Hollywood tint to a very Modern Warfare

The television advertisement for Call of Duty: Modern Warfare 3, the new video game from Activision Blizzard, features movie stars Jonah Hill and Sam Worthington shooting their way through a landscape of urban destruction.

Playing to a celebrity-obsessed culture where video games are increasingly mainstream, the widely-viewed clips and online viral videos helped propel the title to record sales of $400m on its first day.

The showy Modern Warfare 3 ad also comes at a time when top tier video game releases are bigger than Hollywood blockbusters and game companies are looking to produce more television content that can be viewed by online gamers.

Modern Warfare 3’s success is a testament to the enduring popularity of the “first person shooter” game, which in the 17 years since the release of Doom, the first popular title in the genre, has become a fixture on computers and game consoles such as the PlayStation and Xbox. Another big seller in recent weeks has been Battlefield 3, the new first-person shooter from Electronic Arts.

But some analysts are concerned about the health of Activision’s main franchises. The online multiplayer World of Warcraft has lost 1m subscribers during the year. In addition some video game industry analysts are wondering if the Call of Duty franchise, which has sold more than 100m units overall, has peaked.

Activision chief executive Bobby Kotick said in an interview with the Financial Times, however, that the first-person shooter category still had room to grow. “When you think of great game concepts, I think that unleashing your inner soldier is a great one,” he said. “There’s a lot to love about it.”

The company reported strong quarterly earnings last month and raised its earnings forecast, but its shares have fallen more than 10 per cent since.

The star-studded Modern Warfare 3 commercial was part of an unprecedented blitz of video game marketing. Electronic Arts spent heavily promoting Battlefield 3, and games such as Elder Scrolls V: Skyrim and Activision’s World of Warcraft with advertisements featuring actors including Chuck Norris.

“The crowded release schedule triggered competitive behaviour, with more marketing spending than we have seen in past Novembers,” said Michael Pachter, analyst at Wedbush. “We think that the huge marketing push from publishers and competitive retail climate could help sales throughout December.”

Activision has partnered with Tony and Ridley Scott, the film directors, to create a TV programme called Friday Night Fights featuring highlights of Modern Warfare 3 game play. The show will be available for viewing on the Call of Duty Elite network, a new $50-a-year online social network.

The Elite network, which Activision launched last month, stumbled out of the gate due to glitches brought on by high demand. But more than 1m users signed up in the first week, giving Activision a handsome new revenue stream.

Other examples of video games embracing filmed content include Madden Nation, a reality show on Disney’s ESPN sports network that features gamers playing Electronic Arts’ Madden NFL game. Twitch.TV, a website launched earlier this year, features live broadcasts of video games and chat in online forums.

“This is an important evolution of our medium,” said Mr Kotick, suggesting that Activision would release more television-style programming soon. “It would be logical to think you could produce [scripted content] that you could watch in the games.”

One worry for analysts is that Activision does not yet have any major games on Facebook, while its main rival Electronic Arts has two of the top ten by users. Nor has Activision acquired any major social gaming companies. Electronic Arts bought Playfish in 2009, and Disney acquired Playdom last year. Zynga, the largest social gaming company, is preparing to go public. Mr Kotick said Activision was investing in the Facebook platform but had nothing to announce for the time being.

However, the company is still working to develop new franchises with the release of Skylanders, a game targeted at children, which includes action figures that respond to the onscreen action. “Skylanders was this idea that you can bring your toys to life,” Mr Kotick said.

Mr Kotick said Activision may not have enough supplies of the new game to meet holiday demand. But Cowen analyst Doug Creutz said that although it was on track to sell “reasonably well” it still had not cracked Amazon’s closely watched Top 20 titles.

“With any new intellectual property, you never know how well it will be received,” Mr Kotick said of the Skylanders launch. “This was just something new.”