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Analysis: How  Call Of Duty  DLC Boosts Revenue, Publicity

Analysis: How Call Of Duty DLC Boosts Revenue, Publicity

October 21, 2009 | By Matt Matthews, Staff

October 21, 2009 | By Matt Matthews, Staff
More: Console/PC

[In this NPD analysis, part of our monthly extended look at U.S. console retail sales, Gamasutra examines DLC for Activision's Call Of Duty: World At War, calculating that the average WaW game owner has spent $9 on DLC, taking average sales per customer to $65.]

Analysts and gamers alike anticipate that Activision Blizzard's Call of Duty: Modern Warfare 2 will set the charts on fire in November of this year.

We've selected its immediate predecessor - Call of Duty: World at War - as an example of how well a strong retail game can extend its revenue stream beyond the initial purchase.

According to exclusive U.S. sales data provided by the NPD Group, the Xbox 360 and PlayStation 3 versions of World at War have sold for an average $56 since the game's launch in November 2008.

Moreover, Activision Blizzard has published three Map Packs as paid downloadable content (DLC) in March, June, and August of this year. Each pack sells for $10 and as of mid-August the latest figures revealed that 6.5 million map packs had been downloaded by consumers worldwide.

We spoke with our colleague, Jesse Divnich of EEDAR, about how we might estimate the number of World at War DLC purchases in the U.S. According to Divnich, "59% of Call of Duty: World at War retail sales occurred in the United States."

Elaborating further, he added that Xbox 360 owners and North American consumers more generally are more likely to purchase DLC. Based on those figures, Divnich said that 65% of all World at War map packs could easily have been sold to U.S. owners.

Including sales since August 2009, we expect that World at War map packs have now reached nearly 7 million units worldwide. Assuming that 65% of those sales were inside the U.S. at $10 each, we estimate that Activision Blizzard could have realized an additional $45 million in revenue on top of retail sales of Call of Duty: World at War on just the Xbox 360 and PlayStation 3.

However, the DLC revenue is different from retail revenue because it more closely resembles the publisher selling directly to the consumer with greatly reduced overhead and a higher margin.

Not only is there no physical product to be manufactured and shipped, but retailers simply aren't an issue. There are, however, some network fees incurred when distributing through Microsoft's Xbox Live service or Sony's PlayStation Network.

(In addition, publishers like DLC because it offers an opportunity to re-promote the game, also meaning incremental additional sales as people consider purchasing it to play the downloadable content.)

We estimate that in the U.S. the average PS3 and Xbox 360 Call of Duty: World at War consumer has paid approximately $65 for the game. This takes into account the PS3 and Xbox 360 consumers who bought only the game along with those who bought one or more map packs. In effect, the DLC sales have increased the revenue per software unit by 15%.

There are several assumptions we've made along the way. First, we have neglected Windows PC sales of Call of Duty: World at War. While the retail sales figures we have cited did not include that version of the game, it is not perfectly clear whether those figures were included in the map pack download totals that Activision Blizzard publicized. We don't believe so, but cannot be positive.

If one must consider Windows PC sales, the situation becomes even more difficult to track since that version of the game was sold at retail and through both Valve's Steam and IGN's Direct2Drive digital distribution systems.

With Modern Warfare 2 expected to best World at War's 11 million units in sales, it seems certain that consumers will again be tempted with paid DLC throughout 2010 as Activision Blizzard attempts to maximize its revenue per sale.

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