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Microsoft (NASDAQ:MSFT) will release the latest installment of its Call of Duty video game series on its Xbox Game Pass subscription service, marking a major shift for the lucrative entertainment property.
Call of Duty is one of the most successful video game titles ever, generating over $30 billion in lifetime revenue, with more than 425 million copies sold. In recent years, the game has fetched a premium price of $70 for each copy.
Microsoft (MSFT) acquired the first-person shooter game franchise through its $69 billion acquisition of Activision Blizzard, which closed last year.
The Redmond, Washington giant has pivoted away from the traditional “console wars” with Sony (SONY) and Nintendo (OTCPK:NTDOY), focusing instead on boosting numbers for its Game Pass subscription service, which has garnered over 34 million subscribers.
Microsoft’s (MSFT) Netflix-style subscription service costs $9.99 to $16.99 a month, and lets users play hundreds of games from numerous publishers. The company has aggressively sought to increase the number of games offered through the service and releases all of its first-party games on Game Pass on day one.
According to Wedbush Securities analyst Michael Pachter, Microsoft (MSFT) could lose sales of around $300 million or so with no meaningful reduction in costs. The company could lose sales of about 3 – 4 million units, possibly as high as 5 million, Pachter added.
“In order to offset this, they would have to attract at least 2 million incremental subscribers at $15 per month, but realistically, many (if not all) of these are people who would have otherwise purchased the game, increasing the loss of game sales. Most likely, they would have to add around 4 million subscribers to ‘break even'”, said Pachter.