 2056. I am pulling for the latter, but if I add in some non-statistical analysis, I am forced to admit the possibility that an earlier date is more likely:
- The game is already technologically ancient, and this kind of classic MMORPG is a dying genre.
- The game does not really lend itself to ATVI’s strategic vision of mass esports events, mobile apps, and fast-paced arena-type contests.
- The game accounts for less and less of Blizz’s revenue each quarter, and it is only a matter of time before they decide they can no longer devote the resources necessary to maintain it.
- The kinds of things Blizz has to do in order to keep the game corporately viable seem to be exactly the kinds of things that drive players away, resulting in a downward spiral. Example: Introducing more and more endless grinds in order to keep MAU “stable”.
If, adding in the analytical points I described, we assume the earliest end date — 2021 — that could mean we will see at most two expansions after Legion before the final demise of the game. And if we do not get the next expansion within, oh, say six months, it could mean the expansion after Legion will be the final one.
All wild speculation, of course, but hey it’s kind of fun to indulge in some tin-foil hat theories on a nice Friday fall day.
With that, enjoy your weekend, and let’s hope we have some great new announcements coming out of Blizzcon in the next few hours.