World of Warcraft is an immersive massively multiplayer online role-playing game developed by Blizzard Entertainment with over 12 million active subscribers worldwide, more users than some countries. It has been financially successful due to its compelling gameplay, continuous new content through expansions, and a premium subscription-based business model. While the game faces threats from free-to-play competitors, Blizzard supplements subscriptions with microtransactions like character services and mounts to increase revenue without changing the core experience.

4. Set in a world, far
beyond our imagination

6. More people in
World of Warcraft than Greece

8. Company Background
Activision Blizzard is one of the leading
companies in entertainment industry
• Listed on NASDAQ is ATVI
• Revenue: 4.47 billion

10. World of Warcraft
• Activision-Blizzard’s
• Released in 2004
• Number 1 sales and subscription rate remains
undefeated for the past 7 years.
• 32.5 million subscribers world wide
• 12 million active paid users
• 3 expansion sets
– The Burning Crusade (2006), Wrath of the Lich King (2008),
and Cataclysm (2010).

11. SWOT Analysis
Strengths:
• Immersive Experience
• Achievement Oriented
• Endless Game Content
• 50 Character Slot
• Dedicated Customer Service
• Characters are never deleted
• Largest MMORPG in the World
Weaknesses
• Time commitment needed
• Elitist culture of the game
• High Retail Price, Barrier to
Entry.
• Old game engine developed in
2004
Opportunities
• New games - cross sell
• New Expansion Pack
• Free to play model
• Micro-transaction
• Expand the current gaming
choices
Threats
• Saturation of the
subscription population base
• New Free-to-play
competitors
• Inflation Rates

12. Current Pricing
$19.99
1 Month Free Play 13.99 X 2 months
14.99 per month
12.99 X 3 months
29.99 X 60 day
1. Free to play until level 20

13. Wrath of Lich King Expansion ($39.99)
Level 68-70, new game area, new class,
new profession
Cataclysm Expansion ($39.99)
Level 80-85 game content, 2 new races,
new profession
Base Game + Burning Crusade ($19.99)
Level 0-68, basic game
optional
optional
Fastest Selling PC
Games of all time

14. Psychological Pricing
• Odd Endings
o World of Warcraft players are offered a month-to-
month subscription for $14.99, which compared
to $15, seems cheaper
• Endowment Effect

15. Psychological Pricing
World of Warcraft is free to play until level 20
oAttract new players and allow them to establish
emotional investment into their character and
immersing relationships with the game and
their characters.
o1/3 of players are not willing to give up their
accounts even for money, especially female
players.
endowment effect

16. Break-Even Analysis

17. Iso-Profit Analysis
• Monthly subscription
– Rate $14.99
– VC: $0
– Contribution margin: $14.99
• Volume discount of $2
– Rate $12.99
– Contribution margin: $20
– Sales increase needed: 0.15 units

18. Monopoly Pricing

19. Economic Value to Consumers
Benchmark Guild Wars $29.99+$19.99
Better Customer Service +
Out of the reported 400 million to
maintain World of Warcraft for 4 years, a
large chunk was quoted under customer
service.
50 Character Slots v.s. 5 +
Guild Wars offer 5 character slots and
charges $9.99 for every additional
character. World of Warcraft players on
average make 9 characters.
9-5= 4 additional accounts
$9.99*4= $40.00
Never Delete Characters +
More Game Content +
Since Guild Wars cost $50.00 dollars to
play. $50/100 hours = $.50/hour. World
of Warcraft has an additional 900 hours *
.50 = $450
Total: $29.99+$19.99+ $40+$450= $539.98 + Never Delete Characters +
Customer Service

20. • average experience: 2 years
• excluding the software price: $60
• subscription rate from EVC:
$20.00/month + unquantifiable value
• premium pricing is justified
Economic Value to Consumers

21. Subscription VS Free-to-play
$15 per month
V.S.

22. • Make money mainly through:
o Boxed sales (software)
o Micro-transactions (purchase in-game items w/
real money)
Cosmetics vs Efficiency/Skill Related
– Use money to buy time and skills
– Which one is fair?
Subscription VS Free-to-play

23. We see World of Warcraft do a bit of both…
• Subscription Model ($15/month)
+
• Micro-transaction
– Blizzard Pet Store: Buy pretty horse
for $25 dollars
• Free to play until level 20
Subscription VS Free-to-play
$10 CASH
and take me
home

24. Celestial Steed $25

25. • extract additional profits from subscribers
– Subscription + in-game items
• Price discriminates
– between those are willing to pay $25 for a shiny digital pony, and price sensitive
players who are not
• Increased revenue without changing
subscription
• Sold only cosmetic items, thus did not anger
fans
Subscription VS Free-to-play

26. Recommendations
• Must devise strategy that
oCreates strong customer retention
oAttract new players
oJustify its premium price by
communicating its high utility

27. Recommendations
• Release the fourth expansion earlier
• Need to provide more content
• 2 years gap is the perfect wait time
• Attract new players
• Creates strong retention

28. Recommendations
• Provide game updates more often
• Keep the game fresh
• Creates retention
• Additional justification for WoW’s premium
price

29. Recommendations
• Increase free level cap from 20 to 30
• More time for the trial players to explore
• Enhance endowment effect

30. Recommendations
• Continue with its subscription based model
• Extract revenues from other channels
• Expansion sales
• Micro-transaction
• Differentiate itself from the competitors

31. Thank you for your time