Shouldn't Activision Blizzard be making more money?

[Ail]

Average revenue per Wow user worldwide is 9$, Blizzard published the numbers a while back.

So Wow brings around 108 million$/month in revenue.

But it's a lot more complex than that.

Wow costs are a lot higher than you estimate them to be( I think the Wow team itself is  close to a thousand employees now, I read an article about it awhile back)  and Blizzard is spending a lot of money on Diablo 3, and a new MMO. Still Blizzard in itself is very profitable ( I think to remember they made around 400 million$ of profit/year).

The Activision side of the company is profitable too ( 20 millions MW2 20 millions pack = close to 1 billion revenue from MW2 alone...)

But for accounting purpose some of the revenue is not accounted for as it comes in ( I am not an accounting expert I don't understand the details).

A proof of that is that they have a positive cash flow of over 1 billion$ over the last 12 months and that they are sitting on 3.3 billion$ of cash and actually decided on a new stock buy back program of 1 billion$.

 

If you really want to understand better how it works you have to look at the cash flow of the companies in the industry.

Activision has a 22% Free Cash Flow/revenue which is by far the best in the industry.

By comparison EA FCF/revenue is around 0%....

Microsoft has  FCF/revenue of 34% which is among the best of any company in the world...