Call of Duty: Ghosts Sales Hit $1 Billion in a Day, Keeps Activision’s Self-Sustaining Cash Cow Alive

Activision Blizzard (NASDAQ: ATVI  ) CEO Bobby Kotick, a polarizing figure who is often vilified by gamers, loves to compare his company's games to Hollywood blockbusters.

Last December, when Call of Duty: Black Ops II hit $1 billion in sales in 15 days, he proclaimed, "Since Call of Duty was launched, cumulative franchise revenues from players around the world are greater than current worldwide box office receipts to date for the top-10 grossing films of 2012 combined."

Kotick also noted that life-to-date sales of the Call of Duty franchise had, at the time, topped worldwide theatrical box office receipts of both the Harry Potter and Star Wars franchises.

Sales of Call of Duty: Ghosts hit $1 billion in a single day. Source: Pcgamer.com

Whether you love or hate him, it seems that Kotick is indeed onto something -- sales of Call of Duty: Ghosts recently hit the $1 billion milestone in a single day -- easily topping Black Ops II's previous franchise record as well as the three days it took for Take-Two's GTA V to hit the $1 billion mark.

Just to be clear, however -- that stunning $1 billion in a day figure only reflects sales to retailers, and not necessarily to consumers -- whereas its previous figure for Black Ops II included sales to both retailers and consumers.

The rule of diminishing returns hasn't applied ... yet

Yet what's even more incredible is that unlike the movie industry, which often faces diminishing returns with franchise sequels, the Call of Duty franchise hasn't slowed down yet. Sales actually accelerated at a breakneck pace since Call of Duty 3 (2006), the last World War II themed game in the series.

The first installment of the game set in modern times, Call of Duty 4: Modern Warfare (2007), sold approximately 15.7 million units worldwide -- a 120% increase from the total of Call of Duty 3 units sold. However, this was only the start of a steep upward climb for the franchise, as seen below.

Call of Duty title

Release date

Units sold

World at War

Nov. 2008

16.0 million

Modern Warfare 2

Nov. 2009

22.7 million

Black Ops

Nov. 2010

26.2 million

Modern Warfare 3

Nov. 2011

26.5 million

Black Ops 2

Nov. 2012

24.2 million (so far)

Source: Vgchartz.com, Ign.com

Looking at that chart, it's hard not to admire how Activision releases a new Call of Duty like clockwork every November to cash in on the holiday season. However, it appears that sales could be peaking -- the 26 million unit threshold appears to be a tough barrier to crack.

The Cult of CoD is a self-sustaining beast

What arguably keeps Call of Duty sales churning from year to year is its self-sustaining, cult-like appeal. On the surface, Call of Duty isn't a terribly innovative first person shooter (FPS), and it's not a favorite of critics, either.

Simply take a look at how Ghosts fails to stack up to some comparable FPS titles, based on average scores at Metacritic, which aggregates review scores from major sites across the Internet.

Title

Call of Duty: Ghosts (2013)

Crysis 3
(2013)

Battlefield 4
(2013)

Halo: Reach (2010)

Metascore

74

76

83

91

Source: Metacritic

By comparison, the highest rated Call of Duty ever was the first Modern Warfare game, which earned a score of 92. Therefore, if critical reception to the newer Call of Duty titles has cooled, why are sales still soaring?

That can be explained by some simple comparisons to two other companies -- Apple (NASDAQ: AAPL  ) and Facebook (NASDAQ: FB  ) . Just like Apple's fans will inevitably camp out in front of stores every time a new iPhone is released, Call of Duty fans can be expected to line up to claim the game the moment it hits store shelves.

Lining up for the latest Call of Duty game has become a tradition for many gamers. Source: Standard.co.uk

Just like Facebook, many people don't play Call of Duty because it's the best FPS shooter on the market -- they simply play it because that's where all there friends are. Therefore, Call of Duty shares that self-sustaining social quality with Facebook -- it's a snowball that progressively gets larger and larger, until it is impossible to stop. And just like Facebook, it's created a fair number of stereotypical personality archetypes, which were humorously analyzed in this recent article on Game Informer.

That's where blockbuster multiplayer games like Call of Duty shine against Hollywood films -- beyond going to the movies with friends and chatting about them, there's no real self-sustaining social aspect of films. In addition, films also rarely attract huge cult followings that prompt fans to camp out in line for tickets -- with Star Wars and Harry Potter being rare exceptions.

That's precisely why Activision's Call of Duty hasn't been dragged down by the rule of diminishing returns, even after 10 main releases and notably stagnant innovation -- it's a self-sustaining beast.

Will we ever see the end of Call of Duty?

For better or worse, Activision's Call of Duty strategy has shaped much of today's market for triple-A games, in which new releases for expensive core franchises are expected on an annual basis. For a game like Call of Duty, which relies more on its multiplayer mode than its single player one, annual updates are a viable strategy.

However, other companies that create more story-driven games, such as Electronic Arts' (NASDAQ: EA  ) Bioware studio, could end up sacrificing quality to rush a release into the holiday season. Two of Bioware's recent installments to its core franchises, Dragon Age 2 and Mass Effect 3, were both harshly criticized for being rushed and incomplete in comparison to their predecessors. To keep up with the pace of game releases set by Activision, Ubisoft added more and more studios to its Assassin's Creed team to release new installments of the franchise annually.

For now, it's doubtful that we will see the end of the Call of Duty franchise anytime soon, even if sales of Ghosts start to peak at around 26 million units. Activision will keep this cash cow, which generated $8 billion in life-to-date revenues at the end of fiscal 2012, alive for as long as possible.

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Read/Post Comments (8) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On November 08, 2013, at 12:40 PM, speculawyer wrote:

    Dude, really? Really? This article is dead wrong. WRONG. They did $1B SELL-IN. They even admitted in their CC that Ghosts did not outsell BLOPs2.

  • Report this Comment On November 08, 2013, at 1:02 PM, TMFSunLion wrote:

    That was already addressed in the article:

    "Just to be clear, however -- that stunning $1 billion in a day figure only reflects sales to retailers, and not necessarily to consumers -- whereas its previous figure for Black Ops II included sales to both retailers and consumers."

  • Report this Comment On November 08, 2013, at 1:23 PM, speculawyer wrote:

    Then why did you say it beat the previous title and GTA V? It did not. You contradict yourself. The title and paragraph before that are just wrong and you are helping Kotick propagate misleading information.

    So they stuffed the channel based on the brand strength . . . whoo-dee-doo. But it turns out that the game got mediocre reviews and sold less than BLOPS2. The news is not good news for ATVI.

  • Report this Comment On November 08, 2013, at 5:42 PM, Honeybadger89 wrote:

    This is a complete mess of an article. I had to create an account just to say that.

    Sales to retailers means jack.

    Sales are down from BO2.

    Ive played the game, did not buy it. its not very good. Definitely the weakest COD game.

    And whats with the review embargo?

    What a ridiculous mess this whole thing is.

    Ill be sticking with Battlefield 4. Easily the winner this time around.

  • Report this Comment On November 09, 2013, at 2:23 AM, w00tw00t wrote:

    After reading this I was deeply disappointed in your journalistic skills to the point I created an account simply to comment on this, the new CoD game sold to retailers $1 billion dollars worth of products. This in no way beats GTA V.

    For a start, GTA V so far has sold just over $1bn, what does that imply?

    It implies that retailers had access to MORE than $1bn worth of products, you can't sell something you don't have.

    And even though you made a complete turnaround in the following paragraph, the title is completely misleading and so are the first two paragraphs, not only that but many people are predicting an end of CoD as a major thing due to a few major things;

    1: the game is the same game as the last 50,000 CoD games

    2: the engine they are using is in no way representative of next gen, or even current generation technology

    3: they constantly try to "one up" all other games, especially clear with their childish challenge to the recent success of GTA V

    4: the community

    5: the sheer lack of imagination and ideas that go into every CoD game, straight up copy paste from every 80's - 90's heroic action war film and James Bond plot line

    I hope that next time you write an article on something as major as this you take a little more time to carefully word it. Very contradictory, and totally misleading.

  • Report this Comment On November 11, 2013, at 8:45 AM, Groovetoon wrote:

    'Call of Duty: Ghosts' day one sales fails to met expectations

    http://www.examiner.com/article/call-of-duty-ghosts-day-one-...

  • Report this Comment On November 14, 2013, at 1:26 PM, LoganS2 wrote:

    It matters that they sold 1 billion dollars to retailers. It matters a lot. That's money that they already made, and they don't care who buys the game anymore as long as retailers do. I agree on the games being repetitive and lack imagination, but I spent a lot of time in high school on just this game. After playing call of duty a million days it does get boring because its the same thing every time, but I can't play anything other than call of duty because the rush just isn't the same in other games. You play to be competitive, and enjoy the competition from other players. That's what it provides for you.

  • Report this Comment On December 01, 2013, at 8:32 AM, RazorGun wrote:

    I think COD had offered a lot in the past that Ghosts now is considered repetitive - C'MON PEOPLE IT'S JUST A GAME!

    Ghosts was fun to play and it was the first time I had a gun fight in space and underwater. The game should have more emotional bump though as the story revolves around family and frienship, Riley the dog was adorable and would've been better if it could "cuddle" the gamer sometimes.

    By the way, here's a walkthrough of the game: http://www.cheatmasters.com/blog/2013/11/05/call-of-duty-gho...

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