Activision Blizzard (ATVI) is betting it has figured out a new way to make money with Call of Duty: Elite -- an add-on to the videogame industry's largest franchise. Elite looks to be social networking with something on the side for the stats freak the company hopes lives in all of us. It's easy to see why the game's reported 20 million players would be interested in this. What is harder to see is why they would pay for it.
Elite, which will cost gamers a monthly fee, has been described as a "dedicated social experience for players." If that seems a little vague it's because the company announced the new product despite having no clear idea of everything in it or how much it will cost. CNET's Daniel Terdiman describes it as well as possible: "[It] will allow players to form groups with just about anyone or clans with their friends, play in leagues, share videos of their best action to Facebook and YouTube, see detailed statistics on game play for themselves or their friends, win prizes."
These seem more like the kind of service enhancements that a company would add to keep existing players interested while also attracting new people. And the company even knows this. That is why it has already said that parts of it will be free.
According to the Wall Street Journal: "You're not going to have to use "Elite" or pay for a subscription in order to play "Call of Duty." For that, you just have to buy the $60 game. And "Elite" isn't charging for multiplayer gaming. In other words, you're not going to have to pay to play your friends online, either."
So what will people be paying approximately $8 a month for? Who knows. What is clear is that Activision is trying to create a new business model for games, a hybrid of the two already in existence. Gamers are usually charged either when they buy the game -- and are allowed to play online for free, or they pay a monthly subscription fee, a la World of Warcraft. Activision's hybrid is clearly better for the company, but it doesn't seem to be offer any value to the customer.
So how can Activision justify charging for a social networking service? The Guardian's Keith Stern answered this perfectly: "Well, Elite will have already cost millions of dollars to set up. Activision has formed a new development studio, Beachhead, to create the system. Berger also stated that the publisher is employing 'a standalone service team to provide worldwide 24/7 customer service for Elite members'. That all costs money."
I wouldn't be in any rush to sign up for this when it comes out. Not because you won't enjoy these add ons, but because in a month or so it's all going to be free.