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Activision Almost Blows It

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Activision Blizzard (Nasdaq: ATVI  ) has made many of its fans fighting mad. The video game maker announced that it would launch an online social networking service called Call of Duty Elite this fall, based around its popular military-shooter franchise. Unfortunately for Activision, the company also announced that it would charge a monthly fee for access to some of Elite's premium features. Hearing only the part about the fee, gamers went downright nuclear.

Make it free!
In its enthusiasm to reveal Elite, Activision flubbed the announcement and left out key information. Gamers naturally assumed the worst. Their most frequent complaint about the service is that competitors such as Bungie and Electronic Arts (Nasdaq: ERTS  ) offer the same features as Elite for free. A few people even mistakenly believed that Activision intended to charge for online multiplayer action. Grumbling gamers argue that they should not have to pay extra for these features.

As it turns out, Activision agrees. It released a FAQ about Elite shortly after gamers took to the Internet to vent their fury. Activision said that all of the features gamers enjoy for free now will remain free, and that most of the in-game statistics-tracking and social-networking features are also included in the free side of the service.

So what are they charging for?
Activision has not released many details about Elite's premium service, which caused much of the confusion. It seems that the paid subscribers will also be able to form private clans and compete for both in-game and real-world prizes.  From what I can tell, Elite sounds like the world's most violent bowling league.

I can see how this latter feature might add a lot of value for certain players. Having the option to join a "no one under 30 allowed" clan might actually get me back into online gaming. Additionally, if I'm playing against people of equal skill level -- about a step and a half above "newbie" -- then why not try to win a competition?

Although Activision has not settled on the final price of the premium service, it believes the fee will be less than Netflix's $7.99-a-month streaming-only plan. This seems reasonable to me, especially if the rumors that subscribers will also get new map packs and other extra content at no additional cost are true. I also find this subscription model a more honest way to squeeze more revenue out of a game than offering downloadable content of questionable value, or following Glu Mobile's (Nasdaq: GLUU  ) strategy of giving the game away for free, but overcharging for in-game power ups.

Ready for evac!
I'll be watching Elite's launch closely. If it's successful, the social and competitive features should help extend the life of the series by elevating Call of Duty from just a game to a full-time hobby. The premium service will also give the company another source of predictable revenue, although I highly doubt it'll rake in the same kind of numbers as World of Warcraft.

Unfortunately, botching the announcement means that Activision will have to work a lot harder to convince gamers that it's worth their while.

Interested in keeping up on Activision? Click here to add it to your watchlist.

Fool contributor Patrick Martin owns shares of Netflix and Activision. The Motley Fool owns shares of Activision Blizzard. Motley Fool newsletter services have recommended buying shares of Activision Blizzard and Netflix, buying puts in Netflix, 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.

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  • Report this Comment On June 10, 2011, at 11:47 AM, jpbash19 wrote:

    I didn't see a bias in your article and it was informative. Great to see an article on MF that doesn't leave me steaming.

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