Activision earlier today announced that it's setting Call of Duty Elite free for the upcoming Black Ops II release (and future Call of Duty games) but switching map pack sales to a Season Pass or a la carte model. It's a move that most game industry analysts see as good business sense.
"The problem with a service like Elite is that the key driver was the map packs plus these sort of nebulous premium features," David Cole of DFC Intelligence told GamesIndustry International. "Activision probably found the main driver of purchase was the map packs with the other premium features acting more as a wedge that fractured game play between premium and non-premium users."
"In this case the Season Pass seems cleaner...With the Season Pass they are still selling the DLC and at the same price. They just eliminate the confusion of people that would say 'why would I pay $50 for a competitive program guide?' It is making it cleaner for the consumer while at the same time not lowering the price," he continued. "My thinking is it is not a competitive reaction but more a reaction to what consumers were probably telling them and creating a business strategy that could both give consumers what they want and possibly increase revenue."
"I think that they are following the Battlefield Premium lead, and I think they want to increase engagement of gamers in the hopes that they will sell more units"
Whether or not it's a competitive reaction is debatable, but Wedbush Securities analyst Michael Pachter does think that Activision is essentially mimicking what EA did for Battlefield and DLC.
"I think that they are following the Battlefield Premium lead, and I think they want to increase engagement of gamers in the hopes that they will sell more units," he told us. "It's a trade-off: more units and probably lower map pack sales, and they are hopeful that the overall revenue number rises."
Indeed, engagement for any online franchise is key. EEDAR's Jesse Divnich noted that setting Elite completely free should do well to build loyalty to Call of Duty.
"It's a positive move for Activision. Opening up the Elite service to all consumers will be conducive to building long-term loyalty to the Call of Duty brand - especially as we transition to a new generation of consoles. The last console transition resulted in Call of Duty overtaking Halo and Medal of Honor, two strong franchises from the PS2/Xbox era," he observed. "Activision doesn't want to leave anything to chance and as a result, we all benefit. It's a great value proposition for Call of Duty fans, and opening up Elite to everyone will increase consumer loyalty and add yet another strategic barrier to competitors looking to swat Activision from the top of the FPS mountain."
"Publishers are getting more revenue from aftermarket content such as virtual goods and add-ons, but revenue from general subscription services is declining rapidly"
Billy Pidgeon, analyst with Inside Network, remarked that the move makes sense for Activision, as subscriptions are harder to justify these days.
"I am not surprised that Activision is moving away from charging for Elite as a service. Online multiplayer gaming is essential to franchises such as Call of Duty, and publishers do not usually charge for online services. In fact, subscription-based business models for online games are diminishing overall in favor of free-to-play models," he said. "Publishers are getting more revenue from aftermarket content such as virtual goods and add-ons, but revenue from general subscription services is declining rapidly. Also, with titles competitive to CoD coming out from a number of publishers Activision shouldn't charge for what other games offer for free, or other games will gain market share to CoD's disadvantage."
Subscriptions can exist under the right circumstances, but Elite didn't appear to be one of them. "I think charging for premium services could still work as long as these services should offer very specific features and privileges that resonate as valuable to players willing to pay but aren't seen as baseline necessary services by most players," Pidgeon continued. "But that value will go away should competitors offer similar services and features for free. There are other business models for online games -- such as e-sports, limited use items and secondary markets for player to player transactions -- that are very interesting and can be applied to hardcore multiplayer games."