Calling the Elite

Published as part of our sister-site GamesIndustry.biz's widely-read weekly newsletter, the GamesIndustry.biz Editorial, is a weekly dissection of an issue weighing on the minds of the people at the top of the games business. It appears on Eurogamer after it goes out to GI.biz newsletter subscribers.

Activision is a company built around two pillars. The first is World of Warcraft, a product which generates annual billion-dollar revenues from solid, predictable monthly subscriptions. The second is Call of Duty, a franchise whose billion-dollar credentials come from a monolithic boxed product launch just ahead of the holiday season each winter.

Everything else Activision does, to borrow an expression from Steve Jobs, is really just a hobby. Jobs was talking about Apple's underwhelming AppleTV product, but the term applies well to Activision's other titles. Some of them are pretty successful hobbies, like Blizzard's other franchises, but compared to the two brands that hold the company together, they're small fry.

Activision has announced something that's almost breathtaking in its inoffensiveness

As such, I'd imagine that Activision executives are plagued by one recurring nightmare - or at least, that they ought to be. What if one of the pillars cracks? What happens if one of those products falters - if the enormous figures generated by one of those beasts suddenly disappear from the publisher's bottom line? In a market as fickle as videogames, even splitting all your eggs between two baskets looks pretty overconfident.

If this does happen, though, it's unlikely to be World of Warcraft that suffers. Blizzard's genre-dominating behemoth may no longer be posting major growth figures (a problem in itself, in some regards, since the stock markets to which Activision is ultimately beholden are far more concerned with growth than with solid ongoing revenues) but it's certainly not in decline either. Its players have made a firm financial commitment, the kind which is hard to elicit in the first place but which, once obtained, tends to translate into immense loyalty to the game - a clear factor among a lot of WoW's player base, and indeed MMO player bases in general.

Call of Duty, on the other hand, is a lot more fragile. Where WoW players need to make a firm decision to stop paying for the game, CoD relies upon players making a firm decision each year to spend £40 on the latest version. The pressure this places on the brand is obvious - you're only ever as good as your last game, and one weak instalment, one year of bad word-of-mouth and negative consumer sentiment, and the following year's game could experience a slump that no amount of marketing dollars would ever fix.

There are two ways in which Activision can insure itself against such an eventuality. The first is to build more pillars - developing more IP of equal commercial potential to its present blockbusters. With the recent demise or "resting" of the Guitar Hero and Tony Hawk franchises, that's never been a more pressing need. The firm's partnership with Bungie is the most likely source of such an IP in the coming years, although it would be unwise to chalk that up as a sure thing - bear in mind that the last studio to go from working on a massive Microsoft IP to developing new IP for Activision was Bizarre Creations, and we all know how that ended.

The second form of insurance, then, would be to gradually steer CoD away from the risky business model it presently uses, and towards the much more reliable and stable model WoW uses. From a high-level business perspective, nothing makes more sense - or looks more attractive - than this idea. At a more realistic and detailed level, however, it's a concept fraught with problems, not the least of which is that the game's most vocal fans seem to loathe the idea.