Publishers must find a way to profit off online multiplayer, says Pachter.
July 16, 2010
If the videogame industry is going to rebound from its decline in software sales, publishers will need to look at monetizing online multiplayer, said Wedbush Morgan analyst Michael Pachter in his latest investor report.
Pachter believes one of the main reasons software sales for PS3 and Xbox 360 are down year-over-year is due to gamers continuing to log substantial hours into a handful of online games and not picking up new titles regularly.
"We estimate that a total of 12 million consumers are playing Call of Duty Modern Warfare 2 for an average of 10 hours per week on the two platforms' respective networks, and the continued enjoyment of this game (along with an estimated 6 million Halo online players, 3 million EA Sports players, and 5 million players playing other games, such as Battlefield, Red Dead Redemption, Left 4 Dead and Grand Theft Auto) has sucked the available time away from what otherwise would be spent playing newly purchased games," he said.
Pachter also noted that Activision needs to make the first move with multiplayer charges, and expects we could see something with Call of Duty: Black Ops, set for release this November.
"We think that it is incumbent upon Activision, with the most popular multiplayer game, to take the first step to address monetization of multiplayer," said Pachter. "It is too early to tell whether that will be a monthly subscription, tournament entry fees, microtransaction fees, or a combination of all three, but we expect to see the company take some action by year-end, when Call of Duty Black Ops launches."
Pachter says he expects the publisher will apply a World of Warcraft-like business model to its Call of Duty franchise. Activision will likely continue to offer some form a free multiplayer for awhile, he says, but notes that it's imperative the company capitalizes on the estimated 4 billion hours of time spent online since the launch of Call of Duty: Modern Warfare 2 on Xbox Live and PlayStation Network.
"We are quick to point out that the average single player game has an expected play time of under 30 hours, suggesting that a staggering 133 million units of equivalent game play have been spent (so far) playing Call of Duty online, with Activision only seeing revenues from the original 20 million units sold, plus an estimated 8 million map packs sold," he added.
Activision hasn't been shy in the past about its intentions for some of its key franchises. The publisher has said several times it's looking at new online business models for Call of Duty and Guitar Hero.
In a recent interview, Activision CEO Bobby Kotick also made his displeasure known over closed online networks such as Xbox Live.
"We've heard that 60 per cent of [Microsoft's] subscribers are principally on Live because of Call of Duty," said Kotick. "We don't really participate financially in that income stream. We would really like to be able to provide much more value to those millions of players playing on Live, but it's not our network."