Activison Blizzard’s Plays to Stay Relevant in Today’s Gaming Industry.

World of Warcraft stands out as an exception in the MMORPG world. Where nearly all other titles have either faltered or drastically altered their business models in order to survive World of Warcraft has remained steadfast to its subscription based system. This has made it the most successful MMORPG ever, making it a multi-billion dollar business all of its own. However its heydays are long behind it, with subscriber numbers slowly dwindling over the years. The more regular release of expansions have helped to keep the number up somewhat but the downward trend was still easily noticeable. Blizzard, obviously aware of this, has decided to stop reporting subscriber numbers altogether after their last quarterly report yesterday.

The last subscriber count pegs World of Warcraft’s player count at about 5.5 million, the lowest it’s been in 10 years. Whilst that number might sound like the first rattles of World of Warcraft’s death knell it’s likely anything but as many long time MMORPGs have survived on much smaller subscription numbers. For Blizzard it does present a challenge as dwindling numbers can often have a runaway effect; reaching a critical point where the majority of the playerbase abandons the title for greener pastures. That point is probably still some time away and indeed if the last subscriber peak (from the last expansion) is repeatable then I see no reason for World of Warcraft to go away any time soon. However the change in what (Activision) Blizzard communicates, as well as their recent purchase of King, is indicative of some of the other issues the company is facing in their attempt to stay relevant.

It was around this time that Blizzard was planning to announce their next MMORPG based on an entirely new IP. This was known internally as Project Titan, a name which got more than a few people fired when it was made public. Unfortunately the game simply didn’t work in the way it was originally envisioned and it was scrapped late last year. Whilst Overwatch may have arisen out of its remnants it meant that many who were looking towards Blizzard’s next MMORPG were left wanting and thus began to look elsewhere. Had project Titan been released around this time the demise of World of Warcraft might have been fully sealed but it would have been a greater win for the company overall.

This has led many to call for World of Warcraft to change their subscription model to be more inline with current trend of switching to free-to-play. To be sure the transition can be made as The Old Republic and other titles have shown however there’s little incentive for Blizzard to do so when their monthly revenue rate is still in the hundreds of millions of dollars. Until they’re really hurting for numbers, and I mean really hurting, such a transition would likely devastate their revenues to the point where World of Warcraft wasn’t sustainable. However I think Activision Blizzard recognises this as a potential possibility and that’s where the acquisition of King comes into play.

King, for those who don’t know, are the developers behind the incredibly successful Candy Crush saga. Activision Blizzard is paying a cool $5.9 billion for the company which isn’t a bad deal if their current profit rate of $127 million per quarter is anything to go by. They are undoubtedly one of the leaders in the free-to-play model and there’s every chance they’re buying them with a view to revamp the business models for some of their products. This isn’t limited to Blizzard titles of course, but the timing of the two announcements certainly makes it feel like they might be related.

This definitely feels like a pivot point for Activision Blizzard as they muse through their options for future growth. There’s definitely a trend for their newer IPs to be done differently to those of the past and how Overwatch is positioned will be strongly telling of how they see game development in the future. Right now it points to a free-to-play future, one that could very well make its way into already established IPs. If any company can make the transition work, and work well, it’s Activision Blizzard but no change of this magnitude is without risk.