Activision Blizzard Overruns the Battlefield

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Well, we all saw this coming. Activision Blizzard (NAS: ATVI) estimates that it sold 6.5 million copies of Call of Duty: Modern Warfare 3 on its first day, beating the first-day sales of Call of Duty: Black Ops by nearly a million copies. However, that's not the only reason Activision investors should get excited.

Surveying the field
Don't get me wrong, the first-day sales are a massive win, especially considering that Modern Warfare only launched in two markets -- the U.S. and the United Kingdom. It took Electronic Arts (NAS: ERTS) a week to sell 5 million copies of Battlefield 3 worldwide.

In the old days, it was enough to crush your competition this soundly, but the gaming landscape has changed. Developers now hope to squeeze more revenue out of a title through downloadable content and microtransactions. For example, gamers have purchased more than 20 million map packs for Call of Duty: Black Ops at $15 a pop. This generated an additional $300 million in revenue for the company, or about twice the revenue that Glu Mobile (NAS: GLUU) and Majesco Entertainment (NAS: COOL) earned in 2010 combined. Given MW3's early popularity, it could bring in an even larger pile of cash through map packs.

A new secret weapon
Activision has another trick up its sleeve this time around, though. MW3 marks the official launch of Call of Duty: Elite, a social platform that allows players to track in-game statistics, form public groups as well as private clans, and share video captured during the game for free.

Players can also pay $49.99 a year for a premium membership, which includes a host of extra features including all the downloadable content for MW3 -- and I'd assume future CoD games -- and year-round competitions for real prizes.

That's right; Activision has brought subscription gaming to first-person shooters. They've done it brilliantly. By making the premium service completely optional, they don't alienate the less hardcore players while finding a way to generate predictable revenue from the series' biggest fans. It's too early to know whether gamers will pay up for the extra features, but given the franchises' popularity, Elite Premium subscribers could easily make up for World of Warcraft's declining subscription numbers.

Foolish takeaway
Although I'm concerned about Activision Blizzard's somewhat limited game catalog, I have to give the company credit for finding new ways to generate revenue from its games. I'm hoping products like Elite and the companion toys for the kid-oriented Skylanders: Spyro's Adventure will start to convince investors that Activision Blizzard is bigger than the World of Azeroth.

If you would like to keep an eye on Activision Blizzard and its never-ending quest for more revenue streams, then click here to add Activision Blizzard to your free stock watchlist.

At the time this article was published The Motley Fool owns shares of and has written calls on Activision Blizzard. Motley Fool newsletter services have recommended buying shares of Activision Blizzard and creating a synthetic long position in Activision Blizzard. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.Fool contributor Patrick Martin owns shares of Activision Blizzard. You can follow him on twitter @TMFpcmart03. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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