HOT TOPICS: Has Call of Duty peaked?

In the first of a series of features answering the biggest questions about the industry’s future, Christopher Dring explains why it’s too early to call time on the world’s most successful shooter franchise.

Has Call of Duty peaked?
NO.

The world’s biggest entertainment product is in trouble.

At least, that’s what some corners of the press seem to think. Call of Duty: Modern Warfare 3 – last year’s entry in the hit shooter series – sold fewer copies than 2010’s Call of Duty:?Black Ops. And analysts do not expect this year’s edition to do any different.

It’s unlikely that future versions of Call of Duty will outperform Black Ops, which sold 25m copies,” says Michael Pachter, MD of Equity Research at Wedbush Securities.

The installed base is larger, but annual releases are tough to sustain at a high level, as a number of consumers know they can skip one year and buy the game the next.

I think that Activision will try to continue to innovate, but they will also be limited by the annual nature of releases.”

Yet despite the falling number of users, to suggest Call of Duty is now a declining franchise does a disservice to Activision’s impressive ability to make money.

Modern Warfare 3 was only one part of last year’s Call of Duty offering, as the game launched alongside a new social element: Elite. The service got off to a rocky start, yet since its November debut, Elite now boasts over 10m members, 2m of which are paying 35 a month to access the ‘premium’ service.

In terms of revenue, Call of Duty is in the ascendancy.

We should see revenues continue to grow as more people sign up for the premium CoD Elite subscription,” agrees Pachter.

The subscription is the same as selling each member three DLC packs, and I expect premium Elite to grow by two million customers per year, driving overall revenues up by three to five per cent annually.

Ultimately, they will probably offer yet a higher tier of service that provides updated content more frequently than DLC drops, perhaps as often as weekly or bi-weekly. I think Activision’s ultimate goal is to extract $120 a year out of everyone who plays Call of Duty, but it will give those users more content than someone buying a $60 DVD and buying four DLC drops for $15 each. I think that is a good strategy, as those paying more will get more, and it will drive overall revenues higher.”

Yet Activision isn’t just content on generating more money from its avid Call of Duty fanbase. It wants to reach new gamers in new territories, too.

The publisher is currently working on a whole new title, currently named Call of Duty China. The game is a free-to-play microtransaction shooter, designed specifically for the lucrative Chinese games market.

If it resonates in that country as it has done across the rest of the world, then Call of Duty could yet become an even bigger phenomenon than it already is.