Keeping games in play

On a cloudy Friday afternoon in West Los Angeles, nearly three weeks ago, about 50 people were waiting to buy a video game that was not supposed to go on sale for four days.

"Do you have it yet?," an eager customer asked an employee of the store.

The object of his desire, Call of Duty: Modern Warfare 2, officially launched the following Tuesday, but demand was so high many stores started selling it as soon as shipments arrived.

"I'm definitely buying fewer games this year, but I knew I was going to buy this one as soon as I could," said Jeff Katayama (28).

The self-described "Call of Duty freak" drove 32km to pick up the game early.

Thanks to Mr Katayama and millions like him, Modern Warfare 2 generated a record-setting $US550 million ($NZ754 million) in sales in its first week, besting not only the previous mark for a video game, but for movies at the box office as well.

That represented approximately 8 million units sold, according to estimates by Santa Monica-based publisher Activision Blizzard.

"This provided the entire industry with a shot in the arm," Colin Sebastian, an analyst at Lazard Capital Markets, said.

He predicted Modern Warfare 2 would ultimately sell 15 million to 20 million units, which equated to about $US1 billion in sales.

Modern Warfare 2 cost between $US40 million and $US50 million to produce, according to people close to the project - about as much as a mid-size film.

Including marketing expenses and the cost of producing and distributing discs, the total launch budget was $US200 million, on a par with a summer popcorn movie - and extremely high for a video game.

Unleashing a huge, Hollywood-scale opening for Modern Warfare 2 has been a top priority for Activision Blizzard.

The marketing and publicity campaign has featured all of the trappings of a modern movie effort including advertisements and trailers designed by top advertising shops, a Twitter feed on which news was strategically disclosed, and a controversial scene involving airport terrorism that leaked on to YouTube and generated hordes of media attention.

"My goal was to create a launch that would compare very favourably to the biggest box offices of all time," Activision Blizzard chief executive Bobby Kotick said.

Theatrical box office and video games sales are not equivalent, since movie tickets are significantly cheaper and are followed by markets that generate additional revenue, such as DVD and pay television.

Nonetheless, that top video game launches now exceed the biggest film debuts is a further signal that the two businesses are coming to rival each other in popularity.

Modern Warfare 2 comes at a propitious time for Activision and the video game industry.

Video game sales through October were down 12%, according to the NPD Group, driven by the recession and a lack of mega-hits.

Activision itself has seen sales of a new sequel and spin-off to its Guitar Hero franchise lag significantly behind versions released in the past two years.

Since the first Call of Duty, a simulation of World War 2 action, launched in 2003, it has been among the most successful brands in the industry, alongside the likes of Super Mario and Grand Theft Auto.

Five major releases before Modern Warfare 2, along with a few spin-offs, combined to sell more than 48 million units.

The high water mark was 2007's Call of Duty: Modern Warfare, which brought the series to contemporary times and was produced by Los Angeles-based Infinity Ward, creator of the first Call of Duty.

It sold 14.4 million units.

"Modern Warfare appealed to all types of gamers because it broke down the barriers of a traditional shooter and gave it the feel of a Hollywood blockbuster," said Sean Spector, co-founder of video game rental service Gamefly.

Because it typically takes at least two years to produce a video game, publishers tap different studios when they want to produce annual sequels.

Infinity Ward started work on a second Modern Warfare game immediately after the first, while Santa Monica-based Treyarch made 2008's Call of Duty: World at War, which sold 12 million copies.

Infinity Ward's past success gave it an extraordinary level of independence to design the game, but Activision did insist that Modern Warfare 2 expand its predecessor's robust online multiplayer features.

The first Modern Warfare has consistently been among the most popular video games played online for the past two years, keeping players engaged and generating revenue through downloadable content sales.

"With multiplayer we deliver hundreds or thousands of hours of gameplay for about the same price as taking a family to the movies," Mr Kotick said.

"It's also a way to address the challenge of used games."

Many industry professionals scorn the used market, since it brings no money to those who make the games.

To keep playing against friends and competitors, however, consumers cannot sell the disc.

In the five days after it launched, more than 8 million people played Modern Warfare 2 online.

As Activision seems to be discovering this year with Guitar Hero, there is danger when a title is overexposed with too many iterations.

Nonetheless, the publisher has aggressive expansion plans for Call of Duty.

While Infinity Ward and Treyarch have produced sequels in alternating years since 2005, the publisher now has a third development studio working on future versions.

In addition, one person close to the company said it is considering adapting Call of Duty as a massively multiplayer online world.

The genre, in which Activision's Blizzard Entertainment subsidiary is a leader, requires huge upfront investments but can be very profitable, as players pay a monthly subscription fee.

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