Analyst: Activision Could Announce Subscription Plans For CoD, StarCraft II By Year's End

Activision's new software has been weak at retail and it's once-vital music game business is no longer performing -- but some $60 million in potential Modern Warfare DLC sales during its first fiscal quarter may point to online business as the publisher's best revenue gold mine. And that means subscriptions are coming up, says Wedbush analyst Michael Pachter. "Activision could grow earnings meaningfully by monetizing Modern Warfare 2 online multiplayer," says Pachter. "We estimate that the number of hours spent playing MW2 online is roughly 4 billion combined on Xbox Live and PSN, suggesting a large revenue opportunity. We expect the company to announce plans to monetize online multiplayer content in MW, Black Ops, StarCraft II and other games before year-end." Such a move could explode the company's share price; "investors attribute high value to recurring revenue," says Pachter. And the impact of the drama and instability surrounding the Call of Duty brand and the Infinity Ward studio seems to have passed, he adds -- "most of the negative news (including the Infinity Ward departures) is behind the company," he notes. Late last week came predictions from another analyst, Janco Partners' Mike Hickey, that Activision could soon try out a subscription model for Modern Warfare in China -- and in so doing, create $50-$100 million in first-year sales for Chinese online partner Netease. Activision has never directly stated plans for a subscription service for the game in either China or the West, but the company's stance on pursuing online monetization options has always been forthright; CEO Bobby Kotick has estimated 70 percent of the company's operating profit comes from "non-console-based video games."