World of Warcraft has been a veritable gold mine for Blizzard; it's the gift that just keeps on giving. And as much as Activision denies it, CEO Bobby Kotick would love nothing more than to transform the Call of Duty franchise into a similar subscription business. Analysts persist in their belief that a premium Call of Duty subscription plan is coming, and China may be a great way to get it started.
Talking about NetEase, which operates WoW in the region for Activision, Janco Partners analyst Mike Hickey said that Call of Duty could be the perfect way for Activision to enhance its relationship with NetEase and make a boatload of money.
"We expect the Company could extend their relationship with Activision Blizzard, by establishing an additional license to operate Call of Duty Online in China and Blizzards unannounced MMO, which will likely leverage their battle.net platform. The eventuality of COD in China could bring an additional +$50 to +$100 million in sales and +$0.15 to +$0.30 in EPS in its first year of operation," he explained. Hickey added, "We believe the regulatory authorities will approve the last World of Warcraft expansion pack Wrath of the Lich King, potentially driving active paying accounts to over +10 million."
Hickey also noted that there's plenty of room for market growth. "Despite the rapid growth of the online game market in China, now roughly $4 billion, it’s only 40% the size of the U.S. video game software market and less than 20% of the total U.S. game market; suggesting additional room for meaningful expansion," he said.
