Call of Duty isn't a franchise so much as a phenomenon. By publisher Activision Blizzard's (NASDAQ:ATVI) count, more than 100 million people have played a CoD-branded title, collectively spending 25 billion hours in the game. Since first launching in 2003, Call of Duty has generated close to $10 billion in revenue, which makes it one of the most successful entertainment brands of all time.
Don't call it a comeback
The 2013 installment, Ghosts, was a step back for the franchise as sales slipped from the prior year. Activision executives blamed the transition to next-generation consoles for that weakness. It's also possible that gamers were tiring of the franchise as it entered its second decade. Still, that "disappointing" Ghosts title finished 2013 as the second-most popular video game, behind only Take-Two Interactive's epic Grand Theft Auto V.
But don't expect Activision to get elbowed off the top spot of the podium again in 2014. With Advanced Warfare, this year's Call of Duty installment, the company has a near-lock on first place in the video game sales charts.
After all, the competitive field is weaker this year. Electronic Arts usually puts up a strong fight for first-person shooter fans through its Battlefield franchise. Battlefield 4, for example, was one of last year's top-selling games. But there won't be an EA entry to compete with Advanced Warfare this holiday season. The company pushed Battlefield Hardline's release until March, leaving the first-person shooter category as Activision's to lose this winter.
Meanwhile, Activision's ramped-up investments in the CoD franchise appear to have resulted in a much stronger title for 2014. Advanced Warfare is the first chapter in the franchise to benefit from a three-year (as opposed to a two-year) development cycle, and developer Sledgehammer Games has made good use of that extra time. This year's title is a bigger critical success than Ghosts was. Metacritic reviews have the game pegged at an overall 83 score out of 100, as opposed to its predecessor's 78. To highlight one opinion, gaming site IGN called Advanced Warfare "faster and more focused than any Call of Duty game before it." IGN gave the title a 91 -- or "amazing" -- score.
Activision would see a few major benefits from a blockbuster performance by Advanced Warfare. First, sales would likely jump over the prior year and could set a new annual record for the franchise and the company. In fact, management just raised its fiscal-year revenue guidance to $4.8 billion, within striking distance of the $5 billion record Activision set in 2012. A breakout CoD performance in the fourth quarter might push the company back into record sales territory this year.
But the bigger payoff will come down the line, through more than a year of expansions to the Advanced Warfare game, along with downloadable content purchases. These digital sales are more profitable for Activision and would see a major boost if Advanced Warfare jumps out of the gate and builds a large gamer base over the next few months.
Another benefit of Sledgehammer's three-year development window is that it has allowed the developer to turn more resources toward creating bigger expansions and a wider range of downloadable content. That should give Advanced Warfare a strong shot at a longer, more profitable life than any prior Call of Duty title.