Call of Duty: Modern Warfare 2, one of the top-selling games of all time, has been a huge boon to its publisher, Activision Blizzard. But on Wednesday, the fate of that game franchise may have taken a bite out of its publisher’s stock price.

In an up market on Wednesday, Activision’s shares fell 3 percent, to $11.90.

Activision has had some tough news of late with regard to Modern Warfare 2. On Monday, Jason West and Vince Zampella, creators of the game, announced that they had formed a new game development studio called Respawn Entertainment in partnership with Electronic Arts, Activision’s rival. The two men were top executives at Infinity Ward, the studio that created Modern Warfare 2.

Other defections have followed. Evan Wilson, an industry analyst with Pacific Crest Securities, said at least nine other employees had left Infinity Ward in the last few days, including top developers.

The defections come a little more than a month after Activision parted ways with Mr. West and Mr. Zampella, accusing them of insubordination for negotiating to work with other publishers, Mr. Wilson said. Activision and the two men are now engaged in lawsuits over, among other things, the fate of the intellectual property behind the Modern Warfare games.

At first, Mr. Wilson said, investors weren’t particularly piqued by the news. After all, developers and publishers can often have tensions over the way revenue is split, or around creative differences.

But Mr. Wilson said the continuing defections this week from Infinity Ward had given investors pause.

“Investors are starting to think Activision really ticked off a whole studio,” Mr. Wilson said.

That is a big deal, he said, because Modern Warfare 2 was not just a hit; it was a major contributor to Activision’s profitability, bringing in some $550 million in the first five days after its introduction in November, and selling some 16 million copies in the fourth quarter, Mr. Wilson estimated.

It is, Mr. Wilson suggested, one of three legs of Activision’s profitability stool, along with World of Warcraft and Guitar Hero.

Michael Pachter, an industry analyst with Wedbush Securities, agreed that investors were reacting to the news, but said he thought they were overreacting. He said Activision should have no trouble replenishing the supply of talent at Infinity Ward, even if Respawn winds up hiring 20 of its employees (it had around 90 full-time employees in November, Mr. Wilson noted).

“It’s not going to kill the brand,” Mr. Pachter said of the defections. But he added: “Competition will hurt the brand.”

Activision could not be reached for comment. Electronic Arts declined to comment.

Activision can continue to put out Call of Duty games and, in fact, already has one in the pipeline and others planned. Not all of the Call of Duty games were even made by the Infinity Ward studio. But Mr. Wilson argued that there was a real prospect the company would not be able to reproduce the talent behind Modern Warfare 2, and the game’s quality, and that was what had investors worried.

More broadly, the economics of the video game industry are changing in a way that make individual development studios increasingly important. That is because it costs so much to develop big games now that the smash hits are essential to finance and they drive publisher economics. In short, the brain trust of a single studio can make a difference.

“There has been a rise of the developer,” Mr. Wilson said.

Source: Richtel, Matt. New York Times. April 14 2010. < http://bits.blogs.nytimes.com/2010/04/14/activision-is-shaken-by-departures/ >

I'm waiting for Respawn Entertainment's first game...

im more waiting to see if west and zampella start to feel the pain of 'migrating to host' publisher...maybe activision was more looking to ensure the quality of the experience for the consumer rather than the hardcore studio? maybe iw just wasn't balanced for that?

either way - whenever you shake a tree - loose nuts or fruits always will fall out

it will be interesting to see how the lawsuit turns out, as the 'respawn' time may be limited if they have no ip - and i will cite dnf and fear as a prime example of what can happen to your 'studio' when lawyers get involved

StrYdeR writes...

Activision were more interested in ensuring the quality of experience for the consumer than IW? What rock have you been hiding under? Its been clear since Kotick took over as head honcho at AVTI that they want to milk the consumer for all its worth, and the recently released court papers detailing West and Zampella's complaints against AVTI make clear that West and Zampella did not feel the direction they were being ordered/forced to take by AVTI did any favours to the credibility of IW as a whole, or what they believed their fans wanted from the studio. Hence why they were looking for the door "out" that lead them to being fired.

As to the question of "IPs", West has made clear that until they form a team, they have no "IP". Many are convinced that Respawn will simply regurgitate the COD franchise. I can tell you, after having submitted my resume to the studio for consideration for a developers job, that the returned letter detailing what they were looking for does not indicate an IP any where near what COD or Modern Warfare stands for. Its still an FPS, but they want to take a completely new direction.

Relevant image of PDF file of the court papers lodged in counter-claim to AVTI's court claims:



Note the discontent on the part of West and Zampella to the "aggresive development schedules" forced upon them by AVTI. They recluctantly signed a MOU in 2008 for the development of MW2, but the continued intrusion by AVTI on their IP and development process made them feel the road had come to an end. So, they started to make it known that they were seeking further sponsorship outside of AVTI, which lead to them being fired for breach of contract - which amounts to breach of confidentiality.

To be honest, I am still finding it hard to care about what happens to IW. As far as I am concerned Infinity Ward were a dead studio the second they decided to develop/release MW2 and I am starting to get tired of seeing the "more people are leaving" news posts, that are mostly written as if it's the sky is melting and it’s the end of the world. I lost interest in anything IW had the moment they started trying to tell me what I should and shouldn’t like.

I am still yet to find any actual statistics on sales, instead of just estimates but I am fairly sure that the departure of "the best game developer ever" won't affect Activision that much. Take away the call of duty series they still have 139 published games under their belt and it doesn't exactly seem like they are slowing down.

It's mostly just the console drones that are upset because there's not going to be a Modern Warfare 3...the end of the Truman show comes to mind. "What do we do now?"

Welshy writes...

Take away the call of duty series and this site is dead in the water. I would guesstimate that 90% of the entire traffic to this site over the last 5 years has been due to the call of duty franchise.

Talk about bite the hand that feeds you.

DemonSeed writes...
enough said

Welshy writes...

And I am aware of your personal bias against me as well. Touche!

Fact remains, take away COD and this site is dead. Individuals like you or I have nothing to do with it. Its a cold hard fact of life.

There are a hell of a lot of people that would not be even known in the moding community had it not been for COD, and yet they try to deny that fact. They try to distance themselves from the game as if it never gave them all the kudos they may presently posses. I say, go find another modding community where no one knows you and ply your trade with them. Try to reinvent yourself and see if your talent wins through.

As for me, I am an unashamed fan of the COD seires. I dont try to bit the hand that has fed me, and I am hopefull and honored that a new studio chocker block full of the talent that has generated one of the all time top FPS games of all time might even consider me for a job.

In other words, I am honest about who and what I am. Others are not.

DemonSeed writes...Not a fact until it happens.
To be more precise, I expect the site to be more quiet. Dead indicates I will shut it down which is not in anyone's plans.

Although there is quite a bit of CoD stuff on this site, I don't anyone to think this site is shutting down if the whole series takes a dump. We'll pick up another set of travelers with another game. SoF is gone and that's where we started.