Microsoft Plans Boldest Games Bet Since Activision Deal, Changing How ‘Call of Duty’ Is Sold
Software company will add the latest installment of the hit videogame series to its Game Pass subscription service at launch
Microsoft plans a major shake-up of its videogame sales strategy by releasing the coming installment of Call of Duty to its subscription service instead of the longtime, lucrative approach of only selling it a la carte.
The plans, which mark the biggest change to Microsoft’s gaming division since it
closed the $75 billion takeover of Activision Blizzard, are expected to be announced at the company’s annual Xbox showcase next month, according to people familiar with the matter.
Call of Duty is one of the most successful entertainment properties ever, generating over $30 billion in lifetime revenue. Activision, which makes it, has long released new editions annually, selling about 25 million copies on average for around $70 each in recent years.
A Microsoft spokeswoman declined to comment.
Before the Microsoft deal last year, Activision was reluctant to fully embrace
subscription-based models for a game that still attracts a premium price. Microsoft’s subscription service, Game Pass, costs $9.99 to $16.99 a month, and provides access to hundreds of games from Microsoft and dozens of other companies.
All that means that, with Microsoft’s new plan, people could end up paying Microsoft less for the new Call of Duty than it would have made with the traditional approach. The tech company’s hope is that, instead, it will draw new users to Game Pass who will end up paying it more over the long term.
Last September, Microsoft’s science-fiction game “Starfield”
was released on Game Pass at launch and it drove a record number of new subscriptions in a single day, Microsoft has said.
Call of Duty was central to regulators’ concerns over Microsoft’s acquisition of Activision, which closed in October after 21 months. The prolonged review was partly over concerns that the Call of Duty franchise could give Microsoft an unfair advantage in cloud gaming, a new and more affordable way of accessing games, if it were to decide in the future to withhold the series from rivals. Microsoft pledged not to do so.
Call of Duty made its debut in 2003 and has since ranked No. 1 in overall franchise sales each year from 2009 through 2023, according to research firm Circana. Bobby Kotick, who helmed Activision for more than three decades and left shortly after the Microsoft deal closed, saw the subscription model for games as bad for both the industry and players.
“I have a general aversion to the idea of multi-game subscription services,” Kotick said during a court hearing last year over a Federal Trade Commission lawsuit filed against Microsoft to block the Activision deal. “Maybe part of it is being in Los Angeles and having large, big media companies move their content to these subscription streaming services and the business results have suffered.”
Other industry executives have shared similar views, including
Take-Two Interactive Software Chief Executive Strauss Zelnick, who has said subscriptions are fine for catalog games but not new frontline releases.
Microsoft’s decision has been the source of online speculation. Activision said on the X platform in October that the delays in closing the merger cost Microsoft the ability to release last year’s Call of Duty, “Modern Warfare III,” on Game Pass. Activision, which also owns World of Warcraft, Candy Crush and other hits, hasn’t yet revealed the name of this year’s Call of Duty game.
Microsoft launched Game Pass in 2017 and earlier this year it said the service had 34 million subscribers, up from 25 million in 2022.
Since major game releases can still garner premium prices, some analysts argue that subscription services pose too great a risk of cannibalizing a-la-carte sales. “We strongly believe that an overall shift to a subscription model for the industry would negatively impact value creation at the publishers,” TD Cowen analyst Doug Creutz wrote in his final report on Activision last year.
But Microsoft isn’t in a position to keep its own new releases off Game Pass if it wants other game companies to populate the service with their latest and greatest titles. Adding Call of Duty at launch would signal that the software company is committed to the subscription strategy, said Wedbush Securities analyst Michael Pachter.
