Blizzard incurs 'substantial loss' from BlizzCon

This year, more than 20,000 people gathered at the Anaheim Convention Center for BlizzCon, the annual expo celebrating the Diablo, Stacraft, and Warcraft franchises. Given that Blizzard Entertainment charges $125 per ticket to the event--where it sells hundreds of thousands of dollars of merchandise--and sold pay-per-view rights to DirecTV, one would expect it to be profitable for the company.

It isn't.

Today at the 2009 Austin Game Developers Conference, Blizzard Entertainment cofounder and executive vice president of product development Frank Pearce revealed that his company still doesn't make a profit on the expo. "BlizzCon is operated at a substantial loss for the company," said Pearce. "It's a huge marketing opportunity, so that's the benefit we get out of that. But in terms of any kind of financial gain, it actually is a loss for us."

When asked how much Blizzard loses on each event, reps offered the following statement: "For competitive and confidentiality reasons, we don't provide specific financial data. However, this year 20,000 players purchased tickets to the show, and tens of thousands more followed along on television and the Web via DirecTV."

Though Blizzard wouldn't get into specifics, its BlizzCon losses likely stem from a variety of sources. First, the company has to rent the Anaheim Convention Center and provide nearly 2,000 computers for demos and the expo's tournaments--which themselves have cash prizes to be paid out. Secondly, the company must fly in staffers from around the globe to man the event, causing a major crimp in productivity in the weeks leading up to it.

Finally, Blizzard has to pay for appearances by celebrities, such as Starcraft II star Tricia Helfer, comedian Jay Mohr, and musical acts like this year's Ozzy Osbourne concert.

However, as mentioned above, Blizzard feels the real payoff is the enthusiasm its event generates among its fans, including the 11-million-plus players of World of Warcraft. "We treat BlizzCon as an operating expense," the company said in a statement.

In his GDCA speech, Pearce outlined the sheer scale of operations it takes to keep those subscribers flush with new content. Put together, the massively multiplayer online role-playing game and its two expansions have 7,650 quests, 70,000 spells, 40,000 NPCs, 1.5 million assets, and 5.5 million lines of code, and require 4,000 employees, 13,250 server blades, and 75,000 CPU cores.