One year away from the 20th anniversary of its first release and a few months out from the completion of Microsoft’s planned takeover of Activision Blizzard, “Call of Duty” is changing the game again.
Already one of the bestselling video game franchises ever, new mainline title “Modern Warfare II” became the fastest-selling entry in the franchise in a matter of days, amassing $600 million over its late-October launch weekend — comparable to global box-office openings for the biggest Marvel titles — before surpassing $1 billion in sales less than two weeks after release.
Even more, “MWII” in Europe managed to outsell 2021’s “Call of Duty: Vanguard” by 125% over that timeframe and is already close to surpassing its lifetimes sales.
There’s much for the brand and publisher Activision to celebrate here. But truthfully, this exceptional performance for “MWII” has also seemingly arrived in the nick of time, highlighting disparities in activity and sales across “Call of Duty’s” multiple offerings and the studios that develop them.
“MWII” developer Infinity Ward’s last mainline entry, October 2019’s “Modern Warfare,” was instrumental in lifting interest in the franchise back up after developer Treyarch’s “Black Ops 4” debuted a year earlier. Monthly active users (MAUs) at Activision shot up from below 50 million the prior three quarters to nearly 130 million in 2019’s holiday quarter.
Then in March 2020, Infinity Ward’s highly anticipated “Warzone,” a battle royale and free-to-play addition to the franchise developed alongside Raven Software, was able to sustain similar levels of engagement for Activision throughout the first full year of the pandemic and into the start of the next console generation as new PlayStation and Xbox systems hit the market in November 2020.
But after Activision hit a peak of 150 million MAUs in the first quarter of 2021 after “Warzone’s” integration with Treyarch and Raven’s 2020 mainline entry “Black Ops Cold War” the prior quarter, monthly MAUs at Activision began to fall steadily each quarter and failed to pick up even as developer Sledgehammer added “Vanguard” as the next “Call of Duty” entry in November 2021.
Unsurprisingly, the impact on earnings was demonstrable.
With “Warzone” especially elevating in-game spending at Activision Blizzard, putting the Activision segment on equal and often greater footing than mobile-games segment King, the decline in activity for “Call of Duty” saw Activision fall back into the background of King’s superior earnings over the last three quarters. In fact, Activision was the worst performing segment in the third quarter of 2022, a first for the publisher since 2019. Across all segments, year-over-year product sales and recurring spending were down 45% and 6%, respectively.
As such, the breakout success of “MWII” could not have been better timed. While “Candy Crush” publisher King is seemingly bulletproof, Blizzard is facing an uncertain 2023 after failing to negotiate a new agreement with Chinese gaming partner NetEase. As a result, Blizzard’s live services will be suspended from the region in January.
But more than just a revenue boost for Activision Blizzard in its potential final months as an independent company before Microsoft aims to finalize its $69 billion acquisition of the company, “MWII” raises the question of what, if any, shifts in release strategy may lie in wait for the brand as a Microsoft subsidiary alongside Xbox.
This has been a contentious subject for Sony and its Xbox rival PlayStation as global regulators have examined the deal.
Sony’s two-to-one lead in console sales has made its anti-competitive claims leveled against Microsoft not as resonant as it has hoped. However, its concern that Microsoft’s ownership of “Call of Duty,” whose “Vanguard” release was still the bestselling game on PlayStation in 2021 despite mixed reception, managed to earn a sympathetic ear in the U.K., the regulatory body of which sought to investigate the deal further.
Microsoft gaming CEO Phil Spencer has asserted “Call of Duty” will hold to its current multiplatform release strategy for at least three years and has also stressed Microsoft is as interested in the mobile advantage of King as it is “Call of Duty,” citing the mobile sector as crucial to staying competitive.
But given the failures of Sledgehammer and Treyarch’s last two games to sustain the degree of interest that Infinity Ward has achieved, as well as an earlier 2022 report that Treyarch’s next mainline game will miss the annual fall window expected for 2023 and bow in 2024 instead, it’s difficult to imagine the brand’s strategy under Microsoft will remain entirely the same. If Activision Blizzard has seemingly accepted that new annual releases of full games is unsustainable, theoretical financial support from Microsoft would certainly help negate reliance on that model.
All the more reason to watch how “MWII” and further updates to “Warzone” perform over the next 12 months — especially if Infinity Ward must pull double and buy its sister studios time.