Starcraft 2 Expected to Make at Least $350 million in Sales

Last week we reported that Starcraft 2 owners Activision spent $100 million on creating the game. Janco Partners analyst Mike Hickey said today that he’s expecting the game to sell at least 7 million units during this fiscal year for Activision Blizzard, which would result in sales of over $350 million. Hickey said that would also generate “an estimated $171 million in operating profit (assuming a 45% operating margin).” Moreover, Hickey believes that around 70% or more of the StarCraft II sales will happen during the Q3 period, resulting in about $245 million in sales.”

“We believe they can generate $225 million in sales from Korea through their fiscal ’10 period from both game sales and Cyber Bang time based play.  We expect an additional 2.5 million unit sales from U.S. / Europe, from which we assume 50% are distributed through digital channels.  We believe the game can sell +50% of Sims 3 performance in calendar year 2009.   GameStop is supporting the release with a Midnight launch event across 3,000 stores,” noted Hickey.

He continued, “We’re assuming the SC 2 can generate 5.45 million active users in Korea by the end of its first year release, the last reported number we have heard was 6 million.  However, we could be meaningfully under appreciating the active player base in Korea.  Blizzard Entertainment Korea was rumored at a recent media event to comment that players in Korea have approached 11 million, suggesting an opportunity for performance in excess of our estimates (we have not been able to confirm commentary).  There are 48 million people in South Korea, and StarCraft is considered a national sport, with two dedicated television channels providing 24 hour coverage.”

“We are assuming the 30% of the active player base is playing through a Cyber Bang or Internet Café.  We could not identify an acceptable street ratio for the relationship between home and cyber café play.  We estimate Activision Blizzard can net $0.13 per hour from Cyber Bang game play, with average player fee per hour of 1,250 won.  We do not have an exact estimate on annual hours played through Cyber Bangs, but if we assume 7 million hours per day, the implied market share for StarCraft II would be roughly 28%, which seems reasonable.”