Actvision, the makers of "Call of Duty: Modern Warfare 3" can now claim the trophy for the biggest video game first-day launch ever--with $400 million in sales, and of over 6.5 million units sold in the U.S. and the U.K. in the 24-hours after the game's release.
The company took a big risk on the launch, which makes up one-third of the company's $4 billion in annual revenue. Activision's strategy is to focus on releasing fewer titles, and banking on each of them being big hits. The "putting most of our eggs in one basket" strategy is a risky one, but one that (at least in the short-term) has paid off for the company.
Activision releases game titles similar to the approach that movie companies releases feature films--hoping for a big launch day, then hyping the big first-day numbers to stimulate immediate follow-on sales.
"We believe the launch of 'Call of Duty: Modern Warfare 3' is the biggest entertainment launch of all time in any medium, and we achieved this record with sales from only two territories," Chief Executive Bobby Kotick said.
This strategy is all well and good, until one of their big title release misses the mark and shatters revenue projections, or when a title can't hype 1st day sales to stimulate follow-on numbers. Risky business, but one with big rewards if it works.
Source: The Wall Street Journal