Infinity Ward to close, expects analyst

Earlier this month, Wedbush analyst Michael Pachter weighed in on the departure of about a dozen employees from Activision's Call of Duty: Modern Warfare 2 developer, Infinity Ward. He said the studio could lose 20 more and the publisher would just replace them and still put out a competitive product. One of Pachter's colleagues today expressed a more dire appraisal of the situation.

In a note to investors, Janco Partners analyst Mike Hickey said the Infinity Ward departures "have created meaningful uncertainty around the future of their Call of Duty: Modern Warfare franchise," not to mention the studio itself. Hickey expects that Activision will shutter the studio entirely after the next map pack add-on for Modern Warfare 2 is released.

As for the follow-up, Hickey said development on Modern Warfare 3 would be split between two studios "not historically tied to the franchise." When that game does arrive, Hickey doesn't think it will quite live up to the blockbuster sales of its predecessor. He is expecting a fourth-quarter 2011 release of the game to bring in $738 million by the year's end, where Modern Warfare 2's sales total for roughly the same period was about $1 billion.

Infinity Ward has been the center of turmoil within Activision since last month, when the publisher fired studio cofounders Jason West and Vince Zampella. They sued the company, which sued back, alleging that the pair had been plotting to start a new studio with chief Activision rival Electronic Arts. Within weeks of their termination, West and Zampella started a new studio with chief Activision rival Electronic Arts. A number of Infinity Ward developers jumped ship to join the new studio, dubbed Respawn Entertainment, while others simply resigned. This week, a group of 38 former and current Infinity Ward developers sued Activision for as much as $625 million, alleging the publisher had been withholding royalty and bonus payments due them.