Video Games Fight for Shelf Space
Since 2003, Activision Blizzard’s Call of Duty shooter franchise has been such a juggernaut that few video game rivals dared stray into its blast radius. This holiday season, competitors are sending a different message: game on. “We’re launching Battlefield 3,” Electronic Arts Chief Executive Officer John Riccitiello said in April. The first-person military shooter, set to come out on Oct. 25, is “designed to take that game down.”
It’s shaping up to be a particularly bloody holiday season in the gaming industry. While most years see only a few blockbuster releases, this fall there are nearly a dozen, including the latest installments of Microsoft’s Gears of War and Halo franchises and id Software’s Rage, along with Call of Duty: Modern Warfare 3 and Battlefield 3. The onslaught is driven in part by desperation. Packaged games’ sales peaked in 2008, according to researcher DFC Intelligence. They’ve taken a pummeling this year, with sales falling to five-year lows as consumers increasingly turn away from game consoles and toward all-purpose mobile devices such as Apple’s iPads and social networks such as Facebook. The video game outpouring might salvage a year of lackluster sales, but it could harm the industry if the pileup produces a drought of top titles next year, says J. Paul Raines, CEO of retailer GameStop. “The challenge, for us and for the consumer, is that all this hits within a space of six to eight weeks,” he says. “We’d certainly have preferred it to be spread out.”
To compete for entertainment budgets, game makers are ramping up their marketing spending. In August the top publishers kicked off what could be their most important charm offensive at the pre-holiday confab in Las Vegas for GameStop’s 5,000 top employees. Workers for the Grapevine (Tex.) specialty retailer offer on-the-spot buying advice to gamers, and 500 game developers were on hand at the Sin City event to win their support. They surprised the GameStop employees with parties, T-shirts, free games, and backpacks. They also set up picture-taking sessions with scantily clad women and the Star Wars character R2-D2. “This year they really went all out,” says Raines.
Riccitiello says he expects EA and Activision to spend $100 million collectively marketing their competing shooters. That’s two to five times the average for these companies, says analyst Michael Pachter of Wedbush Securities.
Electronic Arts, which lost its title as the largest publisher to Activision in 2007, is trying particularly hard to win hearts and minds. Riccitiello acknowledges it will be hard to knock aside Call of Duty, a franchise that has rung up more than $4 billion in sales and sold more than 60 million copies. (GameStop preorders show Call of Duty leading Battlefield 3 by a 2-to-1 margin.) Analysts estimate that EA has also spent up to $300 million to make Star Wars: The Old Republic, a subscrip-tion-based online game that makes its debut in December and will go up against Activision’s World of Warcraft, the genre leader, with $1.23 billion in sales in 2010.
The competition can get ugly—or at least the fans can. Earlier this year, Call of Duty aficionados who typed modernwarfare3.com into their browsers were redirected to the website for EA’s Battlefield 3. Activision won a National Arbitration Forum ruling against the site owner, who had no affiliation with EA, and gained control of the domain name in September. Says Activision CEO Robert A. Kotick: “I would not want to be anybody competing against things like Modern Warfare 3.”