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Premium Call of Duty content could go free - Pachter

Analyst says new CoD studio Beachhead may operate "as a loss leader"

Wedbush analyst Michael Pachter believes new Call of Duty studio Beachhead may operate as a "loss leader", as Activision looks to cement the franchise's market leading position in the FPS genre.

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Activision said earlier this month that Beachhead "will lead the creation of our all-new digital platform for the Call of Duty franchise", creating "a best-in-class online community, exclusive content and a suite of services for our Call of Duty fans to supercharge the online gaming experience like never before".

In a research note today, Pachter said Activision may decide not to charge for Call of Duty multiplayer services - he previously predicted it would - and that it could even offer some "must have" new features free of charge.

"We have long believed that Activision would begin to offer a premium multiplayer experience for its Call of Duty brand, beginning early in 2011," Pachter said. "With the company's recent announcement of Project Beachhead, it acknowledged that such a premium service is in the works, but details about pricing were not provided.

"Given the surprising strength of each successive version of Call of Duty over the last few years, we now think it is possible that Activision will use its premium service as a loss leader, providing the service for free to create a more formidable barrier to entry by its competitors; we think it is possible that Project Beachhead will incorporate 'must have' features that will serve to drive ever-increasing sales of each annual Call of Duty instalment, encouraging all of the multiplayer consumers to purchase the next version on launch date."

"As such," Pachter added, "we think it is possible that Activision will not charge for multiplayer, provided that the company believes it can sustain sales of Call of Duty at the 20 million unit level annually."

"We do not believe that every feature of Project Beachhead will be offered for free, but it is clear to us from the company's statements early in February that it considers Call of Duty a crown jewel in the Activision portfolio that is to be protected at all costs, and equally clear that competitor Electronic Arts intends to capture some market share with this year's version of Battlefield Bad Company."

EA CEO John Riccitiello has made no secret of his company's plans to wrestle market share from Activision in the FPS genre, going as far as to claim that Battlefield 3 will be the best game released in 2011.

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