By Ian Sherr
Consumers in the U.S. frequently line up to pay $60 apiece for
each year's installment of Activision Blizzard Inc.'s (ATVI)
biggest franchise, "Call of Duty." But when the venerable
war-simulation shooting game reaches China's shores later this
year, Activision is taking a different tack: giving it away for
free.
The Santa Monica, Calif., company is responding to the
peculiarities of the fast-growing Chinese market, where game
consoles barely have a presence and people typically play
videogames in PC-laden Internet cafes--often in free games that are
supported by sales of virtual goods.
In this case, Activision will try to make money on its free
"Call of Duty" by selling items to help users play the game, such
as enhancements for their weapons or extra gear. But the China
version is not simply a rehash of existing titles.
The company says this version is completely new, with a
different design and storyline that took two years to produce.
Activision created the game at a studio in China to ensure it would
appeal to gamers' tastes there, said Bobby Kotick, Activision's
chief executive.
"The game is incredible," he said. "How you play, what you play,
customization of weapons, the types of characters, the equipment
you use, the game modes, and the maps are all unique to the Chinese
market."
The game is being fine-tuned for the PCs gamers use in China's
Internet cafes, the company says. And while there will be an
intricate storyline for the game--as is typical with many games
from the series--Activision also is including the popular
multiplayer options, with specialized digital shootout locations
that were designed with Chinese players in mind.
Activision invested about the same amount of money producing
"Call of Duty" for China as it does for one of the installments in
the U.S., Mr. Kotick said. Analysts estimate the games cost at
least $50 million to produce each year.
The move is a risky one, analysts say, because Chinese consumers
are so different from those in the western world. But the market is
large and growing, representing an important opportunity.
"No one's done it really well yet," said Michael Pachter,
analyst at Wedbush Securities. He said many Chinese gamers have
grown accustomed to buying virtual goods in lower-quality games.
So, it's possible they might be willing to pay even more in a game
with higher production values. In addition, he said, war-simulation
shooting games have become popular there, creating an inroad for
the "Call of Duty" games. "It's a good experiment and a worthy
one."
Recreating the game for the Chinese market, using a Chinese
studio, also will likely help draw customers. The game will be
marketed with a slightly different title: "Call of Duty
Online."
"You can't simply go into China, open the doors, and say 'Here's
our product, go play it'," said Edward Williams, analyst at BMO
Capital Markets. He added that many game makers tend to release
games in pieces over there, creating the basic struts of the game
at first and then filling it in as more people play.
"If you start off with as big a budget as a traditional console
game and hope you generate enough money, there's a substantial
amount of risk," he said.
The move is not Activision's first in China. The company inked a
deal to bring its "World of Warcraft" online fantasy game to China
seven years ago.
But "Call of Duty" is an even more lucrative franchise, drawing
throngs of excited fans to launches that typically come during the
holiday shopping season in the U.S. The latest installment, "Modern
Warfare 3," in which gamers play soldiers from various countries
shooting through firefights around the globe, sold about 6.5
million copies in its first 24 hours, grossing more than $400
million, making it one of the biggest videogame launches ever.
Activision's Mr. Kotick said he believes the time and effort put
into tailoring the game for the Chinese market will help to cement
its success there, too.
To help bring the game to market, Activision signed a multiyear
agreement with Tencent Holdings Ltd. (0700.HK), a popular Internet
company in China that offers games, social networking and
e-commerce.
Martin Lau, Tencent's president, said his company was devoting
"substantial" resources toward promoting the game, though he
declined to say how much. But, he said, the title will be
positioned as a star product in the company's game lineup.
He added that while "first-person" shooting games--called such
because the player experiences the game as if he or she is looking
through the main character's eyes--are a large and mature market in
the U.S., these types of games are still a nascent genre in China
and have a lot of potential to grow.
"'Call of Duty' has established itself as the gold-standard in
gaming for years," he said. "We believe its online version will be
very well-received by gamers in China."
The game will go into public testing later this year, following
regulatory reviews.
Write to Ian Sherr at ian.sherr@dowjones.com
Order free Annual Report for Activision Blizzard, Inc.
Visit http://djnewswires.ar.wilink.com/?link=ATVI or call
1-888-301-0513
Order free Annual Report for Vivendi SA
Visit http://djnewswires.ar.wilink.com/?link=VIVEF or call
1-888-301-0513