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Found this posted on Neogaf and found it to be very interesting.


Posted by Nuclear Muffin:



Activision directly responsible for $10 XBL price hike? #1

I just noticed a nice eye opening article, showcasing an interview with Bobby Kotick, that a fellow GAF member posted in the thread about how Activision would never charge for COD multiplayer and I just realised something. Eric Hirshberg has said that they will never charge a subscription fee to COD users because they are already paying a subscription fee to Activision through Xbox Live!


Back in June, Kotick commented saying that he wanted to release a COD game that charged a subscription
http://www.next-gen.biz/news/kotick-...orrow%E2%80%9D




June 2010


Quote:

"I would have Call Of Duty be an online subscription service tomorrow, he replied (via *****). When you think about what the audience's interests are and how you could really satisfy bigger audiences with more inspired, creative opportunities, I would love to see us have an online Call Of Duty world. I think our players would just have so much of a more compelling experience.


Then again in July, he commented how Activision wasn't getting a portion of the Xbox Live fees, despite driving 60% of their traffic
http://www.next-gen.biz/news/kotick-...box-live-model




July 2010


Quote:

We've heard that 60 per cent of [Microsoft's] subscribers are principally on Live because of Call Of Duty, Kotick said. We don't really participate financially in that income stream. We would really like to be able to provide much more value to those millions of players playing on Live, but it's not our network.


Now the XBL $10 price hike was announced in August and implemented on November 1st http://majornelson.com/archive/2010/...scription.aspx


And following this, I just read this Kotick interview here - released on November 12th that brings this theory to light...




November 12 2010 http://www.joystiq.com/2010/11/12/bo...-treyarch-inf/


Quote:

"You know, Call of Duty games probably represent more than 50% of the total Xbox Live traffic," Bobby Kotick told me when I asked him about Microsoft's recent $10 Xbox Live price hike. You see, Activision is tasked with monetizing an immensely popular online game through a traditional - and inflexible - system: a retail disc played in a video game console controlled by another company. And despite a constant refrain of Call of Duty subscription rumors, the only subscription you may pay to play it online isn't to Activision at all; it's to Microsoft.


"I think the thing that sometimes even I don't fully appreciate - and I think I have a greater appreciation for it today, having spent a lot of time up with Microsoft recently - but they invest billions of dollars in the Live platform. Billing, credit collection, things like foreign currency conversion, being able to manage point systems. All of that is extremely expensive to manage and maintain." Of course, this is all to say that it deserves something, but how do Activision and its customers factor into Microsoft's agenda?


"Because of our Blizzard experience we have an incredible understanding of how important the provision of appropriate customer service is," Kotick said, citing 2,500 World of Warcraft customer service employees for the US and Europe alone. "What we'd like to ideally see is that the investment in the subscription fees going towards the provision of a higher level of customer service [...] to see some portion of the subscription fees go towards game enhancement." Activision does enjoy a "very modest amount of the subscription fees," Kotick told us, but he's more interested in seeing any cost increase in the service go towards "directly benefitting the Call of Duty players."


So, with $60 a year out the door for many Call of Duty players - that would be those playing on Xbox 360, as opposed to PC or PlayStation 3 - it's already a significant $5 a month expense and Activision has only snagged a "modest amount" of that $5.


So Activision are now receiving a portion of the XBL fees. Prior to June, they weren't receiving anything and at some point between June-November, they have started receiving a "very modest amount of the subscription fees". Seems rather conveniently timed with the XBL $10 price hike on the 1st of November!


This is also conveniently timed with Activision's sudden change of heart in today's article from the other thread where Eric Hirshberg said that Activision will never charge for online multiplayer...




November 24 2010


Quote:

Speaking to IndustryGamers as part of an in-depth interview on the business (stay tuned for more next week), Activision Publishing CEO Eric Hirshberg told us that charging for multiplayer simply just won't be happening - not now, not ever. "Are we going to be charging for multiplayer? The answer is no. The experience you have out of the box, connecting with the online community to play Call of Duty is absolutely integral to the experience and we'll never charge for that. It's not going to be something we'll attempt to monetize; it's part of the package," Hirshberg stressed.


Further commenting on Pachter's assertion about a variety of online subscriptions, he continued, "Nothing we or anyone else tries is going to work if it doesn't have tremendous value for people and add a tremendous value to the gaming experience. He's probably looking at meta-trends in the world and in culture about online services and new ways things should be monetized from Netflix to cloud-based computing. So there are certainly a lot of behavioral shifts towards long-standing online relationships... But at the end of the day, all I'm trying to get across is I can unequivocally say we will never, ever charge for the multiplayer."


So if my theory is sound, Activision is directly responsible for the XBL price hike and every single XBL subscriber is subsidising Activision, even if you have never bought a single one of their games.


So what are your thoughts on the matter?
 

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How would that fit in with PC and PS3 gaming, though, where they [Activision] undoubtedly still feel that they're deserving of receiving income even when gamers don't directly pay anyone to play online?


Personally I think it should be other way around. If Activision's games use a large percentage of the Xbox Live bandwidth, they should be getting hit with a surcharge by Microsoft for generating so much traffic in the first place. They're not doing anyone a favor by causing net congestion, after all. Or, perhaps service providers like AT&T and Comcast should be getting a percentage of game profits from Activision? Either way, my point is that saying "my game generates the traffic, so give me some of the money" is questionnable. I suppose the argument there is that the games wouldn't sell as well without online play, but really, the job of the game developer is literally to develop games that people want to play using whatever game modes are popular.
 

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Slordak brings up an interesting point. I've been a live subscriber since day 1 though I am in no way a hardcore online gamer. While I would say that I have spent more time online with MW2 and Black Ops than virtually any other game (Forza and Halo 2 come close) the fact is I probably wouldn't have bought MW2 if I hadn't noticed such a huge chunk of my friends list was playing it. And while the games are fun they in no way do anything to merit a premium over other Live offerings, in fact their matchmaking is inferior to most other games that don't just dump you with randoms.
 

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Quote:
Originally Posted by StygianHD
"Because of our Blizzard experience we have an incredible understanding of how important the provision of appropriate customer service is," Kotick said, citing 2,500 World of Warcraft customer service employees for the US and Europe alone. "What we'd like to ideally see is that the investment in the subscription fees going towards the provision of a higher level of customer service [...] to see some portion of the subscription fees go towards game enhancement." Activision does enjoy a "very modest amount of the subscription fees," Kotick told us, but he's more interested in seeing any cost increase in the service go towards "directly benefitting the Call of Duty players."


So, with $60 a year out the door for many Call of Duty players - that would be those playing on Xbox 360, as opposed to PC or PlayStation 3 - it's already a significant $5 a month expense and Activision has only snagged a "modest amount" of that $5.


So Activision are now receiving a portion of the XBL fees. Prior to June, they weren't receiving anything and at some point between June-November, they have started receiving a "very modest amount of the subscription fees". Seems rather conveniently timed with the XBL $10 price hike on the 1st of November!



So what are your thoughts on the matter?
Isn't the "modest amount", which is the whole crux of his arguement, referring to WoW which is subscription based? I read it as he is taking a statement about that Sub service, and twisting it around to XBOX live.
 

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Quote:
Originally Posted by Slordak
How would that fit in with PC and PS3 gaming, though, where they [Activision] undoubtedly still feel that they're deserving of receiving income even when gamers don't directly pay anyone to play online?


Personally I think it should be other way around. If Activision's games use a large percentage of the Xbox Live bandwidth, they should be getting hit with a surcharge by Microsoft for generating so much traffic in the first place. They're not doing anyone a favor by causing net congestion, after all. Or, perhaps service providers like AT&T and Comcast should be getting a percentage of game profits from Activision? Either way, my point is that saying "my game generates the traffic, so give me some of the money" is questionnable. I suppose the argument there is that the games wouldn't sell as well without online play, but really, the job of the game developer is literally to develop games that people want to play using whatever game modes are popular.
I think the reason for Activision getting a cut is that Microsoft isn't allowing Activision to charge for online play so they are giving the a portion of the income instead. If Microsoft said, "No, you can't charge for online play, and we aren't giving you a cut of live subscriptions." Activision would just bail on xbox and make all of the games for PS3 where they could charge. How do you think it would affect xbox sales if the only platform you could get your COD fix was on PS3?
 

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subscription based on ps3 only would make COD one of the worst selling franchises.
 

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Quote:
Originally Posted by CoreyM
Going PS3 exclusive would just result in lower game sales.
Indeed, and this has been mentioned before in similar topics, but somewhere there are corporate number crunchers doing the math for this. You may sell fewer units, but if you're able to net all that missing revenue and then some through subscription fees, you may still come out ahead.


Consider if you can get someone to pay a $10/month fee for your game, and that, on average, you can expect a customer to maintain the subscription for a year. That's $120, or equivalent to 2 extra game purchases. Even if you only sell 1/3rd as many copies of the game itself, your net revenue is the same.


Like most gamers, I hate this idea, but it's ultimately up to what the market will sustain. If Activision has such a killer product, why don't they just set the (non-special edition) MSRP at $80 across the board, anyhow?
 

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Quote:
Originally Posted by formulanerd /forum/post/19540418


subscription based on ps3 only would make COD one of the worst selling franchises.

Perhaps now, but I can see Activision trying to using COD exclusives as a bargaining chip for subscriptions when the Nextbox or PS4 is due for release.
 

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If the pay to play service had dedicated servers and steady stream of new content, I would consider it. It would have to be a modest monthly/annual price, and also not require me to buy a new disk every year either.


Something like $10/month, I highly doubt it.
 

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Quote:
Originally Posted by Slordak /forum/post/19540682


Indeed, and this has been mentioned before in similar topics, but somewhere there are corporate number crunchers doing the math for this. You may sell fewer units, but if you're able to net all that missing revenue and then some through subscription fees, you may still come out ahead.


Consider if you can get someone to pay a $10/month fee for your game, and that, on average, you can expect a customer to maintain the subscription for a year. That's $120, or equivalent to 2 extra game purchases. Even if you only sell 1/3rd as many copies of the game itself, your net revenue is the same.


Like most gamers, I hate this idea, but it's ultimately up to what the market will sustain. If Activision has such a killer product, why don't they just set the (non-special edition) MSRP at $80 across the board, anyhow?

Of course with 1/3rd the customer base do future games suffer? And the expectation with paid monthly content is that there will be constant updates so no $20 map packs. No peer to peer hosting either. There will be higher expectations.
 
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