'Modern Warfare 2': Biggest Entertainment Event of 2009?
When "Modern Warfare 2," the latest installment in Activision's long-running "Call of Duty" series will go on sale at 12:01 a.m. Tuesday, it will not only be the biggest game event of the year. There's a very good chance it will be the biggest entertainment event of 2009.
Analysts expect the game could sell 4.5 to 5 million copies globally on its first day. That would shatter the 3.6 million record currently held by Take Two Interactive Software's "Grand Theft Auto IV" — and it would mean revenues of $270 million to $300 million for Activision .
In the long run, those big first day numbers may be just a drop in the bucket, too. Eric Handler, senior equity analyst for MKM Partners, says he expects the game to sell 19 million copies over the next 24 months.
"Activision's treating this as the biggest entertainment event of the year, rather than just the biggest video game of the year," Handler says.
Noting the continuing excitement surrounding the title, Handler recently raised his fourth quarter shipping estimate for "Modern Warfare 2" from 9 million to 11 million and noted "this projection could still prove conservative." He expects the game to account for 36 percent of Activision's bottom line in the fourth quarter.
Retailers will stay open late to capitalize on the excitement surrounding "Modern Warfare 2". Blockbuster plans to have stores open at midnight in 20 major markets to sell the game. Game specialty retailer GameStop, which said it expects this game to be the biggest game launch in its history, will keep over 4,000 locations open nationwide. Some will have celebrities to lure in even bigger crowds.
"The last installment in the 'Call of Duty' series … reportedly racked up almost 2 million units sold worldwide during its first month on sale and more than one million each month thereafter," says Tony Bartel, executive vice president of merchandising and marketing for GameStop.
"'Modern Warfare 2" should easily surpass that launch mark based on the unbridled customer enthusiasm we’re seeing," says Bartel. "One clear indicator is our number of pre-order reservations for the game, which as of today is the highest for any title we've ever sold."
Activision has invested millions of marketing dollars behind the game to help build excitement, airing commercials during the NBA Finals and Sunday Night Football — rather than focusing mainly on cable channels that target the hard core gamer demographic.
"Modern Warfare 2" is the sixth game in the "Call of Duty" series, which has had something of a slow build with mainstream audiences. Always popular, it wasn't until the launch of the first "Modern Warfare" two years ago that the series began its journey from a hit to a phenomenon.
For this latest installment, developers have blended the game mechanics with cinematic hooks to increase the player’s engagement in the story — in essence, making it truly feel like you're actively engaged in a movie.
The game pits player as part of a special ops unit fighting terrorists in areas such as Russia, Afghanistan and South America. Along the way, they'll chase (and combat) enemies while driving high-speed snowmobiles (the effect is akin to a scene from "Return of the Jedi") and use stealth to work their way through enemy camps.
Overall video game sales are projected to be down roughly 5 percent this year compared to the 2008 numbers, but analysts say that without "Modern Warfare 2", the numbers would be a lot worse. More importantly, it is perhaps the best indicator of the overall health of the industry.
While game prices remain high and the recession has definitely had an impact, if people don't show up for an "event" game like this, expect to see analysts sound a lot of alarm bells.
"It's almost a bellwether of the industry right now," says Colin Sebastian, an analyst with Lazard Capital Markets. "If there's an issue with demand for "Modern Warfare 2," then there's a legitimate question about the overall health of the industry."