Q4 Earnings Call and the future

Community General Discussion
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Results of Q4 earnings call, in broad strokes, mostly wrt WoW:

Overall picture is not good. This isn’t news. Activision Blizzard had just 3 releases in 2018, which is abysmal for 9.8k people they employ - EA that employ 9.3k people had 9 releases. The 3 releases of Activision Blizzard were pretty abysmal as well. Titles with no releases - OV and HS for Blizzard - stagnated. They had to cut HOTS. That the year got to be the best year in Activision Blizzard history is not bad, but nothing terribly important, the growth is expected, and their growth was lower than it should have been for their size and trajectory. This was all known before the call, so I am packing it tight.

The metric they tie themselves to, MAUs, is on the decline pretty uniformly. Blizzard MAUs for Q4 2017 were 40 million. That was considered not terribly good, Q3 2017 was higher. Well, come Q4 2018 and Blizzard MAUs are now 35 million. They call this “a nuanced quarter”.

They lay off 8% of the workforce. They say most of the cut positions are those that are less important than others - and that’s true, we can believe that. It sucks to be cut, sympathies, but they did have tons upon tons of ineffectiveness (just 3 inept titles per year per 9.8k people? come on), so if that ineffectiveness is going to reduce, that’s good. (Big comp packages for CFOs and the likes are obviously distasteful and reduce effectiveness, however.)

In exchange for laying off 8% of the workforce, they say they are going to increase resources spent on development of a set of main games (WoW included) by 20%. That’s likely slightly less resources than they free by the layoffs, because 20% and 8% apply to different things. That also doesn’t mean that there will be 20% more people, most likely a big chunk of that will go towards motivating existing people. But the direction itself is good.

That said, they didn’t say what they are going to do with their development resources, they had been vague. It is pretty safe to assume that they are working and will continue working on mobile titles. Contrary to popular opinion, that’s big money. Modern mobile titles are complex to begin with, but more importantly they demand constant investment after the initial product is issued - the money here is big. Then you double or even triple the money required when it comes to ads - which are vital for mobile games. Mobile games aren’t cheap. We heard of them developing a new take on Pokemon - that single game can eat all of those 20% of additional resources that they advertise.

Still, it is clear that they realize that they are deep in trouble. It is clear that they are willing to fight for their place. And it is clear that, at least for now, WoW is among the titles they are willing to fight for. Let’s wait and see what will come in 8.2 and after. Let’s see what specifically they will do. If that’s going to be mostly empty talks and another round of rehashed techniques, it’d be a pity, but who knows, it might be good.

What I finally think will happen with WoW and other things, after reading a lot more during the day (post later in the thread):

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What is MAU?

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monthly average users or something like that.

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MAU is monthly active users. This is taken across all games. If you log in to WoW, that’s +1. If you also log in to HS, even on the same bnet account, that’s another +1. MAUs for Blizzard are dominated by HS / HOTS, so while WoW MAUs are almost certainly declining, most of the decline is thanks to other games.

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MAU is Monthly Active Users. Game companies uses this to see how many players are actively playing their game. I think it does not mean that all the players are actively playing, but if you login once per month, you are counted as 1 monthly active player

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Actually, I am going to make a correction.

The 20% increase for the most important franchises is specifically 20% more developers, I misread that.

The statement:

“The number of developers working on Call of Duty , Candy Crush , Overwatch , Warcraft ® , Hearthstone and Diablo ® in aggregate will increase approximately 20% over the course of 2019.”

That’s somewhat more daring than 20% more resources.

While we are on this quote, let’s make an obvious observation: no HOTS and no Starcraft (both expected). It would be interesting to see what specifically they are working on with Diablo - if that’s a PC game, it is probably not coming in 2019.

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This doesn’t mean 20% increase in productivity. Depending on a team’s size, it could even mean a negative effect in the short term.

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That doesn’t matter in the long run. I mean, sure, you can screw up everything - they even used this “oh, WoD is so bad / late because we spent so much time training all the new people” (which was just an excuse and an attempt to save face), but that’s all manageable. The additions will be gradual, etc.

Here’s the big thing that I don’t see: any new IP? Doesn’t seem like it, frankly. Because if it was planned, they’d probably have talked about increasing the number of developers without referencing specific titles. No new IP is pretty bad.

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More likely mobile versions aimed at China.

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:open_mouth: they fired Ythisens the US CM. incredible…
Ok not fired. Laid off.

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Companies go through phases. Sucks for all who were fired, but more focus on games development is a good thing IMO.

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I don’t think CMs have been particularly useful, but I will say that Ythisens was way more active than, say, Lore, so if I were to choose whom to lay off…

Anyway, back to WoW.

Suppose we have the increase in development focus for Warcraft. We have at least two new things here already for 2019:

WoW Classic - there are remaining production costs, then operation costs, perhaps some small fixes

Warcraft 3 Reforged - same as for WoW Classic, but this will likely taper off quicker

There is also a strong rumor that they have been developing a pet battle system somehow either inspired or even interacting with WoW, for mobiles. If they are doing that, that’s probably going to appear in 2019, and due to the WoW connection this might go into the “Warcraft” pile.

This does not leave much for WoW proper. So, while I am somewhat hopeful, I wouldn’t quite expect miracles. As in, I am not really expecting big new subsystems coming to WoW. Not even PVP solo queue. Although I would be very happy to be proven wrong and am willing to wait and see.

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Those things aren’t really missing because of a lack of development resources or a company restructure. PvP Solo Queue isn’t happening, because the developers have said that they don’t think it’ll work for WoW (they covered it in a Q&A). Not sure what you mean by big sub-systems.

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You know the only reason I would ever want solo queue is just so that I can witness all of the whining afterwards “OH MY GOD ROGUES/MAGES ARE SO BROKEN” or whatever on the forums.

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Their reasoning for not having PVP solo queue was childish crap made up on the spot, we discussed that already, I believe.

Big subsystems are things like achievements or pet battles or, talking about things they don’t have, housing (eg, FF-style) and flexible factions (players can switch factions freely, maybe even create new ones although that’s not strictly necessary, and there’s some gameplay related to factions competing for something in some way). I don’t think we’ll see anything like that added, we’ll likely have same old. Although as I’d say, I’d be happy to be proven wrong.

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I have to say that Ythisens when popped up was useful and interesting to read.
It’s really weird they laid him off. Even as facade keeping an old loved GM is always better than let him go away: probably the statement about Blizz never hearing customers is true.
My companiy is doin the same thing BUT never fired (or similar) the ppl in touch with customers. Even if the situation is poor the world shouldnt be aware of this.
Concerning the “new products”… Im hyped for classic. But i fear it would be a straw fire (i never know how is spelled in english). All of us are happy by the return of old glory… But are you sure that after 3 months where you’ll reach barely the 40th lvl, the hype will still be there?
And w3 revamped? Is an old game with old mechanics. It was wonderful to watch the culling of stratholme speech in the new way… but it’s always w3.
Their are pointing too many casino tokens on nostalgia effect. i hope this will repay … but i doubt (in the long term).
Im interested in the pet battle game but is just a side game.
I hope BFA will have a positive turn in the future. This just could save blizz and us loyal (?) customers.
Again sorry for my english. I hope to be understandable enough…

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That doesn’t detract from the fact that it has nothing to do with development resources. It’s just a design decision to not have PvP Solo Queue.

Again, those are more design decisions than resource constraints. Ion talked about it in the last Q&A, how they struggle to find a balance between simplicity and complexity and appealing to different audiences. And if you look at many of the game systems over the years, then they remove about as many as they add. Glyphs system gets removed, Honor talents gets added. Artifact Weapon gets removed, Azerite Armor gets added.
If they wanted to, then they could easily increase the overall amount.

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Judging by what was said, nothing frontline is being released in 2019 so if blizzcon doesn’t have some major announcements this year then i’d expect more lay offs to come.

Wow now runs on trickling content to people who are still play and the shop to make up for unsubs, as long as people keep buying then blizz will always be happy with that model.

I guess we’ll see the new expansion in the back end of 2021.

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It would be 2020.
I mean, they’ll probably announce the next expansion at Gamescom or Blizzcon this year. And then, as with every other expansion, it’ll be released within a year of that announcement. So 2020.

And yeah, this year, 2019, will probably have more game announcements than any other year in Blizzard’s history, ever. I would be surprised if we end up with less than 3 brand new game announcements, 1 WoW expansion, 4 HS expansions, and an OW expansion by the end of this year.
And then 2020 and 2021 will be Blizzard releasing titles like never before.

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I agree with all of the key things that you wrote.

Yes, it’s hard to be excited about a remaster of Warcraft 3. It’s nice to have it, but it won’t go anywhere, the same way a remaster of Starcraft 1 didn’t go anywhere.

Same about WoW Classic. I doubt it will create a lot of new revenue. Maybe just a little.

Etc.

It’s all related to resource constraints. Big things need resources that they aren’t willing to spend. They are only willing to spend on safe things. This tends to be small reworks of traditional gameplay.

Ion’s rationalizations go straight into the trash can, I don’t even care what specifically they were and whether they were actually relevant to what I talked about. 90% of things that Ion says in the interviews is either generic nothing or nonsense he makes on the spot that he forgets immediately after the Q&A.

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