Activision Finds New Way to Monetize 'Call of Duty'

"Call of Duty" might be the best selling franchise in the video game industry, but Activision-Blizzard is looking to double down on its earnings potential.

The company has unveiled a subscription-based online service called "Call of Duty: Elite" that will provide extra content for players, including map packs and social network functionality for players.


Due to launch this fall alongside "Modern Warfare 3," the next installment in the series, "Elite" will not only give players access to downloadable content for the game, but will offer in-depth tracking of player statistics and an advanced matchmaking service, letting people play multiplayer games with friends or opponents with similar skills.

People who do not subscribe to the service will still be able to play the games online for free.

Analysts have been expecting the move for some time and say Activision-Blizzard seems to have modest initial aspirations for the service, but the company expects to grow "Elite" substantially in the years to come.

"I think Activision hopes to get up to 1 million subscribers this year," says Michael Pachter of Wedbush Securities, who predicted the company would begin offering a subscription service for "Call of Duty" last year. "From there, they hope to get it up to 3 million next year, then up to 5 million. Over time, they'd like to migrate everyone over to it."

Activision has not yet announced what Elite's monthly subscription fee will be, though analysts expect the charge to be between $5 and $8 per month.

That would be on top of the $60 players pay for the original game – and, if their preferred platform is Microsoft's Xbox 360, they're likely also paying $60 per year for Xbox Live (which allows them to play online).

That starts to become a high price to pay a video game, but "Call of Duty" has long since transcended the "just a game" category. The franchise has sold over 100 million copies – and when new versions come out each November, they cement a spot at the top of the sales charts for months. Over 7 million people play "Call of Duty" games every day, spending hundreds of hours playing multiplayer matches.

It's a regular habit, too. Activision says the average customer spends 58 minutes per day playing the game – more time than most people spend on Facebook.

While "Elite" is an ambitious effort, it's one that could have a long-term impact on the stock, says Pachter.

"I think they're in this for the long run," he says. "For their next [fiscal] year, 1 million subscribers [to Elite] is about an added 3 cents per share. It's meaningful, but who knows ultimately if they'll end up with 1 million or 10 million."

At its heart, "Elite" appears to be a slightly more robust community than the one that is currently offered for free to players of games like Bungie Software's "Halo" and Blizzard's "Starcraft". That might cause some grumbling from players who are reluctant to pay more for the game, but the success of "Elite" could have an impact on free services like that.

Blizzard, after all, is already a part of Activision. And Bungie has signed a long-term deal with the publisher that will see the two working together for the next 10 years.

"The reason the Bungie guys went to Activision is they're psyched to start charging for their stuff," says Pachter. "Blizzard's kind of going that way, too, with all of the customizable stuff on 'Starcraft'."

Activision is launching Elite – and its added services – at a critical time in "Call of Duty's" evolution. The game is expected to see its most serious competition to date this year, when Electronic Arts launches "Battlefield 3" against "Modern Warfare 3".

"This November we're launching Battlefield 3," said EA CEO John Riccitiello at the Ad Age Digital Conference in April. "It's going up against the next Call of Duty, which is presently the number one game in the game industry. … [Battlefield 3] is designed to take that game down. If you're looking for a battle of the titans, a Red Sox versus Yankees, if you're trying to understand if it's Microsoft versus Google and what the tip-off point is for this holiday season - this is it."