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Analyst: Infinity Ward coverage is "overdone"

Call of Duty "more about execution than innovation" says analyst

The media furore over the crisis at Infinity Ward has been "overdone" according to Cowen and Company analysts Doug Creutz and Adam Nolly.

In an investor note the analysts acknowledged that the development team working on 2011's Call of Duty title (rumoured to be Modern Warfare 3) would be "significantly changed" from those that worked on the first two Modern Warfare games.

However, the analysts suggest that the proven track record of non-Infinity Ward entries in the series, such as Treyarch's World at War, gives little cause for concern - with Activision having 18 months to build a new team.

"We believe the future success of Call of Duty will be more about execution than innovation, as the series is now well established with proven gameplay mechanics," said the analysts.

"In our view the largest negative from the Infinity Ward situation is the significantly diminished likelihood that the studio will be the source of new hit franchises beyond Call of Duty," suggested Creutz and Nolly.

However, they point out that Activision's share price and financial plan already implies little or no growth. As such they kept their rating for the shares as "outperform", with a strong recommendation to buy.

Also commenting on Activision's new 10 year deal with Bungie, the pair stated that: "Activision's economics on the deal will be significantly more substantial than straight distribution economics."

They noted that despite Bungie retaining control over the intellectual property rights Activision was still predicting an operating income margin of around 20 per cent - much higher than would normally be expected for such a deal.

Many have taken this to suggest a new style of business model for Bungie's game, possibly involving online subscriptions.


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