Michael Morhaime

With two games shipping in the same year for the first time since 1998, 2010 is shaping up to be Blizzard Entertainment's biggest year yet. Two quarters in, we have much to look forward to and anticipate a strong finish to the back half of the year.

To start things off, I'll discuss our performance in Q2 before talking about specific areas such as StarCraft II, World of Warcraft and BlizzCon. Blizzard has shown continued strength in the second quarter of 2010. Worldwide subscription numbers for World of Warcraft are holding steady at more than 11.5 million players despite the struggling economy and pressure on European currencies through the first half of the year. We were still able to grow our business year-over-year both in terms of revenue and profit. As a reminder, the results from Q2 don't include sales from StarCraft II, which was just launched a week ago.

Star Craft II is currently one of the highlights of our year with the game launching across five different continents and in 11 languages. The response by both players and press from around the world has been outstanding. As a matter fact, Metacritic's currently rate StarCraft II a 94 out of a possible 100, making it one of the top scoring games of all time.

Preliminary sales numbers have begun to roll in, and I'm pleased to say that StarCraft II is already the fastest-selling strategy game of all time. We sold more than 1.5 million copies worldwide in the first two days of release, making StarCraft II the best-selling PC game so far this year.

Just to put that number in perspective, if we compare the day one sales of StarCraft II in North America and Europe combined, the day one sales of World of Warcraft in those two regions combined, StarCraft II more than doubled the sales of World of Warcraft. We are very pleased with the StarCraft II's retail sell-through to date.

What's more, the excitement over StarCraft II has actually driven consumer interest in our other games. Amazon's North American PC sales data for the week of July 29 shows that the top five was a clean sweep for Blizzard: StarCraft II, StarCraft II Collector's Edition, StarCraft I Battle Chest, World of Warcraft Burning Crusade [World of Warcraft: The Burning Crusade] and World of Warcraft occupied the entire top of the Amazon PC sales chart for North America that week.

I do want to point out that StarCraft II is currently in a free open beta period in Taiwan and Korea. This is a standard practice for game launches in Asia to allow players to play the game for free for a short period of time before moving into commercial launch. Since players in Korea and Taiwan can play StarCraft II for free right now, sales numbers from those regions are not meaningful yet. In addition to the high quality of the game, several promotions have helped drive global awareness for StarCraft II leading in to the launch. In the week prior, we debuted an extended trailer for the game on YouTube, that generated more than 2 million views in just two days and more than 4 million views in a week. The popularity of the trailer made it the number one video on YouTube for that week.

Back in June, we also began a terrific relationship with Korean Air. As part of this marketing partnership, Korean Air has wrapped a pair of passenger jets in StarCraft II artwork. Both planes are already in service around the world and will continue to serve as vibrant mobile billboards for StarCraft II for the rest of the year.

Thousands of people came out to support a dozen official launch events in countries around the world for StarCraft II. The local event here in Orange County and the event in Singapore each drew more than 1,000 people. The Taiwan launch drew nearly 1,000. Events in Paris, Berlin and Brisbane drew an excess of 2,000. And the events in Moscow and Seoul each had more than 3,000 attending. In addition to these official launch events, more than 8,000 stores around the world had their doors open at midnight to celebrate the release and welcome players.

The launch of StarCraft II was also the debut of the new Battle.net. The revamped platform was successfully launched around the world, which was a major technical achievement. The integration between World of Warcraft and StarCraft II was a success and players are using the service to compete and communicate with their friends. We're already working on additional features to the service to respond to player demand, such as private chat channels and tournament functionality.

With regard to the World of Warcraft, the Cataclysm Beta launched in June, and the early results of the testing have been very positive. There are currently tens of thousands of players participating in the beta test, and we're planning to add more in the coming months. Additionally, more than 200,000 gamers and media will have the opportunity to play Cataclysm later this month at GamesCom's in Germany.

Excitement around Cataclysm continues to build as players are eager to revisit the altered landscape of Azeroth. In the six years since World of Warcraft's first launch, our developers have gained a wealth of expertise in creating MMO content. Cataclysm leverages all the experience we gained over the last six years as we overhaul existing content in the game and add additional content to satisfy both new and current players. We believe this strategy will not only help us retain players but make us more effective at attracting new players in making the game more appealing again for players who may have left.

Also I'd like to point the release of Cataclysm being our best expansion yet for World of Warcraft. Although an exact release date has not yet been announced, we are on track to launch the expansion by the end of the year. As with all Blizzard games though, we won't release until it's ready.

As far as serving current World of Warcraft players, the Remote Auction House is a service we've introduced recently, allowing any player to view the in-game auction house for free using the web and iPhone or Android phone. Players can also subscribe to an optional service for $2.99 a month, which gives them additional auction-related functionality from their browser or smartphone. We've included the ability to buy or sell items for in-game currency.

Before I move on, I have some great news to share about World of Warcraft in China. Our partner, NetEase, has received official written approval from JPP for Wrath of the Lich King. There is one remaining regulatory approval needed before the expansion can launch, but this is a positive sign for bringing our latest content to Chinese players.

As always, we look forward to celebrating the different Blizzard game universes and their global communities with all of the attendees at BlizzCon 2010. Two batches of tickets for the event went on sale in June, and both effectively sold out the moment they went live. If you weren't in the queue to buy tickets within one second, you didn't get a ticket.

Fortunately, if you wanted to attend BlizzCon but were not able to purchase one of the 20,000 tickets, you won't be left out in the cold. For the second straight year, we're partnering with DirecTV to make it possible for players around the world to enjoy the BlizzCon experience from their homes. Several exciting changes have been made to the service, including the ability for viewers to customize their experience by selecting from multiple channels. The Internet stream will also include enhanced video-on-demand and DVR functionality.

In summary, we view 2010 as the single most exciting year in Blizzard Entertainment history. With StarCraft II, we have already achieved a record-breaking game launch, we had exciting developments in China and Cataclysm is still on track for the final half of the year. So we expect that by the end of 2010, more people will be playing Blizzard games than ever before.

I look forward to joining our growing community at BlizzCon this October, and I hope to see some of you there as well.