WoW Subs Continue to Decline

While Blizzard has slowed down its World of Warcraft subscription churn, it hasn't stopped the bleeding yet: according to the company, the subscription count dropped slightly to 11.1 million worldwide during the quarter ending June 30.

Speaking to Activision Blizzard investors during a Gamasutra-attended conference call Wednesday, Blizzard president Michael Morhaime said that the decline -- now in its second quarter -- is to be expected after the release of a major expansion like December's Cataclysm, saying that "what we have seen is that subscribership tends to be seasonal and driven by content updates."

"So as we're heading further away from an expansion launch, it's normal to see some declines," he continued.

But that churn, while normal, is increasing with each new expansion as Morhaime explained back in May.

"As our players have become more experienced playing World of Warcraft over many years, they have become much better and much faster at consuming content," he said at the time. "And so I think with Cataclysm they were able to consume the content faster than with previous expansions, but that's why we're working on developing more content."

That new content, Morhaime said today, will include "major new raid and dungeon content."

"We believe that this new in-game content will keep the game fresh for current players, and provide compelling reasons for lapsed players to come back," he said.

Also helping to slow down the bleeding is the game's new trial system: in late June, the company changed its trial system: rather than its traditional timed trial, players can now play for an unlimited amount of time for free, though their characters stop leveling up at 20 (the current cap for players with all available content is 85).

The move, said Morhaime, has resulted in a "significant increase" in new account creations. While Morhaime says it's "still too early to tell" how often these new players become subscribers, the company believes that it is "an important direction for us to continue lowering that barrier to trial and reaching new players around the world."

Morhaime also says that the game's international expansion will help the churn: the company still sees big opportunities in China (where partner NetEase recently launched the latest expansion, Cataclysm), the country that claims the most broadband users of any nation in the world. He also said that the game has seen "great success" in Russia, and that the game's upcoming Portuguese localization should attract new players.

"Their economy has performed very well compared to the rest of the world during the recession," he said, speaking of Brazil. "We already have some Brazilians playing in English, but we think the market can be a lot bigger in Portuguese."

"There are other countries that we're looking at beyond these as well, but I don't have anything that I can talk about."

Despite the churn, overall revenues were up for the quarter ending June 30, at $313 million versus $299 million from a year ago, thanks to Cataclysm sales and its growth in China. Its operating margins were down, however, which Morhaime says is because the company is investing more into the development of new projects "that haven't necessarily been announced."