Analysts Debate the Future of COD, Did it Peak in 2011?

After Activision/Blizzard released their financial report on their second quarter earnings, a variety of analysts shared their usual investor notes for those holding stock in the company. Some believe the Q2 report foreshadows darker days for Activision’s bedrock franchise Call of Duty.

Ben Schachter, an analyst at Macquarie Securites, believes that public interest in COD actually peaked in 2011. According to gameindustry international, he has a variety of reasons behind this conclusion. Mainly, he argues what many gamers have been saying for a while now; the ‘modern shooter’ genre just seems tired.

Schachter has a slew of other reason for why COD may be falling off. HD hardware and software sale, as a whole, have been declining all year, lifetime unit sales of MW3 are slightly below Black Ops, the futuristic setting of Black Ops 2 may not have the same appeal for some, the macroeconomic environment is causing some gamers to hold back on upgrades, and currency fluctuation means that European sales are worth less to Activision shareholders.

He isn’t the only analyst who feels this way. In an interview with gameindustry international, Wedbush Securities Analyst Michael Pachter argues that even though COD sales numbers may be large, other similar games are bringing in more and more players.

“Annual sales at the 25 million level are unprecedented, so it’s easy to say ‘that’s the peak.’ I think that the growth in online multiplayer fueled CoD sales, since it was (and probably still is) the best multiplayer experience available,” he said. “However, last year, Battlefield multiplayer probably cannibalized it a little bit, and this year, Halo and Medal of Honor could cannibalize CoD a bit more. Next year, another Battlefield plus the Respawn and Bungie games probably cannibalize it a bit more.”

Colin Sebastian of RW Baird also seems to agree. Speaking with gameindustry international, he pointed out that the upcoming end to the current console generation significantly affects game sales.

“Activision has provided financial guidance assuming that Call of Duty is lower this year than last year, so I think that is a rational comment, especially given the tough console market right now,” he said. “Also, if new consoles are coming next year, that is typically a disruptive period for game sales, and that could drive sales lower as well, at least temporarily. The bigger question I think is whether the franchise (or any franchise) is in a continuous period of decline.”

Though most seemed to agree with Schachter, some analysts don’t. Others actually believe that COD has yet to peak because of it’s ever-expanding brand-name and market. Scott Steinberg, also talking to gameindusty international, thinks concern should only be temporary.

“While temporary signs of concern may exist, and some attrition may be experienced this holiday season in keeping with the dampening of retail uptake and shifts in consumer habit, it’s far too early to determine the extent or degree to which the Call of Duty franchise has peaked. Ancillary products and services should continue to be introduced over the coming years, and additional ventures explored in the online, digital and service-based realms, including possible expansion onto added devices and formats. Which is to say that while sales of physical product for PC and console may not reach the dizzying heights previously attained, the franchise continues to offer many possibilities for growth and expansion, and remains one of the strongest IPs in the gaming space,” he said.

So what can we take away from all of this? Call of Duty will continue being a multi-million dollar cash cow for Activision, regardless of market trends. Even though sales numbers may be dropping off, COD will continue to be a major earner. So, don’t expect to see the ‘modern shooter’ genre, practically created by COD, to go anywhere at all.