Microsoft bets on latest ‘Call of Duty’ to power up video games strategy

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Microsoft is seeking to boost its video games business with the release of the latest instalment of the Call of Duty franchise on Friday, pushing to increase subscription revenues through the new game to offset falling Xbox console sales.

Black Ops 6 is the first of the best-selling series to be launched on the tech giant’s Game Pass subscription service. It represents the biggest test of the company’s gaming strategy since its $75bn deal to acquire Activision Blizzard — makers of Call of Duty — received sign-off from regulators last year.

Microsoft hopes that the release will help achieve its target of reaching 110mn Game Pass subscribers by 2030, a substantial rise from 34mn in February this year.

The company has shifted its focus towards its subscription games service as hardware sales have slowed in recent years. Xbox hardware revenue fell 13 per cent year-on-year in Microsoft’s fiscal 2024, which ended in June.

For the first time this year, subscribers to Game Pass, who can already access a growing library of Xbox titles for as long as they keep paying a monthly fee, will be able to access the latest Call of Duty without having to pay a traditional price of $70 or more for the packaged game.

Microsoft is still making the game available to buy on PlayStation, after concerns from regulators during the Activision merger probe that it might make the title exclusive to its own platform.

The company has sought to maximise Game Pass revenue from the release of Black Ops 6. In July the service’s monthly fee increased by 18 per cent in the US, 15 per cent in the UK and 20 per cent in Europe.

A cheaper “standard” tier was created for new customers with fewer benefits than the premium “Game Pass Ultimate” offering. Users of the lesser tier will not be able to immediately play Black Ops 6 and their access to a number of other games has been removed.

Microsoft also removed a two-week $1 Game Pass trial on October 8, preventing gamers from getting temporary cut-price access to Black Ops 6, a move employed last year before the release of space exploration game Starfield.

The US Federal Trade Commission, which failed in its effort to block the Activision takeover, described the price and tier changes as “product degradation” in a recent filing. Microsoft called the FTC’s criticism as “a misleading, extra-record account of the facts”.

Piers Harding-Rolls, analyst at Ampere Analysis, described Microsoft’s altered strategy as a “big bet” but estimated that the launch of Black Ops 6 would lead directly to a further 2-2.5mn Game Pass Ultimate subscribers. Ampere projects that there will be roughly 23mn Ultimate subscribers by the end of 2024.

“From Microsoft’s point of view this is the whole point of acquiring Activision Blizzard, getting hold of these franchises to scale revenue from those big franchises,” said Harding-Rolls.

Expectations are high for the first-person shooter game after the previous iteration Modern Warfare III was received poorly by users and critics. However, Black Ops 6 has topped Sony’s rival PlayStation Store pre-order chart since the release date was announced in June.

The game lands following a dearth of new blockbuster releases over the past year, with Chinese action hit Black Myth: Wukong and Sony’s Astro Bot among the few exceptions.

Market researcher Newzoo predicts that while the overall video gaming market will grow by around 2 per cent to $187.7bn in 2024, console revenues will fall by 1 per cent to $51.9bn.

That has put pressure on hardware platforms, as the current generation of games consoles approaches its end.

In August, Nintendo said that sales of its seven-year-old Switch fell by almost half in the quarter ending in June, as it struggled to match the success of 2023’s Legend of Zelda game, while Sony said PlayStation 5 unit sales were down by a quarter year on year. However, Sony said growth in its own subscription gaming service, PlayStation Plus, helped to offset the drop in hardware and software sales.

Microsoft declined to comment.

Additional reporting by Tim Bradshaw in London