I was reading a “d’uh, that’s obvious” article today regarding how the massively multiplayer online game (MMOG) industry needs to stop looking for the next WoW killer. And I came across this particular bit of text that, well, just doesn’t add up.
The emphasis above is mine. Let’s take a look at this figure.
Half of $860 million is $430 million. This figure is described as revenue: not net income, not profit, not anything else: the only way to interpret this is gross or top line revenue, that is total incoming dollars, ignoring costs. Now consider the other available figures:
- Blizzard claims 11 million subscribers for World of Warcraft, and
- a subscription to WoW costs $13.99 per month, or $12.99 per month if you commit to an entire year
Assume that 100% of the user base is subscribing using the reduced rate annual contract fee of $12.99, and the numbers look like this:
- (11,000,000 x $12.99 per month) x 12 months per year = $1,714,680,000
That is $1.7 billion dollars per year, which is a lot different than $430 million. And this is purely accounting for subscription revenues: Blizzard released an expansion this year, sold to several million of those subscribers at $40 per copy. There are three possibilities that occur to me here:
- Blizzard’s 11 million subscriber figure is not actual “active”, paying subscribers, or is otherwise totally bogus, and Michael Cai has some special insight into the reality
- Michael Cai didn’t really mean revenue: perhaps he means profit, or something else, is being misquoted/misunderstood, and the writer of the article I quoted didn’t spend thirty seconds to verify the facts
- Michael Cai is pulling numbers out of his ass and didn’t spend thirty seconds to verify them
If I were a reporter rather than a blogger, I’d contact Michael Cai and ask him to explain what he really meant. Maybe that’s something Mary Jane Irwin, the author of the post I quote above, could look into. Or maybe I’ll just leave it up to you, the reader, to generate your own half-baked theories regarding the strange numbers that get quoted in some articles.
UPDATE- The reporter *should* have checked: per Michael (see attached), the numbers quoted, and specifically the $430 million per year figure for WoW’s annual revenues, were U.S. figures only.