Call of Duty: Ghosts Is a Win for Activision and a Perspective on EA's Buggy "Battlefield 4"

Call of Duty: Ghosts, part of the Activision Blizzard (NASDAQ: ATVI  ) portfolio of games, is currently the No. 1 most played next-generation console game on both Sony's (NYSE: SNE  ) PlayStation 4 and Microsoft's (NASDAQ: MSFT  ) Xbox One. Across all gaming platforms, there have been over 1 billion multiplayer matches played since the game's launch on Nov. 5. Eric Hirshberg, CEO of Activision Publishing, said:

Around the globe, Call of Duty: Ghosts is leading the next generation. It's the #1 selling title at key retailers and it's also the most played game on Xbox One and PS4 globally.

The Call of Duty franchise has been an important one for Activision. The franchise has set a record with over 4 billion hours played online. This demonstrates Activision's success with user engagement. Activision continually generates revenue beyond the launch of new Call of Duty games by offering new expandable content year-round.

Activision Blizzard as an investment
Activision Blizzard reported revenue of $657 million in the third quarter of 2013, which is down from $751 million in the same quarter of last year. The company expected revenue to be lower than the previous year's same quarter due to last year's launch of the World of Warcraft expansion pack Mists of Pandaria and continual sales of Diablo III for PC.

Activision Publishing showed amazing growth and contributed to almost half of Activision Blizzard's overall revenue. Activision reported revenue of $320 million in the third quarter of 2013, which is a 14% increase from last year's third-quarter revenue of $280 million.

Activision Blizzard is a profitable company and reported earnings per share of $0.08 in the third quarter of 2013. The company reported that it is raising its outlook for the 2013 calendar year, with expectations of revenue at approximately $4.29 billion and earnings per share of $0.89.

As an investor, it's very promising to see Activision's Call of Duty: Ghosts doing so well among retailers for next-generation consoles. It's also encouraging to see the company increase expectations for the remainder of 2013. Investors should keep tabs on future sales figures for Call of Duty: Ghosts as a metric for evaluating Activision's ability to expand revenue in the future.

Battlefield 4 plagued with bugs
DICE, an Electronic Arts (NASDAQ: EA  ) game studio, released Battlefield 4 last month. The game is a direct competitor with Call of Duty: Ghosts. Players have reported multiple bugs in the game, including major bugs that cause players to be kicked from servers, game crashes, and an in-game "one-hit-kill" glitch. These issues have been plaguing users on all platforms, including the  PlayStation 4 and Xbox One.

DICE is rolling out patches to fix the bugs in Battlefield 4. Unfortunately for PlayStation 4 owners, the patch release date on that system has been further delayed for additional testing.

DICE has put all future projects and expansions on hold until the current problems are fixed with Battlefield 4. The company has reassured users that fixing Battlefield 4 is its no. 1 priority. An EA representative told ign.com:

We know many of our players are frustrated, and we feel your pain. We will not stop until this is right.

The question is whether or not placing future projects on hold affects the bottom line. If developers are spending their time fixing bugs, then they are not working on revenue-generating activities such as launching new games and content expansions. This activity further delays revenue and increases expenses.

Investors should consider the repercussions of such major bugs in a high-profile game like Battlefield 4. Launching a game with such significant issues disappoints the fanbase and hurts both the "Battlefield" franchise reputation and the EA brand.

With a game like Battlefield 4, it is strategically important to build and cultivate a large fanbase for future upselling of content expansion packages. The continual sale of content is the long-term revenue generation strategy for these games.

Although Battlefield 4 has its issues, EA expects the game to help drive revenue for the company in the third quarter of the 2014 fiscal year. The company is reaffirming its projections for the year with expectations of revenue of $4 billion and raising expectations of earnings per share to $1.25.

As an investor, carefully monitor the situation with the bugs in Battlefield 4. The game is part of a vital franchise for EA and will generate ongoing revenue through both game sales and content expansions. It's important for DICE to find a way to repair the damage with its fanbase, since otherwise users might switch to competing games such as Call of Duty: Ghosts.

The bottom line
The gaming world is buzzing with new video games such as Call of Duty: Ghosts and Battlefield 4. The excitement surrounding these game titles has increased tenfold due to their launches on the PlayStation 4 and Xbox One.

Activision Blizzard and EA will likely generate expanding revenue over the coming quarters due the excitement over next-generation video games. Both companies have leading titles and game franchises that not only generate revenue through their initial sales, but also create recurring revenue through the sale of content expansions and other downloadable content.

Editor's note: This article has been amended to correctly reflect Call of Duty: Ghosts matches. Motley Fool apologizes for the error.

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Read/Post Comments (13) | Recommend This Article (3)

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 December 10, 2013, at 4:14 AM, twins8956 wrote:

    I am sorry mate but even with its bugs I think battlefield 4 is a better game , all my friends have now switched over to battlefield 4

  • Report this Comment On December 10, 2013, at 8:36 PM, Prettyfox wrote:

    I'd like to make a point here: Battlefield 4 doesn't take up five times as many resources as it should. Call of Duty Ghosts takes up 100% of my GPU on lowest graphics possible. i have a GTX 660. There is no reason whatsoever Ghosts should take up even HALF of my 660, let alone ALL of it considering that BF4 only takes up 80% at the most stressful point on Ultra graphics settings.

    Call of Duty Ghosts is awful, and only succeeded because of CoD fanboys. Hate to break it to you.

  • Report this Comment On December 10, 2013, at 10:31 PM, mountain8 wrote:

    "Call of Duty Ghosts is awful, and only succeeded because of CoD fanboys." Do you th[nk Cod would have even got launched if it wasn't for fanboys.

    " No. 1 most played next-generation console game on both Sony's (NYSE: SNE ) PlayStation 4 and Microsoft's (NASDAQ: MSFT ) Xbox One. On the Xbox One alone, there have been over 1 billion multiplayer matches played since the game's launch on Nov. 5. Eric Hirshberg, CEO of Activision Publishing, said:"

    Note the 1 BILLION multiplayers Since launch in November. Does that impress you? 1 billion multiplayers? Since November? THAT'S ONLY ONE MONTH, dummies. Hate to break it to you.

    I hear your preference is FULL of Glitches. And few are playing it. Where's your B-4 fan base, pretty fox..

  • Report this Comment On December 11, 2013, at 12:59 AM, Bunnyking77 wrote:

    WOW... I am besides myself at how ignorant the Motley Fools are.

    BF4 is buggy, but is a better game, what happened with Ghost is very simple. It was a Launch title based on a franchise that used to be amazing.

    As of now, I will never pre-order a Call of Duty ever again. Ghost received, the lowest ratings in it's franchise for a reason... It is horrible. The story the multiplayer everything... It's just horrible in ever aspect.

    The game takes away the best parts of the series and vomits up new content.

    Ghost might sell copies now... It will not in the future. The Call of Duty series is on thin ice this time around because Ghost put them on shaky ground.

  • Report this Comment On December 11, 2013, at 1:29 AM, Njancek wrote:

    "Note the 1 BILLION multiplayers Since launch in November. Does that impress you? 1 billion multiplayers? Since November? THAT'S ONLY ONE MONTH, dummies. Hate to break it to you."

    Let's be honest here, how many Next Gen games are there on the consoles, that are big-name titles that people can play online?

    Oh, right, not very many. Of course there's going to be those many players on the next gen consoles, there's hardly any games to play on it. That's like saying all Console-release games are amazing because they sell so great. Seriously, most of those are bundles.

    Honestly, I think everyone is getting way too hot headed about these POS games. They're next gen *ports*, the PC Port is crap, the current-gen console releases look like crap, and honestly, BF4 is just BF3 rebranded and Ghosts is a dead horse being beaten by a dead horse, by a guy who is being paid by all the village idiots still.

  • Report this Comment On December 11, 2013, at 8:46 AM, Zergspower wrote:

    I love that dead horse statement Njancek, and yes The CoD series has run its course and everyone who isn't blind to that fact has noticed it. the idiots who pay that much money for the EXACT game for 5 years straight already prove their intelligence levels are quite low. Me? I friggen LOVED BFBC2 and in my opinion is the best game they've made, BF3 was fun but I am still rigid against the "use a browser to connect" thing which really jus tpissed me off.

    Now if you'll excuse me I am going to go play Starbound on my PC because **** you that's why.

  • Report this Comment On December 11, 2013, at 9:52 AM, Buttercup wrote:

    A billion games have not been played on the Xbox One. The Xbox One was released on Nov. 22, most of those games were played on the previous gen console.

    Also, having played all of the COD games in the franchise, the game isn't really that great, it just has the luxury of being released on 5 platforms.

  • Report this Comment On December 11, 2013, at 1:16 PM, dakers69 wrote:

    As a clan leader in Call of Duty Ghost, I can tell you from first hand experience that the game is horrible. Several features that were promised before the games released have not materialized. This game was promised to be on independent servers for Ghost only and that game play would be run from them instead of using in-game hosts. This has not happened and the game is just as "laggy" as previous versions.

    The game is full of hackers and NOTHING is being done to keep this from happening. The game was hacked at least a week before the release of the game on November 5.

    One of the big selling features was "clan wars", This feature was NOT available at the time of release and took weeks to get them up and running.

    Activisions customer support is a joke to say the least. Matters brought to their attention are seldom resolved if they ever are. The clan page for COD Black Ops 2 was down the last several months before Ghost was released. Gamers were told that they would be resolved and fully operational when Ghost was released...it was NOT!

    In short, Activision promises and promotes their products and then does the minimum possible to keep it going until the next release in the COD series. They have run it into the ground instead of listening to gamers on how to make it better. Sales are down due to their selling a non functional product and then failing to support that product.

  • Report this Comment On December 11, 2013, at 2:11 PM, WizardsFirstRule wrote:

    "The question is whether or not placing future projects on hold affects the bottom line. If developers are spending their time fixing bugs, then they are not working on revenue-generating activities such as launching new games and content expansions. This activity further delays revenue and increases expenses."

    This is not necessarily true. I am in the gaming industry. When a game ships (assuming your team is not let go), a small group of people, usually programmers, some designers and maybe audio designers will work around the clock to fix bugs. The majority of the team, especially artists and level designers, will start or continue working on new content (i.e. new multiplayer levels, new single player campaign levels and a new art set like jungle or snow or desert for an expansion or DLC offering). In many cases, towards the last 1-2 months of a game development cycle, artists are barely able to make any changes and already working on the next title or an expansion.

    And DICE is big enough that they almost certainly have another team made almost solely of programmers that are working on the next generation engine for the next game and will be working on that in parallel with any game development. So having a buggy game does not affect their ability to make new content.

    Having a buggy game does reflect poorly on the company as a whole and will turn off potential consumers who are on the fence about which game to buy right now. It also causes some consumers to wait for a couple of months before they pick this title up because they don't want to experience all the bugs.

    If you can remember back to Call of Duty: Black Ops (think it was this one), there was a Javelin one shot kill bug in the game for almost a month initially. It completely ruined the multiplayer experience at the time. This happens to all developers, unfortunately we can't catch everything.

  • Report this Comment On December 11, 2013, at 2:50 PM, worf254 wrote:

    MY BACKGROUND: I've played every Call of Duty title. I hate Battlefield's Multiplayer. I do well in CoD and in Ghosts. There, you now know my BIAS and possible perspective.

    MY STATEMENT: CoD: GHOSTS is the WORST iteration in the call of duty franchise. Just like the war between XBOX and Playstation, gamers are very fickle, and they remember. Activision "mailed-in" the most un-original, least polished game to keep their profits up (example: no option to record games, but the previous iterations had that basic option). Gamers will remember this copy/paste plagiarized version of MW3. Just like the post above, I will not pre-order or pay extra for any Call of Duty game from now on. With TitanFall (former CoD developers) and Destiny (Halo designers) coming out this year, it could be the WORST upcoming season for the CoD franchise and for Activision. <--- What people call the "CoD killer" or decline from the top of the market.

    Youtube, IGN and other websites carry these messages virally to other consumers. Activision had better make a statement of redemption and make the best CoD this year, or it will be less revenue again.

    Google search for the CoD: Ghosts community boards, and you will see similar rants. I'm a CoD fanboy, and I say the franchise is dying!

  • Report this Comment On December 11, 2013, at 4:49 PM, Dragonslayer wrote:

    I got my hands on CoD: Ghosts and F1 2013 on the same day and put both of them on my PC and all I have to say is this:

    CoD: Ghosts looks sounds and plays like a game from 2008 complete with scenery pop in, piss poor story in the single player mode, brain dead AI, still broke netplay coding that reweds cheating and most annoyingly of all a "lead them by the nose and don't let them think for themselves" story that takes linearity to a whole new level of suckatude.

    F1 2013 on the other hand is actually challenging to play and learn because you have to actively think the whole time you're running a session be it practice qualifying or a race.

    You have to plan and execute your race strategy perfectly but also know and understand how to react to changes like weather tire wear and even fuel consumption if you want to achieve optimum results and there is an actual goal of working your way up from a backmarker team to the front of the grid in a top tier team and challenge for the titles in the career (story) mode that can be both challenging and incredibly rewarding when you manage to eek out a title win by a point or two in the last race of a hard fought season.

  • Report this Comment On December 12, 2013, at 10:19 AM, TheMurd66 wrote:

    I am a COD fanatic. Love all the games. I do own the BF titles but they don't get the playtime like COD. You mention the one hit kill issue with BF, I don't mind that....its the cheats and hacks that have taken over the game..... isn't there any way they can monitor these games? I consider myself a pretty good gamer, but I am getting humiliated on the new GHOSTS game.... Cheats and Hacks are ruining the fun!!!

  • Report this Comment On December 12, 2013, at 4:22 PM, Jlc1664 wrote:

    I'm not sure where the logic is here. 1 billion matches played with 12 people that takes an average of 10 minutes compared to a lobby with 60 plus players that could take 20 minutes to play. So obviously your gonna play more matches on Ghost.

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