Games Thirst – Amazing Life
So, after you’ve taken your hard earned cash and purchased a title for $60 or more, Wedbush Securities analyst, Michael Pachter, believes you should pay an extra fee to play that same game online, citing the recent NPD sales report, which revealed software sales plummeted 15% for the month of June, as the reason for publishers, most notable Activision, to start charging gamers to play Call Of Duty’s multiplayer.
He sees this happening soon, too. In fact as soon as October of this year, when CoD: Black Ops launches.
Pachter also blamed part of the problem on Nintendo’s decision to now bundle two games with the Wii console, and many consumers buying clearance software with their new, cheaper Xbox 360s.
“We think that the overall decline was due to a very large number of people playing multiplayer online games for free on PlayStation Network, and for an annual fee with unlimited game play on Xbox Live,” Pachter said. “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.
We see this as a continuing problem, and think that unless and until the publishers come up with a business model that appropriately captures the value created by the multiplayer experience, we are destined to see a migration of game playing away from packaged goods purchases and toward multiplayer online. While the shift has been great for consumers, who are enjoying an unprecedented, and largely free, game experience, it has been devastating for publishers and shareholders, who are seeing sales and profits decline.”
As for who will lead the way in charging for online play? Pachter says Activision as the company that will make the first step, citing Activision owned IP, Call of Duty, as the most popular online, taking a cue off of its hugely successful MMO, Blizzard’s World Of Warcraft.
“We think that it is incumbent upon Activision, with the most popular multiplayer game, to take the first step to address monetization of multiplayer. 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 said.
“The company has the greatest experience of the Western publishers with multiplayer subscriptions, given its huge success with World of Warcraft, and we expect Activision to apply a WoW-type model to its Call of Duty franchise. It is likely that Activision will ease the pain of consumers, and will continue to offer some form of free multiplayer, at least for a while, but we believe it is imperative that the company begin to capture some value from the huge number of hours spent – 1.75 billion hours on Xbox Live alone through mid-April, and we estimate that this figure is approaching 4 billion hours combined through today on Xbox Live and PSN.
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.”
Thanks, Industry Gamers.
