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#1: Call of Duty Mobile’s Uncertain Future

Microsoft, which seems poised to win it’s fight with Sony and the FTC in pushing through its Activision Blizzard acquisition, revealed a Call of Duty bombshell last week. In a regulatory filing, the company said the newly developed Call of Duty (CoD) Warzone Mobile, which is currently in soft launch and scheduled to release in late 2023, will eventually supersede and replace the existing Call of Duty Mobile, developed by Tencent’s TiMi, outside of China. 

This announcement comes as part of Microsoft’s response to the remedies suggested by the U.K.’s Competition & Markets Authority (CMA) regulatory body: 

Warzone Mobile features a kind of mix of traditional CoD game modes, including Team Deathmatch and Domination, alongside the titular battle royale modes in which players drop onto an island and compete to be the last team standing. Perhaps more significant is that it would be developed and owned entirely by Activision Blizzard, with Atlanta-based developer Solid State Studios, which Activision acquired in 2021, leading development alongside support from Activision Shanghai, Beenox, Demonware, and Digital Legends.

As shown below, the game also features cross-progression with its console counterparts. This was not the case with CoD Mobile, which was a completely siloed experience. In Warzone Mobile, players will share the same player level, weapon progression,and specific battle pass progress across the most recent Call of Duty titles.

Activision’s Rationale

Though the terms of Activision and Tencent’s revenue share for the existing CoD Mobile are not public, we can assume that a substantial motivating factor here is Activision fully owning its CoD mobile product and receiving the full share of revenue.

There could be growing tensions between Activision and Tencent that may have spurred the decision to shift Warzone Mobile development to internal studios. In attempting to make sense of what led to the closure of Apex Legends Mobile, Deconstructor of Fun wrote earlier this year that “co-development between Chinese and American developers and publishers has proven over the years to be extremely difficult,” citing sources from within its community. 

The cancellation of a mobile World of Warcraft project with NetEase may have been an indication of what was to come, as it was later followed by the termination of Blizzard's 14-year publishing deal in November of last year. NetEase stated “there were material differences on key terms and we could not reach an agreement.” NetEase then doubled down on this decision earlier this year after Blizzard reportedly attempted a six-month extension of the publishing deal, which NetEase ultimately declined after Blizzard failed to find a replacement publisher.

Given the many occasions where Activision Blizzard has failed to reach a sustainable publishing arrangement in China with either Tencent or NetEase, it’s perhaps not surprising Call of Duty should face a similar outcome.

But it also appears Activision is interested in creating a unified Call of Duty ecosystem that exists across PC, console, and mobile. Though cross-play is likely not a part of that strategy (presumably because a mobile experience imposes a lower skill ceiling), cross-progression seems to be the way they are attempting to deliver the experience.

Activision’s co-head of mobile Chris Plummer confirmed this when he told Axios last month, “We just want to make sure that you have that kind of shared continuity… It also gives our community a unified chase, a unified backdrop for conversation.”

Again, in sunsetting of Apex Legends Mobile, EA’s stated reasons sound very similar. CEO Andrew Wilson stated earlier this year in the Q3 2023 earnings call, “As we look at the mobile market, the biggest new launches that are seeing the most success are the ones that are deeply connected to the broader franchise, where there's not always cross-play, but it's certainly cross-progression and a feeling that they are part of a single unified community and a single unified game experience.” 

Is cross-progression that important?

Whilst cross-progression is being touted as a critical requirement, it’s not a very common feature in mobile games, as mobile titles often have no console or PC counterparts. That being said, it is a central pillar of the largest and most successful games of the decade, such as Fortnite, Roblox, and Genshin Impact. 

It’s difficult to say to what extent cross-platform features like cross-progression or cross-play will boost downloads or revenue, but the ability to access Fortnite and Roblox on any platform and connect with players from around the world has certainly played a role in those games’ rise to cultural prominence. By enabling play on mobile devices in particular, these games have been able to reach massive audiences while also tapping into a player base who might not traditionally play mobile games.

Cross-progression and cross-play do seem to be on Activision’s mind, as they have employed the strategy across many games in recent years. Successful attempts include Diablo Immortal and Hearthstone, both of which feature cross-play and cross-progression. Though the company reportedly canceled a World of Warcraft mobile version last year due to “conflict about financing terms” with publishing partner NetEase.

For Warzone Mobile, cross-progression could bring an entirely new audience that the siloed CoD Mobile never tapped: the massive user base of Call of Duty on console and PC (the game has been the best-selling console game in the U.S. for much of the last 15 years). Whilst the mobile experience can’t compare to the full console one, these more hardcore players might see it as a supplementary experience if the mobile variant contributes to progression in the mainline version. Conversely, it could also have the potential to increase sales of console/PC if it succeeds in bringing mobile players across.

Is it risky?

CoD Mobile has been hugely successful, breaking records by amassing over 100 million downloads in the first week. According to data.ai, the game has accumulated 400 million downloads and over $1.2 billion in revenue in its lifetime. So, just how risky is phasing it out so Activision can fully shift resources to Warzone Mobile and potentially build a better ecosystem?

According to data.ai, in the last year paid downloads for CoD Mobile made up an average of around 10% of total downloads on Android and iOS, but resulted in no apparent effect on overall downloads. In recent months, paid installs appear to have effectively ceased entirely. 

This would suggest the Call of Duty brand name is proving enough to drive traffic towards the title through search results alone. While it wouldn’t be surprising to see downloads take a small hit as the transition between CoD Mobile and Warzone Mobile begins, it appears that organic downloads might be enough to sustain them. And although Activision claimed on Monday it would continue to support CoD Mobile, this drop in UA could signal an intent to transition UA efforts to Warzone Mobile. Activision's stated commitment to sustain CoD Mobile is more likely a way to help keep interest in the game alive — and revenue flowing — while the transition takes place, although there is also the distinct possibility Activision intends to operate both simultaneously for some time before deciding to wind down CoD Mobile for good. 

Because Warzone Mobile is an entirely new title, as of writing nothing has been announced to suggest that progression will carry over from the old CoD Mobile to this new title. Though Activision has said it will continue to support CoD Mobile, if they do successfully push new users towards Warzone Mobile through UA, then CoD Mobile will see its player base start to dwindle. That in turn could increase matchmaking times and also disincentivize players to invest time and money into the title, pushing players to Warzone Mobile at a higher rate. Ultimately, any player who has spent money and time on CoD Mobile should eventually expect to start fresh with Warzone Mobile.

Is the risk worth the reward?

The central question now is whether existing players migrate to Warzone Mobile and how Activision Blizzard incentivizes players to make the jump. Without the existing CoD Mobile base, Activision Blizzard runs the risk of losing its most dedicated players (and biggest spenders) it’s accumulated over the past three years, not to mention the difficulty of trying to build an all-new player base and convert that group into paying users. This could prove a difficult task given the ongoing struggles of the mobile market, which some industry analysts fear might continue declining this year as it did for the first time in 2022.

CoD Mobile has managed to stay afloat almost entirely on organic downloads alone. Yet if Activision wants to scale Warzone Mobile to reach the same heights, the company faces considerable challenges in UA in today’s market compared to when CoD Mobile first released. Regardless, it seems Activision Blizzard is betting big on building a broader, self-owned Call of Duty ecosystem, a bet that might pay off if it succeeds in bringing mainline console and PC players into the mobile fold and organic growth is enough to rebuild the user base.

Game Launch Radar

#1: Street Fighter: Duel

• Publisher: Tencent / Crunchyroll Games
• Developer: Topjoy / Capcom
• State: Global Launch
• Territories: Worldwide (Previously China-only)
• Classification: RPG | Team Battle
• Quick thoughts:
  • Street: Fighter Duel, first released by Tencent exclusively in China back in 2020 but now available globally via Crunchyroll Games, is team-based auto-battler with gacha mechanics and gameplay similar to that of Star Wars: Galaxy of Heroes and AFK Arena. You can watch a gameplay video here.
  • The core gameplay features a 3v3 auto-battle system, with one extra fighter that tags in after one of your fighters is knocked out). Over time your team builds a power meter that triggers a “combo,” which is a sequence of special power moves each fighter on your team executes in succession.
    • This combo system is unique and brings a ton of depth to the gameplay. We won’t spend too much time geeking out about it , but each fighter’s power move is different depending on where in the sequence they execute the move.
    • These combos are set up prior to the fight and can have a massive impact on the outcome of the battle. 
    • The game even provides “Special Missions,” a sort of puzzle that involves selecting the right fighters from a pre-prepared list and building the correct sequence of power moves.
  • Players can earn fighters from gacha pulls that come with different “grades” ranging from C (the lowest) to SSS+1. This grade affects the fighter's overall power capacity. Dupe fighters can be combined to upgrade other fighters to higher grades.
    • Each fighter has a different “faction” that feeds into a typical rock-paper-scissors type advantage system (and additional special factions that break this rule). Each fighter also has a class and type that makes them an “attack,” “tank”, “support,” etc. fighter.
    • Fighters are upgraded using various resources and currencies, with higher levels unlocking new power moves and abilities.
    • Team setups come with different bonuses that reward the player for incorporating a variety of fighter types on their team. This creates an interesting tension that results in players striking a balance between having a type advantage and having enough variety to gain these buffs.
  • Everything about this game sings Street Fighter. The UI is incredibly polished, the fight animations are all pulled directly from the mainline series, and the sound design is excellent. This feels like a Street Fighter game through and through, even though it is an auto-battler.
  • It also hosts an impressive list of different game modes that are featured as part of limited-time events that change week to week. Most of these involve a different way to progress through the mode in different ways, but still involve the core auto-battle gameplay. The few that I’ve encountered so far range from a draft pick mode, to a mode where your team sits in a little car and has to drive through a map to find the entrance. There is a huge variety and it keeps gameplay feeling really fresh.
  • Early numbers are looking strong, according to data.ai:
    • Whilst the game was released in Eastern markets in 202l, its worldwide release brought 11 million downloads across Android and iOS in its first week. The download growth has now cooled, and the game is seeing an average of around 150,000 downloads a day while active users have remained steady at around 2.5 million. 
    • The game has pulled in $3 million in revenue since a launch across both platforms. Unlike downloads, revenue has actually increased steadily since launch. It’s too early to look at retention figures as of writing but the game appears to be keeping players it amassed on launch hooked and converting them successfully.

#2: The Lord of the Rings: Heroes of Middle Earth

• Publisher: Electronic Arts
• Developer: EA Capital Games
• State: Soft Launch
• Territories: Australia, Austria
• Classification: RPG | Team Battle
• Quick thoughts:
  • LOTR: Heroes of Middle Earth is a team-based, turn-based battler that shares a lot of similarities with EA Mobile darling Star Wars: Galaxy of Heroes, which is also developed by Capital Games. Clearly, EA is hoping to replicate the same success with its spin on the Lord of the Rings IP.
    • The narrative involves the player helping a new character called Eärendil, who is a sort of time-traveler who observes the world of LOTR as a “storyline” that is being “corrupted” by a mysterious dark force.
    • This setup helps the game explain why the player can control both good and bad characters, play out “what if?” style scenarios, and build team comps that wouldn’t typically make sense in the actual LOTR plot. 
  • Gameplay involves teams of five taking turns in attacking one another. Special abilities power up over time and can be used instead of a regular attack. Players must progress through waves of enemies to complete a level, with levels making up campaigns that players progress through. You can watch a gameplay video here.
  • Characters can be leveled up using character shards and can have their stats further improved by equipping gear. Abilities can also be upgraded using the game’s main soft currency.
  • Overall, the game is feeling pretty underwhelming and undercooked. It’s not possible to see numbers just yet, but there’s nothing about it that feels particularly unique when compared to genre leaders Marvel Strike Force or Star Wars: Galaxy of Heroes. 
  • The more cartoonish art style may polarize LOTR fans, and we’ll have to wait and see if it finds an audience with mobile players also well-versed in the IP.
  • The UI generally feels messy and unfinished as well, while character dialogue in between levels feels particularly bland.

Other Game Announcements

• Niantic’s Peridot launches worldwide on May 9th. Link
• Second Life is heading to mobile devices. Link
• Honor of Kings becomes Brazil’s most successful free mobile game. Link
• Vampire Survivors mobile hits 5 million downloads. Link
• Paper Trail is coming to mobile through Netflix Games. Link
• Sin Chronicle shutting down after only one year in service. Link 
• Ragnarok Origins hits 500,000 pre-registrations. Link
• Flexion launches Vikingard on alternative app stores. Link

Company Announcements

• Playtika takes potshots at Candy Crush with new Best Fiends ad campaign. Link
• Unity Report: More players are turning to mobile, but paying less. Link
• Dragon Mania Legends studio Gameloft Budapest to close, 88 staff affected. Link
• Supersonic passes 3.4 billion downloads in three years. Link
• Sybo appoints new CMO Philip Hickey. Link
• Anything World partners with Unreal Engine to expand animation and 3D modeling. Link
• S8UL partners with Krafton to launch Road to Valor: Empires in India. Link

Ecosystem Announcements

• Silicon Valley Bank’s collapse originally left gaming companies like Roblox and Huuuge wondering if they’d get access to some of their cash. Fortunately, the US government has backstopped depositors, so the banking crisis is averted (for now). Link
• In a response to the CMA, the UK’s antitrust regulatory body, Microsoft emphasized the importance of mobile in the Activision Blizzard deal (including its desire to not have to divest mobile assets). This suggests that Microsoft aims to take its ecosystem more cross-platform at some point, a notable step for a leading console company. Link
• AppsFlyer reported that India saw a 32% increase in hypercasual downloads in 2022. However, given the number of companies evolving from hypercasual to hybridcasual, we’ll see if that sticks over 2023. Link
• CEO of Epic Games, Tim Sweeney, noted that the Epic Games Store has mobile storefront apps ready to go for both iOS and Android. It’s just a question of if or when legislation forces the mobile giants, Apple in particular, to better support third party app stores. Link

Content Worth Consuming

• Analyst Bulletin: Mobile Game Market Review February 2023 (GameRefinery). “As we delve deeper into 2023, the mobile market continues to move full-steam ahead with more major titles hoping to hold players’ attention with additional gameplay modes. Marvel Snap, X-Hero, QQ Speed, and Harry Potter: Magic Awakened all implemented a variety of new mechanics during February, including PvP battles, roguelite elements, home features, and minigames.” Link
• Alvaro Duarte: Voodoo’s Ongoing Evolution (Naavik Gaming Podcast). “In this episode, Alvaro Duarte – VP of Casual Games at Voodoo – joins Naavik co-founder Aaron Bush to discuss the shift from hypercasual to hybridcasual, and how Voodoo’s culture is designed for it to move fast, try many things, and support several internal and external teams.” Link
• Istanbul Gaming Summit (Deconstructor of Fun & Google). “Istanbul Gaming Summit is a one-day hybrid moment produced by Google in partnership with Deconstructor of Fun. Join us today to explore premium insights on the future landscape of Gaming, discover top-notch strategies and practical advice to level up your growth plan, and find out the latest news about Google tools and solutions.” Link
• Arseny Lebedev - Life of a Gaming Studio CEO (Elite Game Developers). “With 15 years in the games industry, Arseny Lebedev is the co-founder and CEO at Original Games (makers of Merge Inn) where he focuses on product and strategy. In this episode, we discuss building games, managing stress, and why some people are geared toward entrepreneurship.” Link
• The App Store’s Original Flaw (Mobile Dev Memo). “This paper finds that total advertising expenditure as a percentage of GDP in the US has remained roughly stable since the 1960s, across a number of measures of advertising expenditure. Advertising’s role in the global economy is persistent and substantial.” Link

A big thanks to Jack Sinclair for writing this update! If Naavik can be of help as you build to fund games, please reach out.