Call of Duty Sales Down 60%, Former Activision CEO Says

Former Activision CEO Bobby Kotick says Call of Duty sales are down over 60% year‑on‑year and points to intense competition (e.g., Battlefield) as evidence the franchise is underperforming; he argues this validates the $69 billion sale of Activision Blizzard to Microsoft. Prior reporting estimated a ~$300 million hit in potential CoD sales after the franchise was added to Xbox Game Pass, and Black Ops 7 has struggled to exceed ~40,000 peak daily concurrent Steam players; Activision has not confirmed Kotick’s figures. The claims raise corporate governance and litigation risks for the deal and imply material revenue pressure on a historically core franchise, which could influence investor views on Activision/Microsoft exposure if corroborated.

Analysis

Market structure: Microsoft (MSFT) is the direct loser if Call of Duty (CoD) unit sales have indeed fallen ~60% Y/Y and Game Pass cannibalization costs ~$300m; console-first publishers (Activision IP owners pre-acquisition) lose per-unit pricing power while subscription platforms gain share. Competitors like Electronic Arts (EA) — beneficiary of Battlefield momentum — can steal short-term active-user share and in-game spend, pressuring MSFT’s gaming margins and leverage in first-person shooters within 1–4 quarters.

Risk assessment: Tail risks include renewed regulatory/legal action (investor litigation or antitrust reconsideration) and a persistent franchise collapse that forces large impairment charges; these are low-probability but high-impact over 6–24 months. Near term (days–weeks) expect elevated implied vol into MSFT earnings (next 30–90 days); medium-term (3–9 months) watch MAU, ARPU, and Steam concurrent thresholds (e.g., Black Ops 7 sustaining <50k peak CCs) as trigger points for reassessment.

Trade implications: Tactical short MSFT exposure (1–2% portfolio) or 3‑month put spreads expresses downside while limiting Vega; pair trade long EA vs short MSFT captures relative share shift over 3–9 months. Rotate away from pure console/AAA publishers into diversified middleware, cloud infra, and mobile/social gaming (reduce headset/console supply-chain longs by 20% relative weight).

Contrarian angles: The market may underweight Game Pass lifetime ARPU and cloud/IP synergies — if MSFT leverages recurring revenue and live ops, recoveries in 6–12 months are plausible. Keep position sizing small (1–2%) and use event windows (earnings, major DLC releases) to add or flip exposure rather than large directional bets.

Key Decisions for Investors

• Establish a 1–1.5% portfolio short position in MSFT via a 3‑month put spread (buy 5% OTM, sell 10% OTM) ahead of MSFT earnings within 60 days; set a hard stop at a 30% premium paid loss and take-profit at 60% of max spread value or MSFT decline of 8–12%.
• Execute a relative-value pair: long 1–1.5% EA (ticker EA) equity vs short 1–1.5% MSFT equity, horizon 3–9 months; exit if EA outperforms by +15% or if MSFT outperforms by +10%, or reweight if Black Ops 7 monthly active users rise above 200k.
• Buy EA 3–6 month 10% OTM call spread (small size 0.5–1%) to capture upside from Battlefield momentum and product cycle, selling into any >25% rally; if EA fails to cross strike within 90 days, close at 50% premium decay.
• Reduce exposure to pure-play console hardware/supply-chain suppliers by trimming 15–25% weight; redeploy into cloud/infra names (e.g., MSFT-adjacent SaaS or GPU/cloud capex beneficiaries) to hedge secular gaming weakness.
• Monitor three quant triggers over next 30–90 days before adding size: (1) MSFT gaming revenue guidance negative by >5% Q/Q; (2) Black Ops 7 sustained Steam peak <50k after 30 days; (3) Game Pass churn rising >2ppt — if two triggers hit, increase short exposure by another 0.5–1%.