by Tom DiChristopher

Activision Blizzard launches the latest expansion to its blockbuster World of Warcraft series this week, but some wonder whether the fantasy role-playing game still has the magic.

World of Warcraft remains the top performing subscription-based online role-playing game, and it’s a huge moneymaker for Blizzard Entertainment. But the decade-old massively multiplayer online title, or MMO, is shedding subscribers as the video game market evolves and some fans lose interest.

“Part of what we’re seeing is the game was so successful for so long. It’s just the natural evolution of the product that the base players will end up declining,” BMO Capital Markets managing director Edward Williams said.

At its peak in 2010, 12.3 million subscribers logged on to role play in the immersive fantasy world populated with elves, trolls and orcs, according to digital research firm SuperData Research.

“We’re in what’s likely to be a pretty significant state of decline,” Williams said. “The overriding direction is going to be down, with exceptions every now and then around product releases, which will reinvigorate the subscriber level.”

Subscriptions are indeed ramping up ahead of the release of Warlords of Draenor, the fifth expansion to the original game launched in 2004, but significantly fewer gamers are paying the $15-per-month subscription since Blizzard last released an expansion in 2012.

At the end of the third quarter, World of Warcraft had more than 7.4 million subscribers, compared with 6.8 million the previous quarter. Following the last expansion in 2012, subscriptions grew to more than 10 million from 9.1 million.

These subscriber spikes are historically short-lived, analysts said.

“Of course more people will sign up this quarter, but I doubt it’s going to last,” said Michael Pachter, an analyst at Wedbush Securities. “It will start to fade the next quarter.”

Activision Blizzard did not respond to several requests for comment.

Wedbush projects World of Warcraft will lose about 100,000 subscribers per month through 2015. In a recent research note, Pachter and his team said Blizzard “can stem declines by introducing a new game to keep World of Warcraft faithful engaged.”

For years, many thought a project called “Titan” would be that game, but Blizzard recently announced it was suspending development. At the time, a spokesperson said ” ‘Titan’ just wasn’t the game we wanted to make.”

But the industry also changed while Titan was in development, which may have made a subscription-based MMO seem less profitable, said Joost van Dreunen, founder of SuperData Research.

For one thing, audiences have flocked in recent years to multiplayer online battle arena games, a very different style of game. These “MOBAs” are action-oriented strategy games in which opposing teams attack one another’s bases.

The most-played MOBA is League of Legends, with 67 million monthly users, according to developer Riot Games. About 7.5 million gamers play during peak hours, more than the total number of World of Warcraft subscribers.

Another thing: These games are typically free to play, with developers making money when players buy premium virtual goods and upgrades. League of Legends (made by Riot Games) earned $946 million through October, according to SuperData Research, compared with World of Warcraft’s $728 million haul. That’s particularly important in emerging markets, where subscription costs can be a significant barrier to entry.

SuperData Research expects revenue from free-to-play games to grow nearly 50 percent to $11 billion in 2017. During the same period, it sees pay-to-play sales slipping about 40 percent to $1.7 billion.

Blizzard is expected to launch its own MOBA called Heroes of the Storm, featuring characters from its World of Warcraft franchise next year, and it’s widely expected to be free-to-play.

“It’s a big play for them. It’s also a tough play. How do you break into a market that’s so saturated with League of Legends and Dota?” said van Dreunen, referring to the second most popular MOBA.

Pachter said that only a small minority of League of Legends players are Blizzard fans, but those who are will likely try Heroes of the Storm. Blizzard can attract others by leveraging its experience operating tournaments, he said, adding that top MOBA players could be enticed to switch games with the prospect of big cash prizes.

Blizzard has already had success with free-to-play games. About 20 million people have registered to play its new digital card game, Hearthstone: Heroes of Warcraft. Launched in March, it has earned $114 million through October, according to SuperData Research.

It’s possible that World of Warcraft will eventually transition to free-to-play, but analysts said Activision Blizzard won’t make that decision soon.

“It’s unlikely we see a dramatic change on the World of Warcraft business model any time soon,” said Williams. “World of Warcraft is unique in terms of its ability to grab a large base of players who are willing to pay a relatively substantial monthly fee.”

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