The mysterious Market Participant A, who had sent a letter to the UK CMA supporting Microsoft’s acquisition of Activision Blizzard King, has explained their viewpoint that the Call of Duty franchise does not have significant power to change the market.
Over in the other side of the shores, the FTC had named Call of Duty as one of the most successful entertainment franchises of all time. It had noted that the video game franchise now regularly makes more revenue than many Hollywood movies on an annual basis. In some years it even beats the highest grossing movie of that year.
But Market Participant A makes some good points to bolster their argument, which makes it harder to dismiss them than when Microsoft says it. But to do so, they point to another surprising revelation:
In Activision Blizzard King’s last financial report, ended September 30, 2022, they reported a drop in net bookings, AKA revenue made from DLC and similar add-on content. Activision directly blames this drop in revenue to Call of Duty Vanguard, which did not perform as well financially as its predecessor, Call of Duty Black Ops Cold War.
This actually does line up with our prior reporting on Call of Duty Vanguard. The game’s unpopularity was well known enough that a very public poll on the game revealed players were dealing with burnout on the Call of Duty franchise. We had also noted that fans demanded that Sledgehammer Games fix the title’s performance back in January.
And this is the heart of Market Participant A’s argument:
“It is clear that gamer sentiment can swiftly change based on the perceived quality of the content on offer and that new market leaders can emerge (as was widely seen with Fortnite), along with established titles fading – as has been the case with the once market leading Halo franchise.”
So Call of Duty may be an extremely successful franchise again, after the release of Call of Duty: Modern Warfare 2. But console gamers are a fickle audience, ready to drop their favorite games and franchises if the product is not to their satisfaction.
Contrast this to how there may now be a constant stream of complaints about the Marvel movies and TV shows, and yet they still continue to dominate the theater and streaming landscape. If Market Participant A is to be believed, video games do not engender that kind of loyalty among their fans.
It must be said, while some games do have fans that stuck around through the years, it is true that even the most enduring franchises, like The Legend of Zelda or Assassin’s Creed, have had their duds and misses, like The Legend of Zelda Skyward Sword and Assassins’ Creed Unity.
On their own, these games, as well as Call of Duty Vanguard, would be considered huge blockbuster hits. In the context of the history of their respective franchises, you can see they stand in periods where those games were not as popular, reflected both in the hard sales numbers, as well as the reviews and fan consensus.
The Legend of Zelda and Assassin’s Creed are tentpoles for Nintendo and Ubisoft, respectively. However, when they see gamers did not like the games they come out with, both companies were compelled to go back to the drawing board and find new ways to draw gamers in again.
This resulted in the releases of The Legend of Zelda: Breath of the Wild and Assassin’s Creed Origins, two games that took gambles that did pay off. And the reason Nintendo and Ubisoft took those gambles at all, is because they had to come up with new ways to satisfy a capricious audience.
With that in mind, it shouldn’t be hard to imagine Call of Duty fading out of popularity, and its market position taken by another multiplayer shooter. Some would argue that Call of Duty as a whole already dropped some of that market share and mindshare to newer games, like Overwatch and Destiny 2.
It’s certainly a perspective drawn from decades of experience, not as an end user, but a participant in the industry who has seen their own highs and lows.
It will definitely be interesting if the UK CMA makes public more of these statements from other industry insiders chiming in on the Activision Blizzard King deal.
You can read the full quote from Market Participant A below.
“While Call of Duty has drawn significant attention, in a dynamic industry where games constantly fluctuate in popularity one must question whether significant market power can really be attributed to a particular franchise. As evidenced by ABK’s 2022 10-Q, following the release of Call of Duty Vanguard average monthly active users across ABK “decreased by 47 million or 12%” with such decrease being “driven by the Call of Duty franchise”.10 It is clear that gamer sentiment can swiftly change based on the perceived quality of the content on offer and that new market leaders can emerge (as was widely seen with Fortnite), along with established titles fading – as has been the case with the once market leading Halo franchise.
These examples demonstrate that franchises do not have entrenched market power in the video games market and how Call of Duty, along with ABK’s titles more generally, depend on consumer sentiment for their popularity – with no guarantees that this will continue. In such a rapidly changing industry where leading games can quickly fade while other competitors can emerge, it is difficult to attribute any market power to any one franchise.”
Source: CMA
