Call Of Duty Elite ServiceActivision announced something called "Elite Service" for the Call Of Duty franchise today. Chris Kohler over at Game|Life discusses it here.
Yes, I'm in that article with a couple of quotes, but I would have linked to it anyway, because I really like how Chris frames news.
Basically, Elite adds social networking features around the Call of Duty franchise, and many of these features will be accessible with your mobile device. It also adds a ton of statistics about your performance in the game, with a "player card" available (think baseball card), as well as online tournaments.
Look, here's the takeaway: it's a shitload of stuff.
Here's the second takeaway, and it's much more important: not all of it is free.
How much? We don't know. How much will it cost? We don't know. What we do know, though, is that it will be a subscription service.
Ding ding ding ding ding.
So Chris asked me what I thought about this last night, and here's how I responded:
I think there are a few things here that really stand out.
Activision tried to milk the Guitar Hero franchise by releasing an avalanche of different games, and they wound up super-saturating (and ultimately, blowing up) the market. That's the "game" approach.
This time, though, they're creating this huge service that doesn't seem to increase the amount of content at all. Instead, it's creating this web of content around the game, focusing on social networking and mobile devices (buzzword alert). So this time, they seem to be trying the "about the game" approach as a saturation technique. And much of it is free, based on the press release. Or, at least, the top layer is free.
I think the top layer, though, is a Trojan Horse for the second layer, which is a subscription service, and I think it's fascinating how the gaming industry has evolved. By era (and I'm not including online games):
1980-1991-see you in two or three years, if ever.
1992-2000-see you next year, if it's a sports game (Madden and Front Page Sports become annual franchises)
2001-2007-see you next year
2008-2010-see you next year, plus DLC
2011-see you next month
I think all we have left is "see you now", and maybe that's what freemium games are, so we might already be there.
This is the Holy Grail, really, for gaming companies--a non-MMO with a subscription model. And just wait, because I guarantee that EA will come out with something like this for their sports games before the end of the year.
The genius in this business model, if it works, is that people are still buying the game every year. So a subscription service is on top of the game, not in place of it. So you could argue that it's actually better than an MMO, because with WOW, for instance, you only buy that game once, along with an occasional expansion. With COD, though, people will still buy the game EVERY YEAR, and pay the subscription price on top of that.
What I also find fascinating is that players will have "baseball cards", essentially, with all their stats, and they'll be able to compete in tournaments. Napoleon said that "A soldier will fight long and hard for a bit of colored ribbon." This is just the marketing version of that truth, only in a business sense, it's "gamers will pay long and hard for a bit of colored ribbon."
Okay, that's the end of my response to Chris.
After thinking about it, there's one thing I should have added: in essence, what Activision is trying to do is become ESPN. I know, that sounds a little crazy, but just stick with me for a minute.
In the 1980s, the biggest thing that happened to ESPN, in a business sense, is that they got cable providers to pay a monthly fee to carry their channel. It was only a couple of cents per subscriber, but that was totally unimportant: what mattered is that they paid a fee.
What is that fee today? Over four dollars.
ESPN, if it had remained as an advertising supported channel only, would never have survived. Without that second revenue stream, without that dual revenue approach, they would have failed.
Well, look at Activision now with the Call Of Duty franchise. Yes, they're making a fortune off the game, but their advertising expenses are skyrocketing (seriously, national television advertising in MAY? Holy crap.), and if COD tanks at any point, Activision has nothing except WOW to fall back on. COD could break the company.
Bobby Kotick might have been an idiot to destroy the music game genre by flooding the market with games, but he's just smart enough not to try it again.
What he needs is the ESPN dual revenue stream approach.
Hey, if Activision has a subscription model on top of the annual game costs, they have a dual revenue stream, too. And they're already advertising the shit out of Call of Duty, so they really don't need to spend a ton of additional money advertising the subscription service.
That's awful for consumers, but it's great for Activision--IF they do it right.
So what is "right" from a business sense? That's an easier question to answer than you might think.
The right way to do it is to take the ESPN approach. Make the subscription fee so low at first that everyone wants to get in, and make it so enticing that people won't be able to say no. Seriously, charge some absolutely insane price, like $2.99 a month. Just condition people to be paying a monthly charge for a game they already pay $60 for each year.
I mean, come on, three dollars a month? That's not even one cheap lunch, right?
Get everybody you can in during the first stage. Then, you need to bring in the holdouts who are saying "I don't need the subscription because I'm fine with the free services that I can get."
That's when you start migrating free services to the premium service. Gotcha.
Don't migrate everything--after all, the free service is important to the social networking aspect--but migrate a few key features and pull in more subscribers.
Then, start raising the price every year.
Add features, sure, but make sure that the increase in subscription price more than covers the expenses incurred in upgrading the service.
At some point in the future, unless the Call Of Duty Franchise blows up, people will be paying $14.99 a month--or more--for a game they already pay $60 for each year.
That's our future, and the future sucks.