What You Didn't Know About Blizzcon

Posted by Daeity On Tuesday, October 25, 2011

.. is going to blow your mind. Does this clickbait title work?

So, you want to hear something really messed up? I'm willing to bet that no one knows this (except Blizzard).

During the Blizzcon 2010 opening ceremonies, Michael Morhaime said that there were "more than 100,000 virtual attendees" watching across over 100 countries live via DIRECTV. (This was also when Blizzard DOTA was first announced, and he said it would be free to "all Battle.net players in the coming months.")

Next, during the Q3 2010 Earnings Call following Blizzcon 2010, Michael Morhaime said "More than 25,000 people attended the show with another 95,000 paid viewers following along via DIRECTV or the live Internet stream." (27,000 attendees were later reported.)

But wait.. don't you remember all of those RAYV problems? Oh right.. Blizzard also partnered with RAYV to provide live streaming through the Blizzard site.

In 2009 and 2010, Blizzcon was available live via Blizzard (RAYV) and DIRECTV as a Pay Per View event.

To clarify, there were TWO streams available for purchase: DIRECTV and BLIZZARD DIRECT

During the opening ceremonies, all of the official announcements, and shareholders meetings, Michael Morhaime only revealed the DIRECTV numbers. He was very careful about his wording, and he did not share their internal "Blizzard Direct" figures. How interesting.

However, RAYV sure did share this information in one of their official case studies.

Blizzcon 2010 served over 550,000 unique viewers watching over 100,000,000 minutes of online streaming in a single weekend, The [sic] premium package subscription cost $40 and included HD streaming of the entire event plus a special “pet code” [sic]
This was no typo. 550,000 paid viewers are mentioned multiple times in various RAYV releases. (Update: Even though they "served" customers and mention the premium package in the same statement, it's possible that there could be a percentage of free stream viewers in that 550k figure.)

So, there were 95,000 to 100,000 paid DIRECTV customers and over 550,000 paid BLIZZARD customers. HOLY CRAP.

Blizzard only revealed the 95,000 number though. It was a preplanned, calculated, and strategically worded delivery of speech. :)

It makes so much sense too.. with more than 25,000 (to 27,000) attendees and tickets selling out in minutes, why would virtual attendees only be 3x that number? 650,000+ viewers makes much more sense, but Blizzard does NOT want you to know this information.

It's exactly like what Michael Morhaime said, "margins are higher when we sell direct." SIGNIFICANTLY HIGHER when sold direct, in fact. (I mentioned that citation yesterday too.)

In their partnership with DIRECTV, they are probably taking a larger cut away from Blizzard. But, by using RAYV technology (back in 2009 and 2010) using their own website and resources, they made a TON more revenue from virtual ticket sales.

But 2011 is even more interesting.

During the Blizzcon 2011 Opening Ceremonies, Michael Morhaime gave a "shout out" specifically to the DIRECTV members only. He said there were "more than 60,000 from 130 countries who bought a virtual ticket." So sneaky. :)

He didn't mention the number of virtual attendees who watched through the direct Blizzard live feed though. And last year, it was over 5 times the number of DIRECTV customers.

SO, IS YOUR MIND BLOWN NOW? (Hopefully not just by the number of actual viewers, but also the other revelation.)

If there were 100,000 DIRECTV customers last year, but only 60,000 this year, it's very likely that even more customers are using the Blizzard live stream this year. (By the way, there were "over 26,000" attendees announced at Blizzcon 2011 vs "over 25,000" at Blizzcon 2010.)

How much do you want to bet that the Blizzard live stream numbers will NOT be shared at this upcoming shareholders meeting? They'll only announce the outsourced DIRECTV figures, and very carefully word it. :)

Blizzard is okay with sharing numbers on behalf of partners or citing research publications (who don't have access to their internal digital numbers), but they're highly secretive when it comes to internal figures and revenues.

* UPDATE (10/26/2011)

RAYV has just updated their blog with statistics from the Blizzcon 2011 live stream.
For the third year in a row, RayV partnered with Blizzard and Direct TV to broadcast Blizzcon to virtual ticket holders. The virtual ticket increases in popularity every year. Virtual ticket holders can tune in on their computers and watch all performances, panels, and matches live. The virtual ticket also guarantees VOD access for up to two weeks after the event is over.

For the first time, RayV also streamed regional Blizzard Tournaments. RayV streamed the GomTV tournament, based in Korea, and the SiTV tournament, based in China. Both streams added to the global reach of the Blizzard and RayV community.

The Blizzcon stream attracted countless online viewers. Over the weekend, RayV delivered over 2.26 Million hours of streamed content. There were over 740,000 viewers worldwide and at some points there were approximately 200,000 concurrent viewers.
So, Michael Morhaime announced that there were "more than 60,000" DIRECTV users who purchased the 2011 virtual ticket. But, there were another 740,000 viewers who used the Blizzard live stream instead of DIRECTV (this figure might also include those who watched the Opening Ceremony and SC2/WOW matches).

Those viewer counts are crazy, no wonder Blizzard doesn't like to share them. The "revealed" DIRECTV paid customers is just a fraction of the "unrevealed" paid customers who go through Blizzard directly. A good example of why digital sales are never revealed either.. if they're not there yet, retail sales will eventually just be a fraction of digital sales.

* -------------------

It's all about wording too, like what this blog has discussed so many.. many times. Remember when they said Blizzcon was a financial loss for the company.. but it was spoken in past tense? Or when Tom Chilton claimed that Mists of Pandaria was just a crazy rumor and speculation?

If you guys were interested in tallying up sales, Blizzcon tickets cost $175 (they were $100 for several years, then $125 in 2009, and then $150 in 2010). Virtual tickets cost $40 this year and last. (In 2010, they made approximately $30 million in revenue with $3-4 million in expenses.)

Because they're delivering streaming services themselves this year, their profit is probably even higher.

Activision Blizzard Objectives

All of these deceptive choice of words and "special features" are showing very clear objectives for the company and just how important it is to keep it secret. When Michael Morhaime said that he's a crazy CEO who gets to make crazy decisions, and "what if we just made Diablo 3 available for free to World of Warcraft subscribers".. that wasn't just a crazy "idea". It was with purpose and it was all part of a strategic plan for the company.

Their objective is to push digital sales of games, expansion packs and DLC as much as possible. Digital sales (and providing sales and services themselves) is more important to them than even Paid Services. DIGITAL SALES IS HUGE FOR THEM. And they're realizing it even more every day since a few years ago.

And, I don't think Blizzard wants their competitors to know just how much money they're making from digital sales. Profit margins are massive if you can cut out the middlemen. They're doing it with games, services, music, and even video streams now.

If other competitors aren't already doing this, they will be hurting badly and simply cannot compete with Activision Blizzard. There are just so many businesses out there that haven't realized the importance of digital delivery and just providing these services in house. They should be outsourcing labor, but OWNING the digital delivery systems and finding clever ways to get their customers to buy from their digital stores. This is how Activision Blizzard is destroying the competition.. if competitors can't keep up, they'll be just like Blockbuster still trying to rent out VHS tapes.

Future Plans

With their heavy emphasis on digital delivery, you can bet that both Activision and Blizzard will be finding new ways (and special promotions like "$10 off if you buy online" or "get it free by buying this") to push digital sales. One method is degrading the quality of retail boxes and promoting environmentalism or "green incentives" to move into digital.

Having an easy delivery system and purchase platform is key. The RMAH "B.NET BUCKS" system is a brilliant method to push even more digital sales.

And you can bet that Titan will be HUGE into the digital delivery system. Special coupons or incentives to buy Titan online, purchase DLC digitally, purchase expansion packs online, seamless client upgrade systems, etc.

To continue pushing the digital delivery method (to eventually replace most of their retail sales), Titan will also be incorporating a heavy payment system internal to Battle.net (e.g. more "B.NET BUCKS") If users can make money using Titan, they'll use their Battle.net credits to purchase more games or Titan expansion packs. Titan expansion packs will probably be smaller and delivered more quickly too, since they weren't able to do it in time for WOW but they can still do it for Titan. And with their digital sales objective, it makes much more sense.

More people (and in particular video game competition) need to be aware of where real game sales profit lies.