The little tent-pole that could, and the little blogger that couldn’t

Because some people are getting a little too excited over next-to-nothing, lets actually look at everything said recently from everyone’s favorite video-game producer.

“Call of Duty: Advanced Warfare was the #1 release of the year and the franchise’s cumulative revenue is now over $11 billion. Destiny was the #3 new release of the year and attracted over 16 million registered users. Skylanders, with over 240 million toys sold life to date was, again, the #1 kids console game. World of Warcraft reached over 10 million subscribers and remains the #1 subscription-based MMORPG in the world. Diablo III is the #1 PC role-playing game of the year; and Hearthstone, which is named Game of the Year, has already attracted more than 25 million registered players.”

Quick, which one of the above numbers isn’t directly linked to generating money?

“Destiny and Blizzard’s Hearthstone. Combined, they attracted over 40 million registered players worldwide and generated more than $850 million in non-GAAP revenue”

Why are we grouping the 3rd biggest release of the year with a title that struggles to stay in the top 200 of app downloads? Why o why… (Don’t worry, we’ll get back to that 850m number later, but spoiler alert: nope)

“Blizzard generated record avenues and near-record operating income. The year was driven by Diablo III: Reaper of Souls and World of Warcraft: Warlords of Draenor, both of which generated significant revenues and income that will not have comparable releases this year. In addition, we expect WoW subs to decline as we have seen historically in the year following the release of a large-scale expansion.”

So wait, a title sometimes in the top 40 in app revenue wasn’t a driver of record revenue? What, we couldn’t lump it in here somehow? Why do we exclude Hearthstone when we start talking about significant revenues? (Props to Blizzard for realizing WoW subs will drop (have already?). Maybe release content that holds up to avoid that? I heard Old Blizzard was able to do that, maybe ask them how they did it during vanilla/TBC times?)

“Turning to our quarterly outlook. In 2015, we expect a lighter first half of the year as compared to last year as we don’t have a comparable launch to the high-margin Diablo III: Reaper of Souls, and we only expect modest contributions from Call of Duty Online and Heroes of the Storm, as I mentioned earlier.”

Wait a minute, but what about your new tent-pole Hearthstone? It’s still ‘growing’! And it wasn’t as big a factor in Q1 2014, so Q1 2015 should be awesome right? Right…? Hello?

Actual numbers talk below:

“(CoD)Advanced Warfare the #1 console game globally, which has delivered well over $1 billion in sell-through, and far and away the #1 title worldwide on next-gen platforms.”

“Destiny now has over 16 million registered users with a massive audience of active players still averaging over 3 hours of game play per day, a figure that has stayed remarkably stable since launch. Destiny also performed the rarely seen console gaming feat of growing active players from November to December, driven by the release of the new expansion pack, the Dark Below. And it was the #1 played game in North America on a PS4 in December.“

“On to our third tent-pole franchise, Skylanders. As of today, life-to-date retail sales for Skylanders has exceeded $3 billion. And in 2014, Skylanders outsold all action figure lines and was the #1 kid console game globally for the fourth year in a row, and as a franchise, outperformed its nearest competitor by 30%.“

One of these tent-poles is not like the other

Strange isn’t it, that they give us numbers like player activity for Destiny, or actual sales numbers for Skylanders, or game sales rankings for CoD. Wonder why they didn’t just group them all together, or only provide how many free accounts were created. What, was the number of ‘likes’ on Facebook for each title not a number worth mentioning? Are dollar figures really that important on an earnings call?

“Hearthstone was released first on Windows and Mac and later on iPad and Android tablets, bringing Blizzard into the mobile space for the first time.”

And not just bringing Blizzard into the mobile space, but damn near cracking the top 200 downloads chart at that. Take that “Random shitting slot machine app” at number 201, Blizzard is here to ‘dominate’ the mobile space with its very own graphic dice simulator!

“All this activity helped drive Hearthstone’s highest monthly active players ever in December as well as our highest revenue quarter-to-date for Hearthstone”

Ah final, here come the real numbers…

“Registered players for the game have now reached over 25 million, capping off a spectacular start for Hearthstone. It’s gratifying for us to see how the global Blizzard community has responded to our first foray into a new genre as well as the free-to-play market and gaming on tablets. We’ll keep working hard to build on last year’s momentum with more content in 2015 as well as the upcoming Android phone and iPhone versions of the game.”

And…. that’s it?

Just “keep working hard”?

The big take away number is that a free process that takes maybe a couple of minutes was completed 25m times to date. That’s the only concrete number in this entire report about Hearthstone; the number of free accounts created. What, was Turbine unavailable to provide number of cards draw or something equally meaningless?

Why can’t I get Destiny-like activity numbers, or Skylander-like sales numbers? Why isn’t Blizzard telling us that Hearthstone is the #1 mobile app? The #10 mobile app? What, is stating you are maybe sometimes a top 50 revenue app not a good look for a Warcraft IP, Blizzard-backed, WoW-boosted new app? Do investors not want to hear that?

The only somewhat concrete and significant line about Hearthstone is here:

“We created 2 new tent-pole franchises with Destiny and Hearthstone that are profitable right out of the gate. Destiny and Hearthstone also have great comp and pipelines that we expect to contribute to our results every year in a significant way.”

Destiny coattails aside, Hearthstone is profitable, so it has that going for it. Who would have imagined using existing WoW art to lower the development costs of your dice simulator and cashing in on your very popular IP would result in quick, not-going-to-give-a-number profits. Really shocking. It’s almost like any low-cost turd (the game runs like a dog on the ipad, which is impressive considering there is almost nothing going on graphically OR in terms of data being sent compared to most other multiplayer apps) put out by Blizzard that had WoW behind it and cost a few bucks to make would have been a quick small success, huh?

I wonder if the tent-pole line was a little dig from Activision to Blizzard. Like one side launched Destiny, while the other launched Hearthstone, which is sorta like coming up to a new Ferrari owner and telling him how awesome your new Kia is. I can just imagine someone from Activision patted the intern doing the copy/paste work for Hearthstone on the head and handing him a celebratory lollipop. “Great work nerfing gravedigger kid, can’t wait to see what huge update you deliver next month!”

Good try, good effort?

PS: How about Brian J. Pitz just bringing the heat during the Q&A?

“Brian J. Pitz – Jefferies LLC, Research Division

Our question on Hearthstone monetization. The game is already a big hit. We continue to be impressed with the size of Twitch audiences, suggesting basically off-the-charts engagement.”

Think Brian realizes its one fame-whore on Twitch who streams 24/7 that makes up 80% of those Hearthstone views? (Which I just checked, are now 1/3rd of LoL, and yes, the one-fame whore is streaming.) Better keep that guy on the payroll Blizzard or that “off-the-charts” engagement might go down, and we just can’t have that now can we?

PPS: Dear Az, you might want to rethink that indicative reasoning math there bud. I mean sure, maybe every single dollar collected by Destiny was on the first day, and it was just zeroes after that right, but somehow I just kinda doubt it.

I believe we call that kind of next-level analysis”when Hearthstone players do math”, and it’s about as entertaining as rolling graphical dice to determine a world champion. To the unstable portal everyone!

About SynCaine

Former hardcore raider turned casual gamer.
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22 Responses to The little tent-pole that could, and the little blogger that couldn’t

  1. Azuriel says:

    Or Destiny actually sold $325 million in the first 5 days instead. Perhaps that more than doubled by the end of the year, but the bottom line is that Destiny minus $850 million is where Hearthstone is. That it’s on the same scale as all of Magic: the Gathering (if not ahead), continues to make your app comparisons rather ridiculous. Nevermind how it was ported to run on mobile, not the other way around.

    As for Twitch, Hearthstone is routinely #3 for streaming, or higher depending on which of the half-dozen “fame-whores” are streaming. Who are you talking about, btw? Trump? Amaz? Kripp? Day9? Hafu? Reynad? Noxious?

    • SynCaine says:

      “Activision recently said that the game delivered $325 million in sales (to gamers) during its first five days of availability. With pre-order sales, holiday sales, and digital revenue still to come, the title has a clear path toward hitting that $1 billion mark.”

      Do you read everything you link?

      Edit: Also, even if the 325m only doubled, that would put Hearthstone below MtG, which has a comically bad online footnote and is overall how old now? What next, Hearthstone passing Tomigochis for daily user activity?

      • Azuriel says:

        Missed a sentence there, Syn:

        And Destiny might even get to that figure in the next year.

        • SynCaine says:

          No no, I got it. But if Destiny is close to 1b now after the holiday sales and all, and the total pie was 850m at the end of 2014, what crumbs is Hearthstone collecting out of that?

          But again you are missing the point. Let’s pretend your math is even remotely accurate; why didn’t Blizzard say Hearthstone generated 350m in revenue? Wouldn’t that be a number they would share? They are very open about sharing good numbers when they have them, as I highlighted in the post. Why is it that only Hearthstone is the one title where the only pinpoint number we get is a trash bag one like total free accounts created? Just explain that to me, please.

        • Azuriel says:

          Destiny is expected to hit $1b sometime in 2015, as a franchise. It’s above $500m as of the end of the year, but by how much is entirely the question. If it were even as high as $750m, one would think that would be bigger news that Activision would trumpet.

          As for your question, could you provide a link to Blizzard ever talking about game revenue in any game? They might give subscription numbers and registered accounts and even units sold, but they have never broke down revenues that I’ve seen. In fact, we only know about the $850m bit at all because Kotick and the Activision side talked about it, not Blizzard. In other words, this is not at all unusual and not indicative of anything.

        • SynCaine says:

          If I remember correctly WoW revenue was reported back when it was growing, but can’t say for sure and not going to dig that deep (quick google search was useless as WoW news stories are plentiful). Larger point stands, Blizzard does provide meaningful numbers for games that are doing well, as they did in this very report for multiple games. They didn’t provide a single meaningful number for Hearthstone, only noting that it was profitable and the hope to see it grow in 2015. Missing that fact is my point related to your post.

          How you want to read into the Destiny/HS split of the 850m number that was in the report is both of us guessing at this point. I think based on the news reports about Destiny post-launch (and at the time playing AA with a Bungie employee and talking to him about it), it makes up a significantly higher number than the at-launch 500m, to the point that HS pulls in less than 250m (MtG, which again is a tomigochi-like comparison IMO).

        • WoW revenue has its own line item in the financial report. It says “Online” but the footnote says that it is all WoW.

          GAAP, 867 million for 2014, non-GAAP, which includes cash they took in now but can only record as revenue at a later date, 1.053 billion.

  2. sleepysam says:

    Hey – what about this Kia?

    Looking at getting a Kia so that line was an unexpected shot across the bow. Ferrari is a little on the small side to haul the family around.

    I am guessing about 25% of the Hearthstone users only did it to add that pony mount to their wow account.

    • SynCaine says:

      I’d say 25% is on the low end. WoW has 10m accounts now (or had at the end of 2014), but Hearthstone has been out a year. Factor in WoW churn over a year, and I wouldn’t be surprised if more than 10m of those 25m accounts are three-and-done accounts.

  3. Ben says:

    Honestly, I don’t get your hate towards Hearthstone. I spent some money on it and enjoyed it for what it is, although I stopped playing after a month.

    PS – You can also use Google, as opposed to guessing at statistics. Most sources point to a very profitable title.

    Analyst predicts Hearthstone annual revenue of $30m

    Joystiq – Hearthstone with approx $100m in annual revenue

    Seriously, for a title like Hearthstone $25m-$100m in annual revenue more than likely outstrips the total investment by a wide margin. It’s a hit. Sorry? And, if that last research is true… if Hearthstone is almost head to head with DOTA2 for revenue that makes it insanely profitable.

    Blizzard is what blizzard is. They make games that are accessible but still good. I’ve never regretted a Blizzard purchase, even if the purchase ended up short-lived. Their games are always solid, entertaining, and well made.

    PS – Hearthstone runs fine on my iPad, not sure what your issue is here? Are you on an iPad 2+?

    • SynCaine says:

      Hate is a strong word for a forgettable and insignificant title like Hearthstone. Is it very ‘new blizzard’ that people drop the game after a month? Sure. Is it comical to have a world championship for a game that is mostly dice rolls? Yup. Is comparing the gameplay to MtG a total joke? Absolutely. But again, all of that is footnote stuff that is more slight amusement than anything else.

      Blogging about it at this point is more about people like Az who think its some grand success and ping me about it. One should never let a good mocking opportunity pass.

      (Also why would I google guesstimate articles when I can get the info directly from Blizzard? In this case the info being awkward lumping and otherwise telling silence.)

  4. JJ Robinson says:

    I’d note several points regarding this post:

    1) Companies usually provide as little information as possible on these calls because of competitive reasons, and second they don’t want to show their hand to investors. I’ve listened to hundreds of them, so the lack of disclosure does not surprise me.

    2) Destiny almost certainly cost multiples of HS in terms of development costs, and going forward it’s probably safe to say the costs of development for Destiny will continue to significantly out strip HS. In other words, Destiny better bring in significantly more revenue than HS.

    3) HS’ lack of placement on the app download board is not a great judge of its success. Most HS players likely started on PCs or Macs, and downloaded the app as a secondary platform. HS also does not appeal to the same markets at Candy Crush, CoC, Triva Crack, etc. Plus I’ll admit, HS isn’t optimized very well for tablets currently, but I’m guessing they are working on it. Also, CoC by itself is driving a massive gaming company. HS is one of several spokes driving Activision-Blizzard.

    It’s pretty clear Syn, you dislike HS. However, claiming its a failure financially seems silly given there is little proof of this, and most evidence, given the little there is, would point towards the opposite. Comparing HS to CoC or other mobile games also seems silly. They are inherently different types of games, with different target markets and different monetization tools.

    To me, one of the most interesting comments on the call was luke warm praise for Heroes of the Storm. Maybe the rumors of scaling back development on this title has some merit.

    • SynCaine says:

      I was pretty clear in the post that yea, HS is profitable. Now sure, if I make a game that costs 5 bucks to develop and I buy one copy for 10 bucks, I can call my game profitable too, but yes, HS is profitable. That’s not a debate.

      The Destiny revenue part is only because the call lumps the two together, and Az took that as being somewhat equal lumps. Destiny of course dwarfs HS in cost, and it dwarfs it in revenue.

      As for mobile app success, why isn’t it fair to put HS next to every other app in the app store when Blizzard themselves point to it repeatedly as a mobile app? Look at the top 25 for example, the titles aren’t all from one genre. Its a mix. Why should be just immediately assume HS shouldn’t be in that mix? Is Blizzard some highly inferior little studio compared to SuperCell? Of course not.

      HS is a meh app, hence top 50. HS the game is a poorly deisnged and flawed game, hence top 200 (sometimes) downloads. I think both of those very solid data points are valuable, at least much more so than the total number of free accounts created.

  5. Matt says:

    Yes, who is this one “fame-whore” who streams 24 hours a day? Given the timestamp it must be Amaz, but it would be news to me that he’s on all day now.

    This angst is fascinating to watch. But what is it that you actually want here?

    • SynCaine says:

      Amaz, who is currently offline (must have died?), and HS is now 1/5th of LoL on Twitch. Weird how that works.

      Of course HS is still higher than WoW, so someone should let Mr. Pitz know its now a bigger deal than that sad forgotten MMO, because clearly twitch views are an excellent indicator of… something?

      • tithian says:

        You do realise that Kripp, Trump, Hafu, Forsen, Noxious and Reynad all get thousands or even tens of thousands of viewers each, right?

        HS is insanely huge on Twitch, it has even spawned its own subculture there which is obvious by the emote spam and memes that have come up.

  6. carson63000 says:

    Do you foresee any point in the future when you might realize that Hearthstone is mostly played on the desktop? Or are you going to carry on pretending that it is a tiny insignificant iPad game?

    • SynCaine says:

      Oh I know it is, which makes the game being Blizzard’s first ‘mobile entry’ that much worse. Imagine if HS was mobile only? It would have what, 10k players?

  7. Sofie Hansen says:

    I got bored of hearthstone after a month, but denying it’s one of the biggest successes of 2014 is stupid at best.

    Right now hearthstone is 2nd on twitch with 1/2 of what league of legends has. This isn’t new either as hearthstone has been in the top 5 for a year. The only three games to continuously beat 40.000 viewers in 2015 were LoL, DOTA2 and HS.

    In fact hearthstone currently has 17.000 more viewers on a fucking streaming site than there are players logged into eve-online.

    I’m not sure why you’re intent on pretending hearthstone is a failure, when in reality it’s probably the biggest financially success in video gaming in 2014 considering how little effort they would have had to produce that mediocre piece of shit.

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