Call of Duty: Modern Warfare 2 Prestige Edition

The lawsuit over the Call of Duty video game series will go to trial on May 7, 2012. In case you don’t have a twelve year old brother or don’t find that shooting virtual rocket-propelled grenades at virtual terrorists is your idea of a successful afternoon, Call of Duty is a “first person shooter” action game whose various iterations let players do virtual battle with Nazis/Imperial Japanese/Russian ultranationalists/Soviet Russians/Middle-Eastern separatists as well as face human opponents online. If this sounds silly or juvenile, you could be right, but this franchise has brought in over $3 billion in revenue. Developer Infinity Ward created four of the titles in the series–Call of Duty, Call of Duty 2, Call of Duty 4: Modern Warfare, and Call of Duty 6: Modern Warfare 2. Activision published all these games.

This legal warfare originally stems from Activision’s firing of Infinity Ward heavy-hitters Vince Zampella and Jason West in April 2010 for allegedly breaking their contracts by attempting to form an independent development studio and dragging their feet during production of Modern Warfare 2. Since then, Zampella and West have formed their own studio, Respawn Entertainment, hiring many former Infinity Ward employees, and have affiliated with Activision rival Electronic Arts (EA). This action has generated a host of litigation. Former Activision employees allege that Activision owes them millions in royalties and bonuses. Activision answered the call by suing EA, alleging $400 million in damages for improperly poaching Zampella and West. Most importantly, West and Zampella are suing Activision for $36 million in damages for royalties and unfair dismissal as well as the rights to various intellectual property associated with the Call of Duty titles. Zampella and West’s colorful complaint alleges personal humiliation and an “Orwellian” investigation. However, details about the case are sparse and none of the parties are forthcoming. We may have to wait until trial to see the bulk of the evidence.

The results of this litigation will have far-reaching consequences throughout the industry. EA and Activision have never faced each other in litigation of this size. Furthermore, EA lost $677 million in 2010, and a $400 million judgment in favor of Activision amounts to almost 15% of EA’s $2.729 billion in net assets. Zampella and West are regarded as industry superstars. A high-stakes, emotional trial airs details about Activision, EA, and both individual designers that all parties might prefer to be kept secret. However, the most important spoil of war is undoubtedly the intellectual property from probably the most successful video game franchise in history. The series itself remains a cash cow, with the most recent iteration, Black Ops (not developed by Infinity Ward), clearing $1 billion in revenue and Modern Warfare 3 soon to be released. And here’s the thing. The recent Call of Duty titles since the original Modern Warfare are all incredibly derivative. Developers recycle gameplay in all of the titles often with token updates to graphics and usable weapons. The single-player campaigns routinely will take even novice gamers a matter of hours to complete. Gamers purchase Call of Duty titles to participate in the online player-vs.-player experience, which requires minimal developer creativity and effort to maintain. Downloadable content, such as a bundle of new multiplayer maps, may cost as much as $15, and as more players purchase these maps, this “optional” content becomes necessary to play the game. Modern Warfare itself, though a revolutionary game at the time, did not cost substantially more to produce than comparable titles. Just owning the IP practically guarantees profits, as gamers (especially casual gamers) do not seem to be tiring of the series.

Assuming the trial date is not continued or none of the parties settle, look forward to some exciting litigation in May 2012. In the meantime, enjoy Modern Warfare 3′s release on November 8.

– Cal Albritton

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6 Responses to Call of Duty: Modern Lawsuit

  1. HAWK SMASH says:

    ROLLTIDE

  2. Andrew Ralls says:

    Will this suit finally settle the debate as to which is better, Crash or Crossfire?

    • Cal Albritton says:

      It won’t, but Crash is more fun, as long as you don’t rely on grenade spam, sniping, and cheap helicopter perks.

  3. Jeremy Gove says:

    I expect this suit to be vigorously contested, but may ultimately lead to a settlement. Using the financial information you gave EA lost $677 million in 2010 in an industry that seems unable to stop growing. This may very well mean Activision is suffering from similar financial woes during this economic downturn, when buying $60 video games might not be as palatable to parents of the twelve year olds you mentioned. If the finances of both of these companies are troubled they both may have incentive to settle in order to not face disclosing what may be a troubled financial climate in the video game industry.

    • Cal Albritton says:

      I actually think Activision is doing fairly well. Better than expected Q2 anyway. Here’s the report. Activision/Blizzard has Black Ops, Starcraft II, and World of Warcraft all going for it. World of Warcraft is a cash cow with monthly subscription fees. Furthermore, though I agree with the parents’ perspective, I think the number of “gamers” our age and above is actually rising.

      I hope they don’t settle though. Even if EA settles, perhaps the Zampella and West suit will go ahead.

      • Hunter Branstetter says:

        First some random side thoughts: There have been several recent articles debating whether the gaming industry is either booming in such a way that major industry players can capitalize or growing while decentralizing via mobile gaming and thereby hurting big-name hardware and software manufacturers. Also, a number of different surveys suggest that the average gamer age is rising, but I haven’t seen any investigations of the distinction between hardcore (e.g. devoted WoW or Starcraft players) and casual gamers (e.g. someone playing Angry Birds on the train during their commute).

        Getting to the substance of the post, it seems like the Zampella and West suit, at least for their IP rights claims, will end up hinging on the structure of their contracts with Infinity Ward and their/Infinity Ward’s contracts with Activision. In particular, I suspect that whether the work they were doing for either entity was work-for-hire and if so who retains which rights will end up being the central issue here. To make predicting an outcome more difficult (assuming this case makes it to trial), both Jason West and Vince Zampella are such heavy hitters in their own right and were so influential within Infinity Ward that they likely were able to write their own tickets rather than accept the industry standard language dealing with the individual-developer and developer-publisher relationships.