World of Warcraft: A Profitable Prospect

Gamasutra posted today a report by Janco Partners' analyst Mike Hickey, who talked about World of Warcraft's churn rate and its future prospects:

In his note, in which the financial analyst raised Activision's share price target from $20 to $35 in advance of the merger, Hickey particularly noted: "We expect the Company's WoW franchise will provide a strong source of continued growth. However, with a multitude of competitive MMOs positioned to enter the channel, potential subscriber fatigue and competitive options could undermine subscriber growth projections."

However, he continued: "That said, with only 4 years in the market, World Of Warcraft continues to attract subscribers at an amazing rate, with churn reported to be below other well performing subscriber based business models (we are thinking below a 4 to 5% per month.)" Churn rate refers to the number of subscribers who leave the service during the month.

The analyst concluded that WoW still has much steam in its engines, evident by Vivendi's large majority stake in the newly merged Activision Blizzard company.

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