How much money Blizzard is really making from 10 million subscribers
by Mike Schramm 
Jan 24th 2008 at 5:32PM
An article on Playfuls.com (which I found via Incgamers) tried to take the news about Blizzard's ten million subscribers from earlier this week, and suss out just how much money they're making. They do what most people would do, which is multiply their $15 subscription rate per month times ten million, which would mean that Blizzard is raking in $150 million a month, or about $1.7 billion a year is gross profits.Except that's not right. Because while North American and European players pay about $15 a month, many Chinese and Asian subscribers don't pay monthly-- they pay hourly, at a much lower rate than what other players around the world pay. With 2.5 million and 2 million subscribers in North American and Europe respectively, Blizzard is still making $810 million a year (not to mention the cost to purchase the original game and the expansion pack, which at this point is probably negligible at this point given how much retailers like to take out) in those places. But that leaves 5.5 million players in other countries, and their payment plans aren't as rigidly defined.
Of course, obviously these are all estimates as well, and they're gross, too-- you have to remember that Blizzard pays a huge group of people money to keep up content, customer service, promotion, and administration, as well as maintenance on what must be a huge number of servers (each realm has at least three or four servers running on it, for each continent and all the instances). And Blizzard has other income coming in as well-- licensing fees, fees from The9 (the company that actually runs WoW in China, and likely collects subscription fees there), transfer fees from players, and so on.
Don't get me wrong-- Blizzard is still making a lot of net money on the deal, easily into the hundred millions. But it's not as easily as multiplying what you're paying by ten million, because that's just not the case.
Filed under: Analysis / Opinion, Blizzard, News items, Economy, Making money
Reader Comments (Page 1 of 1)
Jasperwind Jan 24th 2008 5:47PM
"each realm has at least three or four servers running on it"
Is this a documented fact? I always assumed 1 realm = 1 server. I suppose each realm could actually be a server cluster though.
Also keep in mind these servers are probably top notch machines. If you haven't priced Dell servers lately, they are crazy expensive. It's nothing for a server to cost $8-10k. Blizz may be paying much, much more than that (and I emphasize the "much").
Isambaard Jan 24th 2008 6:33PM
3-4 is probably a very conservative estimate. Realms are most certainly clusters of servers, though they almost certainly are not the rack mount Dell kit you'd look at on their website.
I'd guess they have a mixture of databases for things like auction house transactions, bank contents, persistent character data storage, mailbox functions, etc. Then the live world likely runs on a cluster of machines which handle mob behavior, spawning, resource spawning, arbitrating combat, etc. Its pretty well understood from observation that instances seem to run independently of both Azeroth and Outland which also pretty clearly run independently of each other.
Whether the servers load balance population based on zone location within the larger grouping of Azeroth and Outland is anyones guess, and which zones are grouped together is likely based more on average populations than "geographical proximity" on the map.
The key to running a server farm the size of Blizzards and keeping the most people the most happy the largest percentage of the time is spreading the load evenly.
This brings an interesting question up for those realms currently experiencing queues, namely would logging out in a low population area such as Desolace net you a shorter queue or is population for that controlled on a realm level?
klink-o Jan 24th 2008 6:59PM
3-4 servers probably wouldn't run the auction house at peak hours. If you were to count the individual servers (remember, the common image of this big black refridgerator sized box is not a server, it's a case that can contain a dozen or more individual servers) that make an entire realm work, it's likely going to be well over a hundred. Even if you count them in groups, it's still going to be more than 3 or 4. You've got one or more running: the mail, the auction house, probably the bank, several running the each continent, etc. One of the things I've always wanted to see from Blizzard is a tour of one of the realm's physical locations. I'm sure there's some information they'd like to keep private, but still, I'd like to see just how much room it actually takes to house.
Starayo Jan 24th 2008 7:14PM
Instances, raid dungeons, etc are run on a separate server. I think outland and azeroth may be different, too, hence the ability for outlands to "crash" yet azeroth be fine.
PNess Jan 24th 2008 5:50PM
Lrn2read sec statements
they make it very clear what they make.
of course its a bottom line number that also takes into acct all the money spent on other projects...and money taken in on other projects...which at this point is next to nothing.
http://www.vivendi.com/corp/en/publications/quarterly_accounts.php
2007 6 month
500m in rev
119 profit
full year is estimated to be a billion dollar year with 250m in profits.
20m per month profit is quite nice
now this is euro's SOOOOO...
at 1.4+ exchange this puts them at a full year of
1.5b in revenue
375m in profits american dollars
can you say wow....
Charlie Jan 24th 2008 6:55PM
Nice work =D.
375million is alot, but currently its their only income source, so you have to remember that that money goes back into fund Starcraft II and Hydra (their second unanounced project). As well as funding WoW. They prolly took about 50 mil out of that for each project this year.
I'm sure they use their money wisely, but still at the end of the day, your still gonna end up with an huge profit margin. The problem is, you can't just throw money at a problem, so making games (inc patches,expantions) still takes time. It does help to have almost unlimited funding though =D.
codyimeson Jan 24th 2008 5:51PM
i like your articles mike.. but this one was so terribly written it made my eyes hurt.. were you in a hurry for a deadline or just extremely hung over?
but yea.. blizz rakes in the cash.. stupid people with stupid ideas making money!
Green Armadillo Jan 24th 2008 7:38PM
Never thought I'd rush to Mike's defense, but he does have a point here. Far too many people make this particular math error, and I'm happy to see someone actually take the time to think about what the actual numbers are before they post about billions of dollars.
As to the actual box revenues, they might not be entirely negligible. This game still occupies a decent spot on the NPD charts more often than not, which has got to be worth something even though the price is much lower than it used to be. Also, Blizzard offers the expansion as a direct download, for which they presumably pay only bandwidth (some of which they can actually leech off their own customers via the Blizzard downloader).
aanidaani Jan 24th 2008 6:41PM
No one seemed to take into account the fact that most subscribers use credit cards, which charge a transaction fee that ccan, in Blizzard's case, amount to millions.
Karen Jan 26th 2008 11:51AM
It is the credit card charging the fee though, and not all credit cards charge a fee...mine does not....if the card is charging you a fee....the credit card company or bank is who keeps that money.
travipoo Jan 24th 2008 7:40PM
Your also forgetting to add the new realm move and character name change cost.Granted its not anywhere near as predictable as monthly fees.I am sure it still adds up to a nice chunk of change.
Dave Jan 24th 2008 11:22PM
seeing as Vivendi is a publicly traded company, this sort of information shouldn't be terribly difficult for anyone with any sort of journalistic background to find out...
Max Jan 25th 2008 2:56AM
I'd like to know why with all the money they make, they can't find one guy in their team willing to put a few more hours to sketch out some new monsters. If I have to see the same fucking monsters again colored something else, I'll have to flip. They do the same thing with armor, and it's pretty pathetic considering how much money they rack in.
kevan Jan 25th 2008 7:16AM
Sure dell servers can easily cost 5-10k and I'm willing to bet Blizzard is using 15-20k....or maybe higher priced servers for WoW. But think about it people! If you were dell(and dell is just an example as I do not know what kind of servers Bliz uses) you would go to Blizzard and say, "Use our servers please!?!?!" If Blizzard does purchase from said company, they would be buying a MASSSIVE amount of servers at a HUGE discount. They are not going to pay full price for every single server -- that's just unheard of. Heck, I dont pay full price for my consumer level items from dell.
PNess Jan 25th 2008 7:18AM
"375million is alot, but currently its their only income source, so you have to remember that that money goes back into fund Starcraft II and Hydra (their second unanounced project). As well as funding WoW. They prolly took about 50 mil out of that for each project this year."
sigh, this is profit after all expenses...and not just WOW expenses...
they are drawing 1.5 billion in revenue prior to all blizzard expenses.
they are spending 1.1 billion in revenue on the up keep of wow and all other blizzard gaming related expenses.
so the game might very well, since there is a whole other team of devs working on starcraft and unknown project #2, be making a number that is substancially higher then 375m.....
375m is the bear bottom number. the real profit number is prob closer to 500m
Ian Jan 25th 2008 7:32AM
Vivendi Games was recently acquired by Activision. The investment bankers on the deal were Goldman Sachs, who published a transaction analysis entitled "Activision Blizzard: Combining to create a diversified publisher" on December the 5th.
The analysis clearly states on page 4 that "Blizzard Entertainment, a division of Vivendi Games owning World of Warcraft, is expected to have $1.1bn in C2007 revenue and ~$520mn in operating income, representing industry high margins of 47%."
This is separately reported here: http://www.economist.com/business/displaystory.cfm?story_id=10251308
There you have it. Speculation closed.
Ashwin Jan 26th 2008 8:29AM
10 million is all fine and good but I just want to remind people this does not talk about the total number of active subscribers. How many people do you estimate have left the game?
Bloodelfer Jan 25th 2008 5:38PM
some admin said that blizz have about 2,400 workers around the world
Ahoni Jan 25th 2008 10:43AM
Thanks Mike Schramm. I make this point all the time.