Is the Best-Selling Video Game Losing Steam?
To the surprise of absolutely no one, "Call of Duty: Advanced Warfare" was the best-selling game in November.
The title, which is the crown jewel of the Activision Blizzard's portfolio, represented one-quarter of the industry's software sales at brick-and-mortar retailers last month, according to The NPD Group, which normally would be cause for celebration.
But the sales numbers posted by "Advanced Warfare," which has been a critical hit, were 23 percent lower year over year than those posted by last year's "Call of Duty: Ghosts," according to Edward Williams of BMO Capital Markets. And "Ghosts" was a game critics took to task.
That's a significant drop, but it could have been one that investors saw coming. Last year, Activision was quick to announced that "Ghosts" had Day One sales shipments of $1 billion (which, admittedly, was a bit of corporate slight of hand, since sales shipments to retailers do not mean consumers have bought that many copies).
This year, the company further couched its language, simply calling the game "the biggest entertainment launch of 2014 in terms of revenue, surpassing all movie, music and book launches this year."
The declining sales of this year's "Call of Duty" prompted Piper Jaffray analyst Michael Olson to lower his price target on the publisher from $27 to $24, though he maintained an "overweight" rating.
"This is disappointing data following first week 'Call of Duty: Advanced Warfare' sales showing a year-over-year increase," Olson said.
Eric Hirshberg, CEO of Activision Publishing, seems unconcerned about the health of the franchise, though. In a conversation last month, before the sales numbers were reported, he downplayed concern over preorder numbers, saying "We see purchase intent well above last year and we see engagement with the brand in social media channels all being markedly up, so I'm still optimistic."
Williams says he believes the shortfall in sales numbers is largely due to the ongoing transition from the Xbox 360 and PlayStation 3 to newer consoles.
"Advanced Warfare," he said in a note to investors, posted sales growth of 212 percent on so-called next-gen platforms (the Xbox One and PlayStation 4). At the same time, it faced heavy declines on previous-generation consoles, falling 60 percent.
This marks the fourth-consecutive year a "Call of Duty" game has seen its first-month sales decline. The game hit its peak in 2011 with the release of "Call of Duty: Modern Warfare 3," which sold a reported 9 million copies in its first month on shelves.
Whether the game is beginning to lose its appeal with gamers or not, it's still a massive moneymaker, and it's still the envy of every other CEO. Activision, in a release Friday, noted that the game has already become the top-selling console game of 2014.