Digital business models could substantially boost revenues at Activision Blizzard in the next three years, the company says.
Thomas Tippl, chief financial officer at the world’s biggest video game publisher, said during the company’s analyst meeting today that the company could make more money through non-traditional revenues related to its major hit franchises. That shows that Activision Blizzard is rapidly moving into digital markets and new business models as it adapts to a major transformation of the gaming business.
Tippl said the company’s goal is to generate about $1.25 billion in additional revenue through ongoing expansion of current games in the next three years. On top of that, the company has not yet added the potential impact of new game projects such as an upcoming Bungie game and the upcoming massively multiplayer online game, code-named Project Titan, from the company’s Blizzard Entertainment business. And the company could also have some upside from new business models associated with future projects.
As an example of a new business model, the auction house for its upcoming Diablo III game could generate considerable transaction fees for the company. In the game, players will be able to pay real money to buy virtual items that others collect during the course of game play. Players can earn things such as better armor and sell them off to other players for real money through the game’s own user interface.
In the past year, the company generated $1.7 billion from digital revenues, such as online subscription fees for World of Warcraft.
Upcoming opportunities (pictured at right) include map marketplaces — where Blizzard takes a cut on user-generated custom multiplayer map sales — for the two coming expansions for the StarCraft II game. Blizzard also has a couple of upcoming expansions for World of Warcraft, as well as geographic expansions. The company is translating World of Warcraft into Portuguese for launching in the fast-growing market of Brazil.
Eric Hirshberg, president of Activision Publishing, said that the company will also make new revenue from a premium subscription plan for its upcoming Call of Duty Elite social network. Activision Blizzard will also launch a free-to-play, microtransaction-based version of Call of Duty for the Asian market, where free-to-play titles are popular.
Bungie is also working on a multi-platform game that will yield non-traditional revenue. And Blizzard Entertainment is also working on a next-generation massively multiplayer online game, code-named Titan. Tippl said overall that in the past few years, Activision Blizzard has invested $2 billion in new game initiatives.
Earlier this year, Blizzard made the first 20 levels of World of Warcraft into free-to-play levels. That has resulted in a 60 percent increase in the creation of new accounts. And Blizzard’s China partner, Netease.com, is busy expanding World of Warcraft into new cities in China.