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Blizzard's 'Warcraft' riches
Pay to play game subscriptions top 4 million, with no end in sight.
September 1, 2005: 12:55 PM EDT
Game Over is a weekly column by Chris Morris
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NEW YORK (CNN/Money) Any doubts the developers at Blizzard Entertainment had about the viability of "World of Warcraft" were erased the day before the game launched.

As they often do with new product debuts, a group of the company's game makers went to a retailer near their California offices to greet enthusiastic fans who were lined up for midnight launch party. With previous titles, the crowds were only a couple hundred people large.

By 11pm on Nov. 22, there were over 4,000 gamers queued up to be among the first to get a copy of "WoW" (as it has become known). The problem was: there were only 2,500 copies of the game in the store and no one had thought to hire security for the event. By raiding other nearby locations, the retailer was able to meet demand. And the Blizzard crew knew they had a hit on their hands one unlike anything they had created before.

Nine months later, "World of Warcraft" has more than 4 million paying subscribers (meaning players who paid $50 or more for the game in stores, then roughly $15 per month to continue playing). It's a global hit and every publisher in the industry is furiously trying to figure out how to replicate it.

While Blizzard's parent company Vivendi (Research) will not permit it to break out to discuss specific financials, you don't have to be a mathematics whiz to figure out that "WoW" is a cash cow.

"The revenue that's coming in is very meaningful and we are extremely profitable," said Paul Sams, vice president of business operations for Blizzard. "I think we're going to get even more profitable as we learn more and streamline our services."

There are several lessons to be learned the oddest, perhaps, starts in China.

When Blizzard published "Warcraft 3" in mid-2003, it made the conscious decision to chase the Chinese market. China has a very active gaming population, but software piracy runs rampant in the country. Legitimate copies of games sell for what works out to $15 in U.S. dollars. Pirated copies are $1 U.S.

Blizzard, despite the increased piracy it was sure to face, released the game in the country, but opted to drop its retail price to within an "arm's reach" of the pirate price.

"The idea was let's create a real market of authentic players and see if we can change the mindset," said Sams. "Let's see if we can change the mindset by showing we're willing to meet them partway."

The gamble worked. While there were still millions of pirated copies available, Blizzard sold 1 million authorized copies. More importantly, it established a larger brand awareness of the "Warcraft" name. When "World of Warcraft" (which is essentially pirate-proof, since players must log on to Blizzard servers and pay if they wish to play) went on sale, Chinese gamers bought it in droves. At present, there are more than 1.5 million paying players there.

"World of Warcraft's" sales numbers are even more impressive when you consider the game is only available for the PC, a gaming platform many analysts have declared "doomed". While there has been extensive interest in bringing the game to the console world, Blizzard said it's not planning to do that at present.

"While there is an interest [from console makers] and while that sounds cool to us, we're not going down that road at this time," said Sams. "Once we get to the point where we feel we've achieved best of class and it's sustainable... then we'll start contemplating those types of things."

An expansion pack to the game is in the works, with details likely to be disclosed at BlizzCon, the upcoming fan event for players of Blizzard games. But questions are already popping up about what the company has in store for its other premium brands "Diablo" and "Starcraft".

The gaming grapevine has it that "Diablo 3" was (and may still be) under development though Blizzard will not confirm that. But given the success and profit of "World of Warcraft," it's not out of the realm of possibility that the company may create persistent world games revolving around its other flagships.

"I think when you look at our history, you'll find we very much support our franchises," said Sams. "Whether those will go into the MMOG (massively multiplayer online game) arena, I'm not willing to say. But 'WoW' has been gong very nice for us, so we would be crazy not to be considering that."

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Is Sony bluffing about expensive prices for the PlayStation 3? Click here

Morris is Director of Content Development for CNN/Money. Click here to send him an email.  Top of page

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