E3 '09: Morhaime says community and audience-driven development boost the bottom line

‘Our fans help us kill off MMO competition,’ says Blizzard

At an Activision Blizzard investor event last night, Blizzard division head Michael Morhaime said that its huge consumer base is the reason for its success – and the reason why no one else has a chance to compete.

The investor event allowed the publisher to run through its slate of key upcoming products – and Blizzard was a key focus for both the firm, and the investor questions that followed.

Morhaime said that Blizzard is ‘uniquely positioned’ in the games market, specifically given its centrepiece place at online games, something which helps "set Blizzard apart in the games industry".

Since being founded in 1991, Blizzard has grown from its three co-founders (including president Morhaime) to 3,500 employees. 750 of those are developers – the rest are support and management staff for its online service operation supporting its WarCraft, StarCraft and Diablo games.

"Our commitment to quality has helped s grow a global audience that has grown with every release," said Morhaime, pointing out that Blizzard has made the best selling PC game for the last five years in US and last three in Europe.

The company has generated $1bn in revenue for the last two years running, and has tripled reveues in the 2005 to 2008 period, thanks largely to the subscriptions and retail sales of World of Warcraft.

Morhaime said that "staying true to our values and putting customers first" is the real reason Blizzard makes so much cash.

"The story behind us is the passionate community that has grown up around our games."

And this, he said, was the reason why its pretty much impossible for anyone else to seriously compete with Blizzard.

"As broadband penetration grows so do the opportunities to grow our communities," said Morhaime, pointing out that the firm’s vast online support team is primed to serve more customers.

He said that the firm already had a "headstart on China" where World of Warcraft has successfully run for a number of years, and pointed out that, simply, Blizzard beat other publishers to the punch, and has overcome the numerous pitfalls a commercial enterprise encounters in that region due to culturual and economic differences.

"While our competitors will be trying to overcome these challenges to grow their brands, we’re already a major player there."

He added: "None have achieved the same level of online growth as World of Warcraft. We’re able to leverage huge investments in new content across the world’s largest MMO subscriber base."

In all, he said that Blizzard’s entire operating history has helped grow, define and attract its audience – and the firm pretty much has a 20-year headstart on everyone else now trying to crack the MMO and Chinese business models.

"There are really no shortcuts to developing a global playerbase," he added.

Further proving his point, and raising a laugh from the audience, he offered up this stat: "During the last quarter, we had a total of 11.5m subscribers for World of Warcraft… by our estimation that’s 10 to 11m more than our nearest Western competitors."

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