Activision is a company built around two pillars. The first is World of Warcraft, a product which generates annual billion-dollar revenues from solid, predictable monthly subscriptions. The second is Call of Duty, a franchise whose billion-dollar credentials come from a monolithic boxed product launch just ahead of the holiday season each winter.
Everything else Activision does, to borrow an expression from Steve Jobs, is really just a hobby. Jobs was talking about Apple's underwhelming AppleTV product, but the term applies well to Activision's other titles. Some of them are pretty successful hobbies, like Blizzard's other franchises, but compared to the two brands that hold the company together, they're small fry.
Activision has announced something that's almost breathtaking in its inoffensiveness
As such, I'd imagine that Activision executives are plagued by one recurring nightmare - or at least, that they ought to be. What if one of the pillars cracks? What happens if one of those products falters - if the enormous figures generated by one of those beasts suddenly disappear from the publisher's bottom line? In a market as fickle as videogames, even splitting all your eggs between two baskets looks pretty overconfident.
If this does happen, though, it's unlikely to be World of Warcraft that suffers. Blizzard's genre-dominating behemoth may no longer be posting major growth figures (a problem in itself, in some regards, since the stock markets to which Activision is ultimately beholden are far more concerned with growth than with solid ongoing revenues) but it's certainly not in decline either. Its players have made a firm financial commitment, the kind which is hard to elicit in the first place but which, once obtained, tends to translate into immense loyalty to the game - a clear factor among a lot of WoW's player base, and indeed MMO player bases in general.
Call of Duty, on the other hand, is a lot more fragile. Where WoW players need to make a firm decision to stop paying for the game, CoD relies upon players making a firm decision each year to spend £40 on the latest version. The pressure this places on the brand is obvious - you're only ever as good as your last game, and one weak instalment, one year of bad word-of-mouth and negative consumer sentiment, and the following year's game could experience a slump that no amount of marketing dollars would ever fix.
There are two ways in which Activision can insure itself against such an eventuality. The first is to build more pillars - developing more IP of equal commercial potential to its present blockbusters. With the recent demise or "resting" of the Guitar Hero and Tony Hawk franchises, that's never been a more pressing need. The firm's partnership with Bungie is the most likely source of such an IP in the coming years, although it would be unwise to chalk that up as a sure thing - bear in mind that the last studio to go from working on a massive Microsoft IP to developing new IP for Activision was Bizarre Creations, and we all know how that ended.
The second form of insurance, then, would be to gradually steer CoD away from the risky business model it presently uses, and towards the much more reliable and stable model WoW uses. From a high-level business perspective, nothing makes more sense - or looks more attractive - than this idea. At a more realistic and detailed level, however, it's a concept fraught with problems, not the least of which is that the game's most vocal fans seem to loathe the idea.
The concept of a subscription version of Call of Duty was first mooted many months ago, and rumours about such a service were floating around until Activision announced details of Call of Duty Elite this week. It's fairly easy to see why the plans ultimately announced aren't remotely as wide-reaching or game-changing (literally) as those suggested by analysts and insiders up until now - quite simply, the reaction to those more radical plans has been hugely negative.
Instead, Activision has announced something that's almost breathtaking in its inoffensiveness. Call of Duty Elite's subscription service hasn't been entirely decided just yet, but it'll basically offer free content updates and an extra tier of statistics and community features of some description, for a small price. It's a service seemingly aimed solely at CoD's most ardent devotees, and with Activision promising that nothing on offer will provide an in-game advantage, those outside that band will have no reason to complain.
Call of Duty is a relatively fragile franchise - and fundamental changes to the business model count as a pretty serious kick in the shins for even the most robust of franchises
All of which is laudable, but equally, all of which probably means that Elite's impact on CoD's bottom line is going to be absolutely minimal. Which begs the question - why is Activision, a company which is totally clear about its intention to deal only with hugely profitable products, and totally ruthless in its implementation of that policy, bothering with this at all? Indeed, not just "bothering" - the company made a major song and dance about the unveiling, even securing mainstream newspaper coverage for the launch (much to the annoyance of the embargo-restricted specialist press).
There can only really be one answer - Activision sees this as the beginning of something much, much bigger. The company recognises that turning around a franchise like CoD is like turning an oil tanker - you can't just swing it around in the water, but must begin with a series of small, gradual course corrections. With Elite, it's testing just what percentage of CoD's player base see themselves as hardcore enough to want this kind of service - and furthermore, what percentage of those are actually willing to make a monthly financial commitment for it.
The results of this experiment will be fascinating. Those of us who are deeply engaged with gaming tend to live in something of a bubble, or an echo-chamber, and one of the possible false beliefs that may result from that is a belief that online gaming is far more important than it actually is. Specifically in the case of CoD, there's a tendency to see the game as primarily a multiplayer experience, with the singleplayer being something that people turn on in frustration when their broadband is playing up. However, there is certainly also an audience out there for whom CoD is a £40 annual investment for a 10 hour singleplayer game, with multiplayer as an added bonus only.
What is the ratio between those audiences? Online player figures (and CoD's are unquestionably huge) give us some idea, but it's really impossible to know. Equally, how many of the millions who play CoD online would be willing to pay for it, and how many would take off to other FPS franchises if asked to do so? Also impossible to tell - but CoD Elite may finally give Activision some insight into that question.
As to the future - while the innocuous nature of CoD Elite has calmed fears of CoD moving to a subscription model any time soon, I don't doubt that this remains something Activision would dearly love to do. The cautious approach, however, makes sense. After all, this whole effort stems from the basic fact that CoD is a relatively fragile franchise - and fundamental changes to the business model count as a pretty serious kick in the shins for even the most robust of franchises. It's a Catch-22 situation in a sense; to make CoD more robust, Activision may first have to risk seriously damaging it. What we're seeing right now is an attempt to reduce that risk. The softly-softly approach isn't normally in Activision's playbook - it's a company much happier being aggressive - but in this instance, it's the only way forward.