Activision Worried That WoW May Become Obsolete? [World of Warcraft]

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Activision-Blizzard filed its annual report for investors on March 1, which summarizes the publisher's 2009 fiscal year. The report isn't exactly what most players would consider a leisurely read, although it does provide a few interesting details about the publisher's concerns with World of Warcraft's performance as of late. When it comes to investor reports, concerns like these—and the detailing of potential risk factors—is standard practice. Still, the report provides some insight into recent community topics like WoW's subscriber base finally leveling off, as we discussed in a news-editorial last month.

If you've been following the recent NetEase fiasco in China, it should come as no surprise that Blizzard's international subscriber base took a substantial hit last year. WoW's continued success in the Chinese market—which accounts for several million of its worldwide players—hinges on its approval in 2010: "Having World of Warcraft unavailable for play or available only on an unpaid basis would result in lost revenues and income, and having it unavailable for a prolonged period could have a negative effect on our reputation and subscriber base in China," according to the report.

Aside from the obligatory factors like "inflation, recession, rising unemployment and volatile gasoline prices," Activision-Blizzard is keeping a close eye on the social networking (Facebook games) and portable (iPhone) markets, fearing these burgeoning mediums could someday render WoW obsolete:

"Future increased consumer acceptance and increases in the availability such games or other online games, or technological advances in online game software or the Internet, could result in a decline in platform-based software and negatively impact sales of our console and hand-held products. Newer technological advances in online game software may also render products such as World of Warcraft obsolete."

The company also recognized a few WoW- and MMO-specific risks it's facing. "If consumer demand for World of Warcraft games declines and we have not introduced new MMORPG or other products that replace World of Warcraft 's potentially decreasing revenue, or added other sources of revenue, our financial condition could suffer," the report reads. In addition, Activision-Blizzard reiterates its need to "refresh World of Warcraft or develop new MMORPG products," according to the report.

The publisher also mentions the emerging prominence of "online functionality" in video games, echoing the recent changes to its Battle.net platform and its upcoming integration with other Blizzard games like StarCraft 2 and Diablo III. In addition, Activision-Blizzard refers to itself in the report as a "hit-driven" business and recognizes its need to stay one step ahead of competitors, who "may develop titles that imitate or compete with our 'hit' titles, and take sales away from them or reduce our ability to command premium prices for those titles."



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