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This excerpt taken from the ATVI DEFA14A filed Mar 5, 2008. Right, globally.
Bobby Kotick — Activision, Inc. - Chairman, CEO
And our original thinking when we really started to do the deep dive was that subscriber growth was not going to be that great over the next five years. For a combination of reasons. We have Starcraft coming. They have other products in the pipeline. And there’s a certain type of hobbyist enthusiast consumer that has already bought the product.
So we started out with this assumption of not a lot of subscriber growth. Now since we started the deep dive last August they have added 750,000 subscribers. So we were wrong about that. And now we’re understanding why we were wrong. We were very dismissive of their subscriber growth plans for places like Eastern Europe and Russia. We saw they were in investing in a Cyrillic character set and thought, how could that really move the dial. You know what, now we’re believers.
I think in places where there are no consuls, where there is rampant piracy, having an online model, like they have, with one product that really is localized — remember, this is a social network with an entertainment experience that is today averaging 3.5 hours per day per user. So this is replacing television. It is replacing the whole host of other leisure time activities for the certain type of audience that — and I think that they are just beginning to capitalize on it.
From an ARPU perspective today, they are not really focused yet on realizing — on increasing ARPU to these consumers. The best way that they have increased ARPU has been with expansion packs that can sell for $40 or $50. And that is something that they have done very successfully. In fact, in the first month that they released the last expansion pack, it sold roughly 4 million units.
When you look at the installed base as it exists today, there are things that they’re doing like character transfer, where if you want to move from one guild to another guild, you pay $25. Well that is purely incremental profit. And that is another example of where — and I think in the first week the character transfer was available, they generated $25 million of operating profit.
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