Speaking at Wedbush Morgan's Management Access Conference in New York on Wednesday, Activision CFO Thomas Tippl confirmed one major title for the holidays. "For 2009, Modern Warfare is coming back, and this is going to be yet again a game that will be the most-anticipated game of the year, possibly the number one game of the year overall, despite the fact that it's going to launch in the holiday season."
2007's Call of Duty: Modern Warfare from internal studio Infinity Ward has sold over 10 million units. The Treyarch-developed Call of Duty: World at War from 2008 has also been a commercial hit.
"We're very, very bullish" about the next iteration of Call of Duty, said Tippl.
World of Warcraft
Tippl recounted how at the time of the Activision Blizzard merger, some industry watchers speculated that World of Warcraft was peaking at 9 million subscribers, and "about to fall off the cliff."
"...I still remember a lot of those conversations," he said.
Today, about a year after the initial Activision Blizzard merger announcement, the MMO has 11.5 million subscribers worldwide.
"If you add up all the other MMOs that launched that spent $100 million to give [the market] a try, some of them ended up with 300K paying subscribers," said Tippl. He was likely taking a shot at Mythic and EA's Warhammer Online: Age of Reckoning, a game that just happens to have that many subscribers currently.
There is room for more WoW subscribers, though, Tippl claims. "While the numbers look large, we still think that we have opportunities to grow," he said, pointing to MMO growth opportunities in Asia. "Growing the Blizzard business is not one of the things that keeps me up at night."
Blizzard's business continues to improve. In 2007, the developer was already the most profitable business in the industry, with margins between 45 and 50 percent, Tippl said. Now margins are above 50 percent, even in light of two major MMO entrants, Age of Conan and Warhammer Online. Aside from new competition, the studio achieved those margins amidst heavy investments in the development of StarCraft II, Diablo III and the staffing of a new MMO team.
"If I could have another 10 businesses like that, I'd take them without any complaints," Tippl said.
Heroic growth
The Guitar Hero franchise is well-established, but with DJ Hero, Activision has its eyes set on further growth. Tippl believes that DJ Hero could expand the music market by reaching out to a broader, potentially younger market that listens to more contemporary music.
Cautious approach to new IP
"The most important way you manage your product development costs ... is making sure you make the right choice of what games to make in the first place," says Tippl. "I think that has been a big part of our success, and is probably what differentiated us the most. We don't have years where we do 10 or 15 new intellectual properties, because we know that's a recipe for losing money in this business.
"You'll continue to see us selective risks."
Activision Blizzard expects to launch three new, wholly-owned IPs this year: a racing game from Bizarre Creations, Prototype from Radical Entertainment and Singularity from Raven software.
On hardware
Recently, Activision CEO Robert Kotick, yet again, said that console prices are not mass market friendly. Tippl echoed those comments, with a particular emphasis on Sony, whose standard PS3 sells for $399.
"Assuming we see some pricing action from Sony, that could be a further growth impetus [for the hardware installed base]. I think if they don't cut the price, I think we'll continue to see disappointing trends there.
"We're at the stage now where mass adoption... will require some sort of pricing action from the hardware side."