'World of Warcraft' is the ultimate video game goldmine: its 11 million subscribers pay $15 monthly for the service, giving Activision Blizzard a nice, steady revenue stream from the massive multiplayer PC game.
Now, Activision Blizzard is trying to apply the same business model to its console hit, "Call of Duty." It's already the biggest video game franchise of all time, with over $3 BILLION dollars in retail sales.
Now we'll see if the game giant can convince Call of Duty's roughly 7 million daily online players to also pay a monthly subscription fee.
"Call of Duty Elite" is set to launch this fall, when the company debuts "Modern Warfare 3."
The subscription service will offer additional content, along with new game levels and tools for players to analyze their performance.
Will it work? That could all hinge on the price. Activision Blizzard won't say what it'll charge just yet, just that it'll be less than Netflix's $7.99 monthly fee. The company clearly made that comparison to make the point that it's not all that much — but it's worth noting that for players on Microsoft's XBox console, that fee would be on top of the $10 monthly fee players shell out to compete against each other with "XBox Live."
But a subscription service doesn't have to have huge adoption to boost Activision's bottom line. Even if only half the game's 7 million daily players subscribe, MKM Partners analyst Eric Handler says that that would generate more than $100 million in incremental annual revenue for the company. Even better, that revenue would be at far higher margins than the company gets from the console game: 50 percent plus.
There's certainly risk that this will backfire and alienate players. Activision is trying to hedge against that risk by reassuring that it won't charge for anything it's currently giving away for free.
But if it works, it could create the kind of intense online community that would get even more people to play, and get them to play even more. We hope to hear more about the strategy from CEO Bobby Kotick next week at E3, the annual video game convention.
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