May 9, 2008
Online grows, audience broadens, Activision profits
Subscriptions from online games are now bringing in $1bn a year in the US, according to a report by the NPD research firm.
Its data cover massively-multiplayer PC games (MMOs) such as World of Warcraft, casual games and console services such as Microsoft’s Xbox Live.
NPD gave the top five MMO games as World of Warcraft, then Runescape, Lord of the Rings Online, Final Fantasy XI and City of Heroes.
Top online gaming sites were Pogo.com, followed by RealArcade.com, Bigfishgames.com, Gametap.com and Disney.com.
Video game publishers are increasingly looking to online and recurring subscriptions to give themselves extra, steadier revenue streams compared to the lumpy retail sales of games.
Activision will achieve that balance with the merger with Vivendi’s games division by mid-year, combining its powerful game franchises with World of Warcraft from Vivendi’s Blizzard studio.
In its fourth-quarter earnings report on Thursday, Activision followed in the footsteps of Electronic Arts and THQ in announcing it would begin recognising a substantial amount of net revenues and cost of sales from online-enabled games over a service period, expected to be six months beginning the month after shipment.
“I still think that the bulk of Activision revenues will come from the sales of retail products, Blizzard is a different situation,” Bobby Kotick, chief executive, told me.
Activision had a blow-out quarter and year. Revenues for the fiscal year to March 31 of $2.9bn were up 92 per cent, helped by the success of its Call of Duty 4 combat game and the Guitar Hero III rhythm game. Fourth-quarter revenues were up 93 per cent at $602.5m even though no new titles were released.
“The one thing I think we are starting to see is new users,” said Mr Kotick.
“You are seeing the older demographic and some younger consumers coming in. The type of content like Guitar Hero is more broadly appealing, production values are better - the developers of Grand Theft Auto did a brilliant job - and the physical interface is improving with products like Guitar Hero and the Nintendo Wii. All this is driving new consumers and I think that will continue.”
