The layering of a monetised premium service model on top of gaming's most powerful packaged franchise is a response to the current market and industry dynamics faced by traditional games publishers. On one side, packaged games still represent a major proportion of revenues for the major publishers, but while this business still needs to be maintained to deliver business scale, on the other side publishers are also expected to tap higher growth digital opportunities. This can be done by entering new markets through acquisition, but can also be delivered through the evolution of appropriate well established packaged IP into digital opportunities. The Call of Duty franchise is well positioned to be taken through this transition and with the introduction of the CoD: Elite premium subscription service, Activision Blizzard now stands straddling both the packaged and digital opportunities, with the flexibility to evolve its digital offerings in line with consumer demand. We expect the Elite offering to develop considerably over time as consumers align themselves increasingly with digital offerings.

The historical performance of the Call of Duty franchise illustrates that extending a title's lifespan with downloadable map packs can certainly be lucrative, but also serves another key purpose: retention of user attention. The increasing value of map pack sales points to important trend that Call of Duty has been slowly adapting to during its six years of service on HD consoles. Drip-feeds of new content allows audiences to refresh their relationship with the core product, maintaining momentum between the releases of new instalments in the series. The CoD: Elite social layer is an inevitable progression of this idea, tying dedicated users into a persistent, higher-level relationship with the franchise, while also luring in the remainder of regular users with value-added services and a bulk-buy reduction on purchases from the future DLC catalogue. Microsoft's Gears of War 3, another significant online-shooter experience but one that's not perhaps in direct competition with Call of Duty, is similarly trialling a 'season pass', a one-off $30 commitment that represents a 33% discount on pipeline of upcoming DLC for the title.

The arrival of CoD: Elite is particularly timely given the competitive landscape in the multiplayer military-shooter stakes. The next instalment in the series, Modern Warfare 3, arrives in early November, on PC, PS3 and Xbox 360. Most pressingly, EA's Battlefield 3 has been building itself an energetic reputation in the past few months, and launches within the same window as Modern Warfare 3. CoD: Elite is a vital tool in this emerging battleground of digital content and connectivity. IHS Screen Digest doesn't doubt that Modern Warfare 3 will outsell Battlefield 3, given its superior cachet and establishment. But the critical question here isn't limited to the tit-for-tat of first day/week unit sales. This is a longer-term tussle for retention, and the extent to which EA can encroach upon Call of Duty's turf will be better measured by how effectively and for how long player loyalty can be cultivated.

Further, and not quite so close to home, team-deathmatch shooters on PC with a realistic military bent are slowly growing in quantity and popularity (such as Nexon's Combat Arms). As these online, free-to-play experiences become more advanced and accepted across the globe, they will provide creeping competition for Call of Duty from a service-oriented, rather than product-oriented, direction.