Microsoft has confirmed that the upcoming annual Call of Duty (CoD) premium release will enter its Game Pass multi-game subscription service at launch. This promises to boost interest in Game Pass and disrupt Sony’s full game business, but by how much? While it’s challenging to predict the specific commercial impact, Activision’s product strategy, and the agreements made during its acquisition by Microsoft, mean the impact will not be as far reaching as it might have been in the past.

Microsoft follows through with well-established strategy

Microsoft’s decision to put all first-party games releases directly into Game Pass was a watershed moment for multi-game subscription services and propelled the service to more significant consumer adoption over the subsequent years. 

Following the huge cost of Activision Blizzard’s acquisition, there was some speculation around whether its biggest franchise, Call of Duty, would make it day-and-date into Game Pass. Realistically, it would be difficult for Microsoft to row back on this key policy either by windowing the inclusion of the game or placing the game behind a more expensive subscription paywall. This would have undermined the positioning of Game Pass and weakened its appeal significantly.    

Adding new Call of Duty releases to the service will attract entirely new and lapsed subscribers to Game Pass. We expect most of those new subscribers to be at the Ultimate and PC Game Pass tiers. There is no doubt that adding the latest upcoming instalment, Call of Duty Black Ops 6, to Game Pass at launch, will be expensive, at least initially, for Microsoft. But a number of factors will reduce the costs associated by such a move, while still maximising the positive impact on subscription numbers:

• As an online game, inclusion of CoD will drive upsell to Game Pass Ultimate from Game Pass Console generating higher ARPU 
• The potential to offer early access to those who buy the premium/ultimate edition of the game, including those who upgrade having accessed the standard version of the game through Game Pass. This strategy worked well during the launch of Starfield in 2023 and, if used again, will boost premium revenue streams at launch 
• CoD is now predominantly a live service game that monetises strongly in-game. Microsoft will be trading premium full-game sales in exchange for a bigger audience that can be monetised in-game instead
• As part of the conditions of buying Activision Blizzard, Microsoft agreed to allow third-party cloud gaming service providers access to future CoD games at launch. While third-party multi-game subscription services – such as Sony’s PS Plus - are very unlikely to be able to afford the licensing costs of such a move, Microsoft’s strategy will be exposing more gamers to the franchise via bring-your-own-game services such as Nvidia’s GeForce Now. 

Sony will be commercially disrupted, but F2P and live-service attributes lessen the blow 

PlayStation CoD gamers will inevitably be disrupted to an extent and that will be a concern for Sony. At its recent annual Business Segment meeting, Sony highlighted that CoD was one of ten major franchises that made up over 50% of its storefront revenue over the last three fiscal years. 

However, the live-service nature of CoD and its very popular free-to-play (F2P) mode Warzone means the disruption will not be as significant as it might have been in the past, when all revenue from a content point of view was centred on premium sales. Ampere’s data shows that Call of Duty HQ (the launcher covering Modern Warfare III, Modern Warfare II and Warzone) has consistently high monthly active users of between 22m-26m across PlayStation, Xbox and Steam.

Those who own both Xbox and PS consoles may be swayed to play the game on Microsoft’s devices, but cross-platform play and multi-platform accounts mean this is not necessarily a permanent decision. Indeed, there could be a scenario where PlayStation-first multi-console gamers switch to Xbox to play the premium campaign while still playing F2P Warzone on their preferred console under a single Activision account. Ampere’s consumer data shows ownership overlap between the disc-based PS5 and Xbox Series X in the US is around 35% for 16-64-year-olds, so the numbers here could be significant. 

Those CoD gamers that have yet to upgrade to the latest generation of consoles and are ready to invest, will look more favourably on the Xbox Series offer. This will not have a major impact on current console sales trends, but it will influence a small share of buyers as they assess the advantages and disadvantages of the respective platforms. It’s worth noting that CoD gamers are fairly high games content, service and accessories spenders, and adding more of those to Xbox will be a boost for the lifetime revenues of Microsoft’s player base.