Infinity Ward ousters a 'risk,' could endanger Modern Warfare 2 DLC - Analysts

Studio heads' departure has Janney's Shawn Milne and Broadpoint's Schachter worried about brain drain--but both are sanguine about long-term effects, urge buy of shares cheapened by upheaval.

The past 24 hours have seen game-industry headlines dominated by the apparent firing of Infinity Ward cofounders president Jason West and CEO Vince Zampella. Though Activision has not confirmed the pair as the unnamed developers it accuses of breach of contract in an SEC filing, analysts are already weighing in on the fallout from their departure from the Call of Duty: Modern Warfare 2 studio.

In the short term, Broadpoint AmTech's Ben Schachter believes Activision's stock price may take a hit on a wave of "negative" news. "We expect the very vocal gaming press to put the story front and center," he said in a note this morning. "The headlines will likely be ugly."

Analysts are urging traders to scoop up Activision shares brought down by the Infinity Ward turmoil.

He went on to point out that "disruptions at Infinity Ward could, however, affect quality/timing of the downloadable content (DLC) for Modern Warfare 2 (which we estimate could contribute $0.03 -$0.04 in 2010 earnings per share). However, it is unclear at this point what the extent of the impact, if any, on the DLC will be."

Both Schachter and Janney Capital Markets' Shawn Milne agree that the Infinity Ward executive exits will have no effect on the Call of Duty title Activision has said it will release before year's end. Almost certainly developed by Treyarch (Call of Duty: World at War), the game is widely believed to be set during the Vietnam War or Cold War.

The pair also is concerned that the West/Zampella departures could be the first thread pulled from Infinity Ward's fraying cloth. "In the end, what will matter for investors is if the core Infinity Ward studio holds together or if the departure of key executives will lead to further turmoil within the studio," summarized Schachter. "Clearly, having the top developers leave is a new risk," said Milne. "A greater risk would be whether or not the two heads end up taking more talent away from Activision, or the whole team leaves."

Milne, however, believes that "Activision has specific employment contracts for other key personnel at Infinity Ward" that would prevent a hemorrhage of talent. "Moreover, given Activision's studio compensation model (based on franchise profitability), we would believe there would be no shortage of top development talent looking to work on such a valuable brand."

In the end, both analysts are maintaining their "buy" rating for Activision and urging their clients to scoop up more of the company's stock, should it slip in trading today. As of press time, Activision shares were down 1.01 percent, having fallen $0.11 to $10.82 since trading on the NASDAQ started this morning.

One reason for Milne's optimism is that "Activision's effort to extend the Call of Duty franchise online could possibly reduce a portion of risk related to packaged good sequels." Nearly two years ago to the day, Activision CEO Bobby Kotick publicly expressed interest in bringing the Call of Duty IP "into a massively multiplayer environment."

74 Comments

  • benotts

    Posted Mar 5, 2010 10:07 am PT

    RIP CoD. Then again I felt that sentiment as soon as I saw that Activision was starting to take and active roll with Infinity Ward. Then MW2 was released with its insane price tag and now I know that we will not see anymore good CoD titles.

  • Ironsoldier5

    Posted Mar 5, 2010 5:09 am PT

    I think its safe to say that the COD franchise that most of us loved (until they brought it to consoles) can RIP. I think that Medal of Honor and Battlfield are the new Modern Warfares.

  • thorwolfe

    Posted Mar 4, 2010 8:35 pm PT

    @2point5RSman
    every game will have children on it, even the original cod. just like every game will have idiots on it who talk **** even tho they suck. which is why the game has a mute player option.

  • 2point5RSman

    Posted Mar 4, 2010 6:52 pm PT

    @thorwolfe
    Yeah you only need to spend 5 mins in chat on those games to see the demographic they cater to. children.

  • advanracer

    Posted Mar 4, 2010 6:03 pm PT

    - BOYCOTT ALL ACTIVISION PRODUCTS -

  • thorwolfe

    Posted Mar 4, 2010 3:40 pm PT

    @2point5RSman
    lol yea COD started to suck after becoming a pc + console and not just for pc....oh wait CODMW2 is one of the most popular games out on the market.

  • Castlevania

    Posted Mar 3, 2010 10:52 pm PT

    RIP

  • 2point5RSman

    Posted Mar 3, 2010 4:27 pm PT

    maybe they got fired because those games started to suck and were all the same? IDK i havent played COD since, well, COD. (a pc game)

  • fat_otter

    Posted Mar 3, 2010 4:04 pm PT

    It's a bad sign when big members of a company leave/get fired. Remember what happened here on Gamespot a few years ago? Let's hope that doesn't happen to IW.

  • darkfox101

    Posted Mar 3, 2010 1:59 pm PT

    endanger "dlc" hah, how about our extinct dedicated servers

  • sdkingsht

    Posted Mar 3, 2010 10:12 am PT

    @cheeseman242424 specifically non-Infinity Ward WW2 Call of Duty games...there are already way too many shooters that are set in damn near the same time frame.

  • sdkingsht

    Posted Mar 3, 2010 10:11 am PT

    @cheeseman242424 it's called sarcasm lol...i exaggerated to make a point that we're tired of games set in the past.

  • bluespire1

    Posted Mar 3, 2010 4:06 am PT

    I agree this maybe a big mistake by Activision these men are brilliant they will most likely start over and create a shooter to topple Call of Duty like with Medal of Honor.

  • mullen15

    Posted Mar 3, 2010 3:59 am PT

    I love how they did this like the day BF:BC2 came out.

  • Gabr131

    Posted Mar 3, 2010 3:57 am PT

    C'mon peoples this is just advertising. You can't say now you wont play the COD series anymore because of this. Personally i don't care who makes the COD if it is a great game like the last 3 i will sure play it. It could be made by some guys in a barn with a low end computer if it is good i will play it..

  • Pete5506

    Posted Mar 3, 2010 2:34 am PT

    We don't really need any DLC at the moment but with time

  • wahyudil

    Posted Mar 3, 2010 12:02 am PT

    I really love it when a company made a very great mistake and regreted it later ... or being beaten by their own ex-employee ... like a drama .... ex EA beat EA's medal of heroes with COD .... then next, ex Activision beat Activision's COD with something else .... this is like a destiny ...

  • cholo1075

    Posted Mar 2, 2010 10:33 pm PT

    Im look forward to the DLC and nothing more. I think Call of Duty is going to be run into the ground but most good games are.

  • The_X_Factor_9

    Posted Mar 2, 2010 9:31 pm PT

    Let us not kid ourselves. Activision are the master of milking a franchise dry. Of course Guitar Hero is the prime culprit, but no doubt Call of Duty is following in its footsteps. I know a lot of people who loved CoD4 and bought MW2 only to realize they got the sold the same game with minor tweaks that cater to casual players. Infinity Ward is one of the crown jewels on Activision's crown. This coup d'etat to oust the heads of IW can't possibly go well. These guys will land on their feet and create the next big game to compete with CoD. The same way that Rock Band is taking it to the pathetic remnants of the Guitar Hero franchise.

  • rockstar_88

    Posted Mar 2, 2010 9:25 pm PT

    I hope Bobby Kotick is forever damned in the fourth circle of hell.

  • benboz

    Posted Mar 2, 2010 8:36 pm PT

    IW should just leave Activision and make whatever games they like to do.

  • Vari3ty

    Posted Mar 2, 2010 7:24 pm PT

    I actually feel sorry for Infinity Ward. While MW2 wasn't the best game ever made, it still was a solid game, and IW as a whole is a great studio. Will Infinity Ward break off from Activision, though, is the question. They did so with EA... why not with Activision now? Either way, it's clear that Activision is being WAY to greedy and that Bobby Kotick is the anti-Christ of gaming.

  • invictuslemming

    Posted Mar 2, 2010 6:59 pm PT

    Definitely expecting to see a new gaming company crop up from the fallout of this event

  • SuprSaiyanRockr

    Posted Mar 2, 2010 6:45 pm PT

    Regarding the decision by Actifail to drop the heads of IW, I can ony hope that the idea blows up in Actifails face, profit and share prices drop dramatically, and they are forced to sell their franchises (GH, COD, etc) to other companies.
    But that's just me being optimistic

  • SuprSaiyanRockr

    Posted Mar 2, 2010 6:43 pm PT

    "Almost certainly developed by Treyarch (Call of Duty: World at War), the game is widely believed to be set during the Vietnam War or Cold War."

    TERRIBLE IDEAS.
    Firstly, there was never any fighting in the Cold War. It was just a war of words. Secondly, Vietnam war was a horrible and pointless war, created by moronic politicians trying to defend a democracy that didn't exist. I hardly think either war would be suitable for a video game, unless they decided to rewrite history just to make a working story.

  • aldrenar47

    Posted Mar 2, 2010 6:31 pm PT

    "In the end, both analysts are maintaining their "buy" rating for Activision and urging their clients to scoop up more of the company's stock, should it slip in trading today."

    Translation: you should give Activision more money for being d*cks

  • Alex_09

    Posted Mar 2, 2010 6:09 pm PT

    Talk is cheap. Modern Warfare 2 was hardly a perfect game and in the end, if Modern Warfare 3 ends up being good, you'll all buy it.

  • Nivram045

    Posted Mar 2, 2010 5:55 pm PT

    wow damn activision i'm done no more call of duty for me. first they ruin guitar hero and now this

  • sushiroll

    Posted Mar 2, 2010 5:52 pm PT

    I agree, at least BF:BC2 is out today !!!!

  • metalkid9

    Posted Mar 2, 2010 5:10 pm PT

    Today is a new day. Today we celebrate a new genre in "modern warfare". Today is the day we see the Battlefield series victorious and forever be. RIP COD. You'll forever be missed ... NOT!

  • Rigges

    Posted Mar 2, 2010 4:55 pm PT

    Publishers want money, developers want a good game. I would think a lot of COD:MW2 short comings are a result of publisher pressure because most of them eventually come down to dollars and cents (at least in their mind, most of the bad features to stop hackers, pirates or what not, didn’t work anyways).
    A lot of the guys from IW have been together since 2015 inc (22 I believe) worked on Medal of Honor:AA, they were responsible for the COD franchise which was pretty much pure gold both for gamers and for their publishers BUT it has taken a major nose dive and I’d think regardless of what they say, for people who have been together that long, unless they all hate each other, more will follow the leaders.
    Might be a good thing, if they fire up a new company with the intention to make cod look bad, we might start getting some quality games again (let me be the first PC users to ask them, even before they form a new company or game!, DEDICATED SERVERS PLEASE!)

  • sensei_hEnRY

    Posted Mar 2, 2010 4:53 pm PT

    i'm trying to convinced myself that no matter who made it, CoD will still be the best FPS for me, but...this is just suck!

  • DuncanM908

    Posted Mar 2, 2010 4:51 pm PT

    Maybe all of Infinity Ward should quit. Form a new studio called Antivision.

  • nicebai1224

    Posted Mar 2, 2010 3:23 pm PT

    omg today i desided to stop buying cod game

  • True_Chaos_UK

    Posted Mar 2, 2010 3:18 pm PT

    "Activision has specific employment contracts for other key personnel at Infinity Ward".Signed in the employee's own blood the collection of souls begins.

  • InsertWittyID

    Posted Mar 2, 2010 3:08 pm PT

    I decided that I was done with new Call of Duty games/content long before yesterday. Recent events have ensured that I'm never turning back.

  • cheeseman242424

    Posted Mar 2, 2010 2:58 pm PT

    @sdkingsht

    1782?

  • Richardthe3rd

    Posted Mar 2, 2010 2:45 pm PT

    @ thk123:

    I agree; if morale was good and the co-founders are ousted, it wouldn't be reasonable to expect IW to remain a happy camp afterwards. If your boss is an ass, you want him to go, but if you agree with him, that's another story. It really depends, and Activision's attempt to play hush-hush and scream "insubordination" supports the notion that the rest of IW probably isn't too happy about this.

  • _Colossus_

    Posted Mar 2, 2010 2:43 pm PT

    Abandon ship, before Bobby Kotick goes overboard with his plans.

    Too late..

  • SDBusDriver1979

    Posted Mar 2, 2010 2:40 pm PT

    If there is a good time to jump ship, now would be the best. Only layoffs, smaller budget, smaller teams await the employees at Activision in the future. They have milk their franchises dry and is only left with COD and Blizzard if they ever release a game. Activision is going to need a new franchise soon if they want to maintain their size. I swear if anymore layoffs happen, Activision is going to make a press release saying that quality is their top priority just like EA and THQ did. Its just one big cycle with these large video game companies of they get lucky with a title, their arrogance goes through the roof, and then they decline until they are humble again until the next big title comes around.

  • doontime

    Posted Mar 2, 2010 2:32 pm PT

    No more call of duty games for me, I'll stick with cod4.

  • firesage423

    Posted Mar 2, 2010 2:22 pm PT

    just tell trey arch to make a military zombie game or something call CoD Zombie appocalypse or something.. cause that was pretty much the only thing i played on waw when i threw my money away..

  • sdkingsht

    Posted Mar 2, 2010 2:13 pm PT

    Call of Duty without Infinity Ward is like saying the next Metal Gear Solid game will be made by THQ...no thanks...i'm ok...i think i'll skip this one.

  • sdkingsht

    Posted Mar 2, 2010 2:12 pm PT

    aside from Modern Warfare the recent Call of Duty games have been mediocre at best. and am i the only person tired of shooters set in the year 1782? the pure sales and profit from MODERN Warfare should be a wake up call. stop giving us WW2 games already.

  • k2theswiss

    Posted Mar 2, 2010 2:09 pm PT

    how can two people who got fired effect the quality and the time of dlc comes out? you gotta be joking me. do they think there is shortage of people looking for jobs?

  • SoNin360

    Posted Mar 2, 2010 2:02 pm PT

    "affect quality/timing of the downloadable content (DLC) for Modern Warfare 2 "
    I hope its just the timing... I can wait to pay for some decent DLC rather than get some half assed content sooner. Soo I wonder how this all will turn out.

  • firesage423

    Posted Mar 2, 2010 1:59 pm PT

    this is sad but it might clear the patch for Medel of Honor to make a triuphent come back which i seriously hope for and IW can go on with there IP..

  • firesage423

    Posted Mar 2, 2010 1:56 pm PT

    activision and blizzard a match made in hell..

    but if thats the cas henninger id be mad too..

  • S3XYT1M3

    Posted Mar 2, 2010 1:46 pm PT

    At least BF:BC2 is out today.

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