Activision Blizzard Q4 2013 Conference Call – Transcript

Morhaime: 2013 ends on a strong note with our most successful BlizzCon yet. More than 4.5 million viewers around the world tuned in into the show where we gave you two news games, Heroes of the Storm and the next expansion for World of Warcraft, Warlords of Draenor.

More than 24,000 attendees got a chance to download those games in addition to Diablo III: Reaper of Souls on PC and PS4; and Hearthstone are free-to-play digital card games. We received very positive player feedback in press coverage on all of our games that has come given us great momentum as we head into the great 2014.

Before we look ahead, let’s review World of Warcraft in Q4. Global subscribership in the quarter ended at 7.8 million subscribers worldwide, and slightly above where we ended in Q3, meaning that the player base has remained pretty stable for three successive quarters.

We should use the strength in Q4 for a few factors: The excitement from BlizzCon, seasonality from the holidays and a refresh of the recruit of final program which offer special test inbound to players to bring revenue into World of Warcraft.

As we head into Q1, we are not going to benefit as much from the same factors that drove Q4. So we will continue to work ways to drive engagements as we move closer to the release of the next expansion.

Warlords of Draenor will reintroduce players with some classic settings and characters from our Warcraft strategy games. In addition to a new continent, and new dungeons, Warlords will include Garrisons, which are our personal fortresses within the game.

Players can collect computer-controlled followers to work in that Garrison, customize their fortress with structures for special battle sets and invite friends to explore their personal piece of Azeroth.

Players will also get the ability to instantly boost one character to level 90 when they purchase the expansion.

We recently announced that players will get access to this boost when they pre-purchased the game.

So, people would be able to enjoy their new max level character right away in Mists of Pandaria.

We think that this is a great feature that will make it easier for friends to play together in World of Warcraft.

It’s also attractive for veteran players, who have already experienced the level and process multiple times and want to quickly raise a new character to deal with end-content.

We also had some exciting news for Diablo III: Reaper of Souls in Q4. The game will ship for Windows and Mac on March 25th, and we began taking pre-orders in December. We also kicked-off beta testing in December, and feedback from players has been positive.

The expansion will add a new class, the Crusader, as well as new areas for players to explore; and new features like Adventure Mode and Nephalem Rifts, which enhance for replayability.

An all-new Loot system will make playing and collecting gear even more satisfying.

We’re also removing the Auction House from the game on March 18th. A change that has been welcomed by players.

I’d also like to talk a bit about Hearthstone, our free-to-play digital collectible card game. Players build decks of cards that consist of familiar spells and creatures from World of Warcraft and battle against other players using the cards. Players can collect new cards, simply by playing the game or purchase cards with real currency.

Entry into a special game mode called Arena can also be purchased with in-game gold or real currency. Millions of players across North America, Europe, Asia Pacific and Latin America participated in Hearthstone’s closed beta test. And a couple of weeks ago, the game transitioned into open beta, which means that anyone can now download the game without any special invitation.

Concurrently across the globe, it has grown steadily since open beta started. And Hearthstone continues to be one of the most popular games watched on Twitch.

The launch of open beta is a great follow-up for the success we had at BlizzCon, while a 100,000 concurrent online viewers watched the finals of our Hearthstone invitational tournament.

We also announced at BlizzCon that we’re working on an iPhones and Android versions of the game, which we expect to ship this year. In the near term, we hope to just quickly transition into launching on iPad.

Hearthstone isn’t the only free-to-play game on our sleeve. At BlizzCon, we also announced Heroes of the Storm, a new free-to-play online team brawler. Players can choose from an array of iconic Blizzard characters, customize their abilities and team up with friends to battle other players. Heroes take a more fast paced accessible approach to a genre that has grown extremely popular in online gaming over the past few years.

Players and fans are very excited about the game at BlizzCon. We also showcased Heroes at G-Star in Korea, where it was named most anticipated new game by a poll at G-Star.

Now to one of our franchises which is StarCraft II. The Heart of the Swarm expansion is the number one selling PC game at North American retail last year. And a couple of weeks ago, we made the StarCraft II Arcade available to anyone via the free starter version.

We’re hoping a change will encourage new players to try StarCraft II and bring visibility on the thousands of user-made games and maps created using our in-game tool.

Since the patch, we are seeing increased player engagement. Going forward, we are continuing our (###) with our World Championship series. And we’re hard at work on the final chapter to the StarCraft II saga, Legacy of the Void.

To sum up, Q4 was quite busy, an exciting quarter for Blizzard. We showed excitement for all of our games with a very successful BlizzCon and look to make 2014 a great year for Blizzard gamers with multiple game launches.