World of Warcraft Revenue Dropped 54% in 7 Months

On August 1, Activision Blizzard said in its second quarter financial results that World of Warcraft had approximately 7.7 million subscribers. Before that, the company said it had more than 8 million subscribers in the first quarter, and more than 9.6 million in the fourth quarter of 2012. More than 10 million subscribers still clung to the MMORPG in the third quarter of 2012.

On a financial level, SuperData Research reports that World of Warcraft revenue tanked in a span of seven months, with the MMORPG generating $204 million in September 2012 to $93 million in April 2013. The firm claims that a lack of micro-transactions beyond pets and mounts may be hurting business, especially when players can jump ship and spend their cash on a larger assortment of items in competing free-to-play games.

"Games with micro-transactions have long been trumping subscription ones in total revenues in the US, but the decision to switch to a hybrid or F2P model was one that didn't make sense for all games, one of them, currently, being WoW," the firm states. "With a dedicated player base and relatively stable Monthly Active Users (MAUs), WoW would need a convergence of factors to make the switch beneficial. It looks like those factors are starting to stack up, but haven't hit critical mass."

Once an MMORPG switches over to a free-to-play model, there's an influx of new players and a spike in revenues. This can be sustained if the developer/publisher has the proper setup to keep players engaged with the game enough to willingly play money. But World of Warcraft can't suddenly switch over to a sole F2P model; it would be too much of a jolt, the firm said, and doesn't make sense with the current metrics.

"Despite major declines in total revenues between September 2012 and April 2013, the game has seen an increasing conversion rate for the current, add-on, extra-game store, and its micro-transaction revenues have held pat overall," the firm states. "What it tells us is that dedicated WoW players are interested in—and will spend money on—micro-transactions. By bringing this system into the game, and allowing for power-ups and performance-based micro-transactions, WoW hopes to further entice players to spend."

Back in July, Blizzard confirmed that it's already working on an in-game store for the MMORPG. Right now the project is in the exploration process, and will initially be tested with new items that Blizzard plans to introduce in the Asian regions. These items include an experience buff to assist with the leveling process and an alternate way to acquire Lesser Charms of Good Fortune. Blizzard will be seeking feedback on these specific items and about what the company will ultimately stock on the in-game store's shelves.

Could this in-game store open the door to a hybrid subscription model already used in competing games? While subscribers would get the full, premium experience, free-to-play gamers could still experience the world beyond the limits of the "demo" by purchasing what they want in addition to the cost of the game itself. This model would help increase revenue and bring in more players who were previously turned off by the subscription model.

Going completely free-to-play, however, is definitely out of the question. "In order to have sustained the US revenues the game saw in 2011, it would have had to convert 53 percent of the total free-to-play audience in the US at the time," the firm states. "However, there are now more F2P gamers in the country—and worldwide—so it's becoming easier to capture this audience. But there's also more competition."

To read the full report, head here.