WOW-less Q1 pulls Vivendi Games down 24 percent

Lack of expansion to Blizzard's omnipresent MMORPG causes games division revenues to drop to €221 million ($342 million); overall Vivendi revenues up 5.2 percent.


What a difference a World of Warcraft expansion makes. Last January, PC gamers worldwide got their latest fix from Blizzard Entertainment in the form of The Burning Crusade. The title was the first expansion to the veteran publisher's best-selling 2004 massively multiplayer role-playing game, which has shattered records both in terms of revenue and subscribers. Burning Crusade didn't perform shabbily itself, selling 2.4 million units in 24 hours--the fastest retail movement of any PC game--before topping the 3.5 million mark in under two months.

Today, the lack of a WOW expansion in 2008 was felt when Blizzard parent Vivendi SA announced its earnings for the quarter ending March 31, the first of its fiscal year. Overall, the multinational conglomerate--which encompasses the Universal Music Group, Canal+ television channel, and Vivendi Games--year-on-year saw revenues rise 5.2 percent to €5.28 billion ($8.16 billion). However, adjusted earnings before interest and income taxes (EBITA) slid 5.6 percent to €1.2 billion ($1.85 billion), compared to the year prior.

Predictably, Vivendi Games--which includes Blizzard and Sierra Entertainment--saw a much steeper revenue decline. Year over year, its revenue slipped 24.1 percent from €291 million ($450 million) to €221 million ($342 million). The change was even more apparent in post-EBITA earnings, which went from €107 million ($166 million) to just €50 million ($77 million). By itself, Blizzard generated €192 million ($297 million) in revenue during the first quarter--or roughly €64 million (€99 million) per month.

However, Vivendi also pointed out that "excluding the allocation of [Games] Group overheads, Blizzard Entertainment's EBITA was €99 million [($153 million)]"--or roughly €33 million ($51.0 million) each month. That figure was sharply reduced by a €34 million ($53 million) quarterly shortfall at Sierra, which Vivendi blamed on "higher costs related to increased investment in Sierra product development and accelerated royalties expense for released products." The loss also included "continued start up expenses for the Sierra Online and Vivendi Games Mobile divisions."

Ironically, Sierra's bumpy quarter may be one of its last. As part of the looming merger of Vivendi Games and Activision, the division is slated to be folded into the Guitar Hero publisher's organization, based in Santa Monica. Under the terms of the $18.9 billion deal--which has already been approved by European regulators--Blizzard, based in nearby Irvine, will retain its current corporate structure within the new company, Activision Blizzard.

Vivendi also used its earnings today to confirm the next World of Warcraft expansion, The Wrath of the Lich King, will indeed arrive later this year. (According to rumors, the game has already entered the alpha-testing stage.)The publisher is also prepping Starcraft II, a new installment in its celebrated real-time strategy series, for release on an as-yet undetermined date.

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