You may start seeing some automating scripting software (paid or free) for Blizzard's web-based and mobile Auction House (Link) sometime in the near future.

Apparently, there's really no security protection in place other than Blizzard limiting the number of transactions per day (200). Blizzard is probably analyzing basic utilization trends to try and find automated activities but it won't be very successful. It can easily be defeated, however, by properly scheduling the script and using multiple accounts on different proxy servers.

A couple of my contacts in the "gold-exploitation" communities are saying that it's an excellent way to make gold, particularly Neutral AH sniping. They have been experimenting with a custom made AutoIT script and since there are no measures in place to detect scripting software, they're not too worried about getting caught. They've been stretching their search schedules to see how far they can push the bots without being detected, while also trying to emulate "real player" interactions (e.g. checking the AH, refreshing prices at random intervals, posting fake auctions, buying cheap stuff, etc.) They've been making about 50-100k gold per day, and they don't even have to be sitting at the PC. Far more efficient then boring grinding and other farming strategies. =]

It's pretty easy to create an AutoIT script too and at $3 per month for the Remote AH, it's definitely worth the investment considering that these guys alone are selling $150-$300 per day in gold (their estimates for the past week.) That amount is equivalent to a well-paying full time job ($50-100k per year) and that's only on two realms.. imagine if they expanded to multiple servers? They just wanted to say, "Thank you Blizzard for making gold exploitation so easy and safe!"

Of course, as competition increases their (the exploiters) profits will go down - but even then, there are still very few people even now that use automated scripts within the game to manipulate the AH system.

With the AH system now accessible through a web interface (rather than inside a moving/changing 3D world), it's so much easier to create scripts and bots with faster reaction time and without worry of detection.

In an earlier post, it was discovered that Blizzard was making quite a significant profit from banned players (botting & exploits). It looks like they have just introduced another new service that makes cheating activities even more accessible and allows them to make even MORE profit from cheaters.

Even if they get discovered and banned, even better! Their game subscription and Remote AH subscription expires at the end of the month - so they get to keep that revenue plus the amount made when they purchase a new account during that same time frame.

(Note: Depending on the response rate of the web-based AH versus the in-game AH, there might be opportunity for some interesting exploitation. So you might start seeing some new AH strategies popping up..)

If you're a honest player, though, here a couple tips that can keep you from being cheated by this new system:

• When you post auctions, set the price correctly the first time. Double-check before submitting! If you enter the wrong price, it can be sniped before you can retract it.
• If you're using the Neutral AH to transfer items from account-to-account, buy them out IMMEDIATELY. Do not wait for more than 20 seconds otherwise you're at risk of having your items taken. Even 20 seconds is a generous time frame.

In one of my previous posts, I calculated the maximum possible number of WoW players, but those figures did not include alternative revenues collected during the same time frame.

Since the quarterly figures also included such sales as transfers, faction changes, and other paid account services then it would mean that the WoW player counts are even less. But since this transactional information is not public, it's impossible to tell what percentage of their overall Net Revenue is related to subscriptions vs paid services.

Blizzard is under a lot of pressure from their "boss" to introduce new products or add new sources of revenue to combat World of Warcraft's decreasing revenue: "If consumer demand for World of Warcraft games declines and Vivendi Games has not introduced new MMOG or other products that replace World of Warcraft’s potentially decreasing revenue, or added other sources of revenue.."

And it's very interesting to see the strategic deployment (ie, "well timed" delivery) of new account services or virtual products that have been planned for months or possibly years. It's as if the new revenue streams need to be constantly introduced each quarter to combat significantly declining player counts.

(Note: This list does not include major content releases/patches.)

2nd Quarter ending Jun 30 2010 - $289 Million Net Revenue
- Celestial Steed & Lil’ XT Pet introduced at the beginning of the quarter (Apr 15th, 2010)
- The horse was just a reused 3D model so it hardly cost them anything. But it sold at $25 for a minimum of $3.5 million on the first day. Because those sales were part of their Net Revenue, that actually amounts to about 100,000 players. So instead of a maximum of 6.7M players during that quarter, it would be a max of 6.62M.
- Exclusive RAF Flying Mount introduced Apr 30, 2010.
- Remote / Mobile Auction House service ($3 per month) introduced at the end of the quarter (Jun 2010). So many of the profit increases won't be visibile until Q3 2010.

1st Quarter ending Mar 31 2010 - $306 Million Net Revenue
- Celestial Steed leaked to the public to build up interest.

4th Quarter ending Dec 31 2009 - $294 Million Net Revenue
- Race Change service ($25) introduced at the start of the quarter (Oct 09)
- Pet Store introduced in the middle of the quarter (Nov 09). $10 to $25 virtual pets.

Interesting Note: They had a "special" on Pandaren Monk's where they donated 50% of the sales to charity. That special ended on Dec 31, 2009 (coincidentally, the end of quarter). Not only that, but they sold something that cost $0 to make, made quite a bit of profit, while simultaneously receiving tax relief and public relations. Brilliant. =]

3rd Quarter ending Sep 30 2009 - $301 Million Net Revenue
- Faction Change service ($30) introduced at the end of the quarter (Sep 09)

2nd Quarter ending Jun 30 2009 - $324 Million Net Revenue
- Nothing new introduced.

1st Quarter ending Mar 31 2009 - $314 Million Net Revenue
- Nothing new introduced.

4th Quarter ending Dec 31 2008 - $325 Million Net Revenue
- Character Re-customization service ($15) introduced at the end of the quarter (Dec 08)
- Wrath of the Lich King released (Nov 08)

3rd Quarter ending Sep 30 2008 - $271 Million Net Revenue
- PvE to PvP Paid Transfers ($25) introduced at the end of the quarter (Sep 08)
- Recruit a Friend program introduced in the middle of the quarter (Aug 08)

2nd Quarter ending Jun 30 2008 - No Quarterly Report
- Nothing new introduced.

1st Quarter ending Mar 31 2008 - $275 Million Net Revenue
- Character Transfer and Character Name Change cooldown reduced from 3 to 1 month. (Feb 08)

4th Quarter ending Dec 31 2007 - $279 Million Net Revenue
- Name Change service ($10) introduced in middle of the quarter (Oct 07)

3rd Quarter ending Sep 30 2007 - $269 Million Net Revenue
- Scroll of Resurrection introduced at the end of the quarter (Sep 07)

2nd Quarter ending Jun 30 2007 - $324 Million Net Revenue
- PvP to PvE Paid Character Transfers ($25) introduced at the end of the quarter (Jun 06)

(That's just a quick run-through, but if I missed anything I will update it.)

It's very interesting to see that all of the major paid services were all introduced at the end of each quarter. Based on those trends, we might see something new (probably a remote service of some kind) introduced in September 2010. And then next quarter (Q4) is when Cataclysm will be coming out.

Not only that but there's another interesting trend: New paid services (or any kind of alternative revenue stream) are introduced just before quarter end (e.g. 1-2 weeks prior) when the most amount of sales are made! You see, there's a rush because of the new service and everyone wants it as soon as possible. In the end, that rush pads their Quarterly Report profits. And because they can introduce the services any time they want, they only have to release them if they are showing poor performance for that quarter. Of course, follow-up quarters will have significantly less sales, but I'm guessing that there are probably major content releases between each of these activities to keep users interested. =]

Note: Did you notice that major services/changes are released when profits are low for that quarter? But when profits are high, nothing new is introduced.

As you can see, their Net Revenue has remained very close in proximity from 2007 to 2010 as well. If that number is remaining constant (although it's actually trending downwards), but they keep deploying more-and-more paid services over the years, that would indicate that player counts are declining even faster than predicted in the previous post.

The big next step to increase profit is getting WoW players back into China with the WOTLK and the Cataclysm launch. I'm sure we'll see a lot more "alternative revenue streams" (ie, paid services) after the Cataclysm launch, or possibly PR stunts to increase sales of an existing service or virtual item.

Much of this will depend on the success of Cataclysm (mentioned a lot in earlier posts).

What do I think those services could be?

- A lot more mobile services definitely! The Remote/Mobile AH is just a start.
- Checking in-game mailboxes. Inventory, bank, character, and talent management through mobile. (*EDIT: Apparently, the new "Mobile Armory" does some of this already. Guess I was right =] )
- In-game chat with Guild, General Chat, Trade Chat, etc through mobile/remote.
- Integration with Battle.net to allow chat between accounts (e.g. SC2 and WoW players).
- Mobile application that alerts you when other WoW players are nearby, giving you details on their avatar after you "handshake".
- Further integration with Facebook, linking the virtual world with your profile page.
- "GPS tracker" so your Facebook friends know where you are in Azeroth.
- More virtual pets, mounts, and special character customizations only available for real money (special hair cuts, glowing eyes, imposing skull faces, exclusive dances, flaming horns, jewellery, fashion wear, etc.) I think there would be many people who would pay $5-10 for bright glowing eyes.
- Special virtual pets sold with very limited quantities so that people rush for the one-time-only "elite pet" or charity pets for those with a soft heart.
- Depending on the success or failure of Cataclysm, we might see more non-vanity and game-effecting virtual items being sold.
- Change all vanity pets so that they can engage in special combat with each other (they level and grow) to sell even more vanity pets. This would be very easy to do.
- Reduced price structure of existing Paid Account services to attract more players - "Weekend specials", "Christmas Gift Specials", etc.
- Guild Paid services for entire Guild Transfers or group/individual rates for multiple character transfers, realms transfers, renaming, and faction changes.
- Blizzard has been experimenting with Player and Guild Housing, but they also don't want cities to appear empty. It's therefore hard to say if this will ever be introduced, but if it is, the Blizzard store will have house items for sale (e.g. paintings, rugs, bookshelves, etc.) Personally, I don't think this will ever be introduced.
- More "community" integration between Battle.net's games, like pets/mounts for playing the other game, and then once you're hooked: paid premium services.

The list can just go on and on. There are a ton of possible alternative revenue streams, but those are just the simple ones off the top of my head.

This will probably be a boring read for some of you, but I found it pretty interesting.

It's the risk assessment section of Activision Blizzard's SEC filings / reports that discusses Vivendi's concern regarding the MMORPG platform which has been re-iterated every year until about 2009. Just to make it clear to Blizzard and their investors. =]

I particularly like the first introductory paragraph:

Risks Related to the Vivendi Games Business

"Vivendi Games is dependent on Blizzard’s World of Warcraft franchise."

Here are some other tidbits:

- "The majority of Vivendi Games’ total net sales are derived from Blizzard’s World of Warcraft franchise."
- "To remain the leader in the MMORPG category, it is important that Vivendi Games continue to refresh World of Warcraft or develop new MMORPG products that are favorably received.."
- "A substantial portion of Vivendi Games’ revenues are derived from subscriptions paid by World of Warcraft subscribers."

It sounds like they put all of their eggs into one basket. :)

- "If consumer demand for World of Warcraft games declines and Vivendi Games has not introduced new MMOG or other products that replace World of Warcraft’s potentially decreasing revenue, or added other sources of revenue.."
- "..if new business models emerge that offer online subscriptions for free or at a substantial discount to current MMOG subscription fees, Vivendi Games’ revenue and profitability will decline."

This might be evidence of pressure put on by Vivendi that "encouraged" Blizzard's new paid services. (e.g. Server transfers, class/faction changes, character customizations, and other microtransactions.)

If they can't reverse their declining numbers, they might be forced to start selling additional virtual items: gold, gear, levels, etc. =]

- "The development of MMOG products requires substantial up-front expenditures. Vivendi Games may not be able to recover development costs for its future MMOG products."
- "..if future MMOG products do not achieve expected market acceptance or generate sufficient sales and subscription revenues upon introduction, Vivendi Games may not be able to recover the development and marketing costs associated with new products, and its financial results could suffer."

Blizzard, your next gen MMO better not screw up! I know.. It's highly unlikely.

- "Consumer preferences for games are usually cyclical and difficult to predict, and even the most successful titles remain popular for only limited periods of time, unless refreshed with new content."

This is very interesting and so true. That's why I'm looking forwards to the opening day sales reports of Cataclysm. I want to see if their new approach will significantly improve sales. If they don't get 5+ million sales in the first 4 weeks, it clearly demonstrates waning interest in the game - which is one of Vivendi's fears.

Blizzard will play it up though, and announce the total sales made during the first 24 hours of the Cataclysm release. (Let's hope it's atleast 3 million). After that, there won't be any more announcements and they'll conveniently skip the following week.

I'm also predicting that they'll only announce sales, but make no mention of new "Active Subscriber" counts. And if they don't meet the minimum requirements (sales) mentioned above, player counts will continue to drop unless they can re-open the Chinese market. (Keep your fingers crossed!)

- "In order to remain competitive in the MMOG market, Vivendi Games must continuously develop new products and enhancements to existing products."

Develop new products and enhancements.. but don't innovate. Stick with what we know.

- "If World of Warcraft subscribers become dissatisfied, they may chose not to renew their memberships in order to engage in other forms of entertainment (including competing MMOG offerings) and Vivendi Games may not be able to replace lost subscribers."
- "..if general economic conditions decline, consumers may decrease their discretionary spending on entertainment items such as MMOG games and users may choose not to renew their World of Warcraft subscriptions. A decrease in the overall subscription base of World of Warcraft could substantially harm Vivendi Games’ operating results."

This is common sense, but I wish Blizzard would pay more attention to it. There are bad reviews, declining customer support satisfaction, support lines are tied up for weeks at a time, and they're still laying off support staff. They're also adding/removing unwanted features (not listening to the customers.) It's already hurting Vivendi's operating results, and unless this gets fixed soon, they'll be losing even more subscribers that they won't be able to replace.