Activision Blizzard Plays Up Hit Franchises, But ‘World of Warcraft’ Loses More Gamers

'Warcraft' loses 600,000 subscribers during the second quarter but remains top MMORPG

While Activision Blizzard can regularly tout the success of franchises like “Call of Duty” and “Skylanders,” it’s seeing more gamers leave its “World of Warcraft” as competition heats up in the videogames biz.

World of Warcraft” counted 7.7 million subscribers, as of June 30, making Blizzard Entertainment’s fantasy game the No. 1 subscription-based MMORPG.  But that’s down from a high of 12 million in 2010, and 8.3 million in the first quarter, which was down from 9.6 million in the prior three-month period.

The numbers are worrying for a company that has long considered “World of Warcraft” one of its biggest cash cows, if not the largest, steadily delivering profits and consistent revenue stream.

But Activision believes the release of additional downloads to the game will keep existing gamers happy. The first film based on the property that Legendary Entertainment is producing, could also help attract new players. Blizzard is working with director Duncan Jones to develop the film as a potential franchise.

During a conference call with analysts, Bobby Kotick, CEO of Activision Blizzard said there’s room to grow the franchise: “WoW continues to be the top and most compelling massively multiplayer role-playing game available. Over time we have seen players come and go and we recognize there’s a lot we can do to make the experience of coming back much easier than it currently is. That’s a big opportunity for us.”

The results were announced as part of Activision Blizzard’s second quarter earnings, which remained relatively flat compared to the same year-ago frame.

During the quarter, the company generated net revenues of $1.05 billion, down slightly from $1.08 billion last year. Adjusted revenue came in 42% lower at $608 million. Profits rose to $324 million, up from $185 million.

Digital channels generated $387 million and represented 37% of the company’s total revenues. When adjusted, they represented a record 63% from $383 million.

Call of Duty: Black Ops II” and “Skylanders: Giants” are the year’s top-selling games so far this year.

The “Skylanders” franchise has generated more than $1.5 billion in worldwide retail sales for Activision Blizzard, as of July 31, it said.

The results come just after Activision Blizzard made moves to become a standalone company last week after buying Vivendi’s stake in the company, representing 429 million shares, for $5.83 billion.

At the same time, Kotick and Activision Blizzard co-chairman Brian Kelly have formed an investment vehicle through which they are purchasing 172 million shares for around $2.34 billion, making it the largest shareholder in Activision Blizzard. China’s Tencent, which is helping grow the “Call of Duty” franchise there through its online gaming portals and social networks in the country, is also part of that group. Combined, the investment vehicle owns 25% of Activision Blizzard.

“We are pleased with our second-quarter results, which confirm the preliminary results we released last week when we announced our transaction with Vivendi,” Kotick said. “The agreement we reached with Vivendi will make us an independent company and should deliver meaningful earnings per share accretion to our shareholders. Our solid performance across our franchises and strong digital sales, including continued significant growth this quarter in our ‘Call of Duty’ downloadable content business over the previous year, validate our belief that we will enter this new period of independence in a position to leverage the flexibility and focus that it provides.”

Activision will release “Call of Duty: Ghosts” and “Skylanders Giants” later this fall while Blizzard’s “Diablo 3” expands to the Sony PlayStation 3.

Shares of Activision Blizzard closed up 22 cents on Thursday to $18.19, a gain of 1.2%

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