A holiday sales war is shaping up between Activision Blizzard Inc.'s 'Call of Duty' and Electronic Arts Inc.'s 'Battlefield,' two of the videogame industry's fiercest game franchises.

On Tuesday, Activision released the latest version in its durable 'Call of Duty' series, 'Call of Duty: Modern Warfare 3.' It goes head to head against EA's just-released 'Battlefield 3.'

The stakes in this holiday face-off are high. Activision earns half its annualrevenue in the year's final quarter. Both have adopted strategies of releasing fewer, better-quality titles each year, said ITG Investment Research analyst Matthew Jacob, forcing each to lean heavily on the new launches.

'Call of Duty' has the upper hand, estimates Wedbush Securities analyst Michael Pachter. He and other analysts believe the newest version could collect more than $1 billion in revenue and become the highest-selling game of all time. The last two games in the series, 'Modern Warfare 2' in 2009 and 'Black Ops' in 2010, set sales records for the week after their release.

Activision on Tuesday reported better-than-expected third-quarter results, with revenue up 1% to $754 million and profit nearly tripling to $148 million. It raised its forecast for 2011, predicting sales of $4.33 billion and per-share earnings of 76 cents. It reported 2010 sales of $4.45 billion and earnings of 33 cents a share. It didn't provide initial sales data for 'Modern Warfare 3.'

'We're going to have record results this year,' said Activision Chief Executive Bobby Kotick. The firm is investing in mobile gaming and games for social-networks, he said.

EA has a more diversified games lineup than its rival, with hits such as the 'Madden' football and 'FIFA' soccer games. But it lacks a blockbuster in the shooting-game category on the scale of 'Call of Duty' and needs 'Battlefield 3' to flourish to make inroads in that genre this holiday season.

In a mark of the intensifying rivalry, EA isn't shying away from ribbing 'Call of Duty' in 'Battlefield' marketing. EA's campaign features commercials and billboards with the tagline: 'Above and Beyond the Call.'

'We're having some fun,' said EA Labels President Frank Gibeau. 'We can't completely isolate ourselves from the fact that we're shipping in the same window as 'Call of Duty.''

Activision has avoided responding to EA's barbs. 'I have absolutely no comment on it and could care less about it,' said Eric Hirshberg, head of the publishing unit of Activision, which has launched a 'Call of Duty' marketing blitz with ads featuring actors Sam Worthington and Jonah Hill and basketball star Dwight Howard.

The games arrive at a time when videogame sales industrywide could use a little firepower. In September, total U.S. game sales -- including videogame-console hardware and games -- were $1.16 billion in the year to date, down 6% from $1.23 billion a year earlier, according to market researcher NPD Group.

Traditional videogame makers such as Activision and EA have seen their revenues stagnate as they struggle to plug into the fast-growing, online social-gaming business that Zynga Inc. has dominated. Zynga, founded in 2007, has filed for an initialoffering that could value it at $20 billion -- close to the combined market capitalization of Activision and EA.

As a result, the videogames industry is banking on 'Call of Duty' and 'Battlefield' to reverse its fortunes. Mr. Pachter predicts that games released last month, including 'Battlefield 3' and 'Batman: Arkham City,' could lift October sales by 14% compared with a year earlier.

'Battlefield 3,' which debuted Oct. 25, has had the most successful launch in EA's 29-year history, said Mr. Gibeau, selling five million copies in its first week.

But 'Call of Duty' is a juggernaut. Activision has said the first-day sales of the last two titles in the series were five million copies each. While hard-core gamers will buy copies of both, most will stick to just one -- likely 'Call of Duty,' said Wedbush's Mr. Pachter.

Mr. Gibeau conceded his rival's dominance. 'At no point did I say we're going to take them out this year, but we're going to compete with them,' he said.

Mr. Hirshberg said Activision's only competition 'is ourselves' and said that 'Modern Warfare 3' was ahead of last year's record-breaking 'Call of Duty' title by preorders and other metrics. He declined to make unit-sales predictions.

Analysts say Activision has another weapon in its 'Elite' service that goes with its game. For $50 a year, 'Call of Duty' players can access a social network that keeps track of statistics like which gun players have the most success with. The 'Elite' subscription also comes with downloadable maps. EA's 'Battlefield 3' has similar services but doesn't have a subscription model.

Still, some gamers say they plan to open their wallets for both. Maria Ori, a 20-year-old student in suburban Vancouver, said she plans to give 'Battlefield 3' a shot because she wants to play that game with one of her friends. But Ms. Ori is more excited about playing 'Modern Warfare 3' because she is familiar with the franchise.

Stu Woo / Ian Sherr