Call of Duty vs. Battlefield: How The Industry WinsCall of Duty remains the leader in the shooter market, but EA is confident that it's going to take a chunk away from Activision this fall with Battlefield 3. But is this really about taking share from the competition? Is there enough room for both to succeed, and also for shooter titles like Gears of War 3 and Resistance 3 to succeed?
During his Gamescom talk, Activision Publishing boss Eric Hirshberg said that he believes all the top games can succeed and the overall pie will grow. "I believe that as many great games as this industry can make, that's how many people will buy. I say that not only as the CEO of Activision but also as a gamer," he noted. "This isn't politics. In order for one to win, the other doesn't have to lose... We shouldn't be tearing each other apart fighting for a bigger piece of the pie – we should all be focused on trying to grow a bigger pie. If we as an industry act like there's a finite number of games in the world, then there will be."
In our phone call with Hirshberg this week, we followed up with the executive. Is it really possible that the pie will keep growing and that in a competitive business all these games can succeed without taking share from each other?
"What Hirshberg is trying to say is that if Battlefield 3 sells 10 million units, that doesn't NECESSARILY mean that CoD MW3 will sell fewer units than Black Ops sold."
“I meant what I said at Gamescom. I do believe that the size of people's appetite does respond to the number of quality titles that our industry produces in any genre," he told IndustryGamers. "I do feel that in entertainment and artistic media that great content does increase people's desire. And that doesn't mean that there aren't limited resources and that people don't have to make choices. They do. But I come back to every measurement we have to show engagement with and anticipation for and enthusiasm for our game is incredibly healthy. It's actually unprecedented in its strength. So we're very confident in our game and that's what we're focusing on. If there are other great competitors in the marketplace, like I said at Gamescom, they have my support and I hope they do well."
But how can it be that if EA manages to sell many millions of copies of Battlefield 3 that their game won't negatively affect sales in some way of Modern Warfare 3? Because Hirshberg is essentially right - the shooter pie actually IS growing. IndustryGamers tracked down leading analysts Michael Pachter (Wedbush) and Jesse Divnich (EEDAR) for their respective takes on how the market has evolved.
"The Shooter category has consistently grown since 2001. Over 80 million units were sold in the Shooter category in 2010, worldwide - up from 71 million the year prior, and 68 million in 2008. The Call of Duty series has consistently grown in market share since 2007, and the most recent title, Black Ops, had over 25% share in 2010," began Divnich. "To put it simply, the Call of Duty franchise is outperforming the category's growth, and since release counts have been similar over the year the data would conclude that Call of Duty is both growing the Shooter category while growing its share."
"But the overall pie is definitely growing. With over 85 million Shooter games expected to be sold this year, there is plenty of enough room for both Modern Warfare 3 and Battlefield 3 to succeed."
While it might not be about games taking share from each other, Divnich did note that the huge popularity of the shooter genre could take away somewhat from other categories.
"Also, don't forget that it is not just about stealing share between franchises, but other genres as well. Most gamers prefer a wide array of genres, and when we see strong titles from one genre released in a tight window, it typically results in that category stealing share from adjacent genres," he said. "In the case of Modern Warfare 3 and Battlefield 3, it would imply that sales could come at the cost of games in the Action category."
"To Hirshberg's comments, he is right, it isn't about stealing share, it is about growing the category. The best markets to be in--anywhere--are growing markets, and as those markets mature then one has to then think about how to steal share from competitors. With the Shooter category still growing Activision's mindset is very much closely aligned to the category's expected performance."
Michael Pachter largely agrees and added some context about the actual market size in the shooter category, which should grow by several hundred million this holiday season.
"I think the overall shooter market is around $5 billion annually, and it was probably $3 billion five years ago. So there is no question that it has grown, and is growing. The recent growth of Call of Duty has contributed a lot to overall growth, but what Hirshberg is trying to say is that if Battlefield 3 sells 10 million units, that doesn't NECESSARILY mean that CoD MW3 will sell fewer units than Black Ops sold," Pachter explained. "He's saying that it's possible that BF3 will grow the overall market by the difference between it and Medal of Honor (which sold around 5 million). That would mean the overall market grows by $300 million on a $5 billion base, which is quite reasonable."
He continued, "The $5 billion is made up of a bunch of games, and the games are different every year unless they come out annually. As far as I can remember, the only one that comes out annually is CoD, so the comparison differs from year to year. Gears may take Halo's share, for example. It's impossible to say which game took share from which other game, and the publishers are all counting on the overall pie getting bigger so that they can have a bigger piece, regardless of their percentage share."
And Pachter maintains that both MW3 and BF3 should do pretty well for themselves when it's all said and done.
"I think CoD has a lot of things going for it that make it likely sales will be flat or up this year. The multiplayer network is so strong that a ton of people will buy it solely because their friends buy it; that is something that few other games can boast, and makes CoD growth more predictable than most. The wild card for all of these games is whether or not they are actually GOOD games, and we won't know that for sure until they come out. Everything I've seen suggests that BF3 will be phenomenal, which is why people are speculating about how well it will do. Nobody really knows if CoD will be better or worse than Black Ops (it looks great), but I think they're using the same engine, and the team is pretty good. The reason everyone is fixated on it is that Activision fired West and Zampella, who promptly poached 1/3 of the Infinity Ward team, and that caused Activision to put Sledgehammer on the project. [Glen] Schofield and [Michael] Condrey [at Sledgehammer] are pretty competent developers, have a ton of experience, and my sense is that they will do a great job. But it seems the controversy and anticipation won't end until the NPD numbers are in..."
