VUG's 2005 earnings WOWed

Vivendi Universal's games unit goes from $241 million loss to $48.9 million profit in one year, thanks largely to Blizzard's MMORPG.

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This morning in Paris, Vivendi Universal announced its earnings for the calendar year 2005--and it was a good 12 months for the multinational media conglomerate. Overall income fell 16 percent to 3.15 billion euros ($3.75 billion), thanks to its 2004 sale of Universal Studios to NBC parent General Electric. However, year-on-year adjusted income shot up 55 percent to 2.08 billion euros ($2.48 billion), thanks to three resurgent divisions: mobile phones, music, and...games?

Yes, after a long slump, VU Games is back in the black, thanks to a whopping 244 million euro ($289.9 million) one-year jump in earnings. Whereas the division lost 203 million euros ($241 million) in 2004, it netted 41 million euros ($48.9 million) in 2005. Vivendi's overall earnings report said the game division's "dramatic and fast improvement in earnings from operations is the result of the strategy implemented since 2004." Specifically, it credited "lower costs resulting from the global turnaround plan."

Those familiar with VUG-owned developer Blizzard Entertainment can likely name one of the main reasons for the division's change of fortunes. The earnings report said the games group now has "a better balanced portfolio of products thanks to the tremendous on-line activity development with the exceptional success of World of Warcraft."

Just this week, Blizzard announced that WOW has exceeded six million subscribers worldwide. Despite being released 15 months ago, the massively multiplayer online role-playing game remains the number-two best-selling PC game in North America, according to the latest weekly sales figures from research-analyst firm the NPD Group.

Besides WOW, Vivendi's report also named several other games as being hits for the company. "Additional releases contributing to [VUG's] strong performance included 50 Cent: Bulletproof, Robots, [The Incredible] Hulk [Ultimate Destruction], F.E.A.R. and Crash Tag Team Racing as well as the North America distribution of Delta Force: Black Hawk Down and FlatOut."

Vivendi also underlined the fact that VUG's profit came in spite of the cost of several studio acquisitions and next-generation console development. "Earnings from operations included funding increased product development costs linked to recently acquired studios ( Radical, Swingin' Ape, Swordfish, and High Moon)," its report read.

On the Paris bourse, Vivendi shares rose 2.26 percent on the news, closing the day at 25.71 euros ($30.83).

Discussion

31 comments
smbius
smbius

I can't believe how much Blizzard has changed the MMO landscape. Any parent company that has Blizzard on its side is very lucky.

racing5112
racing5112

Vu shouldnt have fired all of the original devs of WoW.. aside from that if WoW ever came to the consoles it would be for as many systems as possible to increase VU's income because with out WoW saving their asses this year they would still be where they were last year buying game studios that dont produce successful games

SubSane0
SubSane0

Blizzard should be grateful to VU Games for funding WoW.

SubSane0
SubSane0

Blizzard should be grateful to VU Games for funding WoW.

jonnyjd
jonnyjd

Wow!!! (no pun intended) No matter how you slice it, a $290M upswing is an impressive feat. Hats off to Vivendi.

SavoyPrime
SavoyPrime

Vivendi should be very grateful to Blizzard for WoW.

iammai
iammai

like they said" one of the main reasons for the division's change of fortunes" this is a great game and that the main reason to make this large profits.

Bruin4ev3r1520
Bruin4ev3r1520

hmmm. am i the only person in the world that didnt get sucked into WoW...

FrankSoul
FrankSoul

blizzard can thanx VUGames since they are the one who bought them and was able to fund WoW project, and now its paying off

ao_bomber
ao_bomber

Six Million... Hearing that makes me feel crowded when I play this game... Heh... *Goes back to playing WoW.*

NeoJedi
NeoJedi

Very nice going for VUG, finally a game company making money!

runstalker
runstalker

Waiting for the token rebellious net kid to pop in with: "r u kiddin me??! teh WoW is 2 eazy! its so overated, liek Halo. ppl r just followin teh crowdz!"

rbarahona
rbarahona

Great news for VU; however I think that they can't rely to much on WoW and start linvesting in new properties.

Romanticide
Romanticide

It just goes to show, WoW really is the greatest. The only news i ever here about WoW is about it's huge successes.

MetaMods
MetaMods

maybe VU need to start making some good content on the release game. They are the only company usine sleeve to release all the game. Come on a 49.99 games suppose have at least Jewel case, not some cheap sleeve.

dchan01
dchan01

I feel bad for Blizzard. They should be the ones reinvesting all this profit.

runstalker
runstalker

VU needs to stay away from overtly pop-culture licensed pap like the 50 Cent game. Even if it was a good -playing- game, just...no. Hulk is cool, their FPS line-up is usually great (Half-Life 2 then FEAR? yeah). VU just needs to smarten up a bit. I have no qualms with them, unlike say an EA and the spite they invite with certain practices. The developers they absorbed have stuff like Starcraft Ghost in development, so by all means, stay well-funded. Blizzard is keeping itself (its franchises) afloat too.

kaziechameleon
kaziechameleon

yeah especially since vivendi lost valve, ha ha ha.

Donkeljohn
Donkeljohn

If it wasn't for Blizzard, VUGames would be in a world of hurt.

runstalker
runstalker

"...profit came in spite of the cost of several studio acquisitions and next-generation console development. "Earnings from operations included funding increased product development costs linked to recently acquired studios ( Radical, Swingin' Ape, Swordfish, and High Moon)." Somebody within VU makes pretty damn good decisions on developer acquisitions.

Optimusv2
Optimusv2

Wait till wow comes to the 360 ;)

MerxThis
MerxThis

Easy game makes big money. Shocker.

Disturbed_1
Disturbed_1

[This message was deleted at the request of the original poster]

Disturbed_1
Disturbed_1

WoW will never die as long as quility content is added 6 millon paying customers is a huge number lets just go by what they charge to play in america $15 so 6,000,000 people x $15 (dollars a month) = $90,000,000 per month Running servers and paying ppl to make new content does take alot of cash but they still profit quite a bit i would think.

britboy68
britboy68

finally i'm FIRST A quarter Billion $$ swing. WoW that's what a good game can do i guess.