Activision Blizzard (NASDAQ:ATVI) recently announced that it would allow customers who purchase the Xbox 360 and PlayStation 3 versions of Bungie's Destiny to upgrade the game to the Xbox One and PS4 versions for free. Game data from the previous versions will also carry over to the newer ones.
The Xbox 360 and PS3 versions can only be upgraded to the Xbox One and PS4 games, respectively -- the deal doesn't allow gamers to swap between the Sony (NYSE:SNE) and Microsoft (NASDAQ:MSFT) consoles. Destiny will launch on all four platforms on Sept. 9, and the promotion will last until Jan. 15, 2015.
What can this unusual promotion teach gamers and investors about the business of cross-generation and cross-platform gaming?
The cross-generation dilemma
Game publishers want to impress gamers with next-generation graphics and features, but they also want to reach the maximum number of customers.
Roughly 5 million Xbox One consoles and 10 million PS4 devices have been sold so far, compared to 83 million Xbox 360s and PS3s. Publishers are reluctant to release exclusive titles on a single platform because they want to reach as many gamers as possible. With AAA game budgets hitting $100 million regularly, publishers simply won't stick with a single console unless Microsoft, Sony, or Nintendo offer compensation.
Some publishers are using unique strategies to fill in the gap between console generations. Ubisoft (NASDAQOTH:UBSFF), for example, will split its flagship Assassin's Creed franchise in two this holiday season, launching Rogue for last-gen consoles and Unity for the Xbox One and PS4. Take-Two Interactive's (NASDAQ:TTWO) Borderlands: The Pre-Sequel, which is scheduled to launch next month, will only be available for last-gen consoles and Windows PCs. Yet none have offered a free upgrade between the two generations.
Will more cross-generation games follow?
Offering free upgrades for last-gen games makes sense, since it's reasonable to assume that gamers who bought the older version of a game won't buy it again for a newer console.
If Ubisoft followed this strategy, it could have released a cross-generation version of Assassin's Creed: Unity instead of making Rogue for the Xbox 360 and PS3. However, that would have weighed Unity down with technical limitations, since the game world would need to be compatible with older consoles. The same applies for Borderlands: The Pre-Sequel -- if Gearbox Software wants to bring it to newer consoles, the company will have to go back and "remaster" the game's graphics with higher-quality textures.
Meanwhile, hardware makers could oppose this strategy if they need a new game to boost console sales.
Let's look at the two best-selling games so far for the eighth generation -- Activision's Call of Duty: Ghosts on the PS4 and Electronic Arts' (NASDAQ:EA) Titanfall on the Xbox One. Call of Duty: Ghosts sold 2.5 million units on the PlayStation 4, compared to 8.3 million units on the PlayStation 3. If Sony had convinced Activision to not launch Ghosts on the PS3, it might have fueled even higher PS4 sales last holiday season. That's why Sony is now heavily promoting its glacier white PS4 Destiny bundle -- it wants gamers to buy the PS4 version of the game instead of the PS3 iteration.
Meanwhile, Titanfall sold 2.1 million units on the Xbox One, compared to 0.9 million units on the Xbox 360. If EA had offered Xbox 360 gamers a free upgrade to the Xbox One version, sales might have been much higher for the 360 version instead, translating to lower sales of the Xbox One.
The Foolish takeaway
I wouldn't be surprised to see Activision apply similar deals to other big titles, such as Call of Duty: Advanced Warfare, in the future. It's a solid strategy that allows Activision to convince last-gen gamers to buy a game early without worrying about missing out on next-gen visuals. Otherwise, those gamers might avoid buying the last-gen version until they finally buy a newer console -- and by then, newer titles might catch their attention first.
This new strategy also hints at the possibility of cross-platform purchases between different consoles and even PCs, but it might be a long time before that grand vision -- of a single game being purchased once and played anywhere -- can be fully realized.
Leo Sun has no position in any stocks mentioned. The Motley Fool recommends Activision Blizzard and Take-Two Interactive. The Motley Fool owns shares of Activision Blizzard and Microsoft. 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.