Pachter is correct. And here's why it works.
Activision would make more money, even if they sell considerably fewer copies. Remember that Activision only gets a slice of that $60 retail price on the box, but they get nearly ALL of their subscription, so they could make as much with 4 million players on subscription as they do currently moving 10 million copies. So it's good for Activsion.
The players that DON'T now buy COD buy a different game instead, so it's good for others as well. So it's good for other devs as well.
I think the only loser is the consumer who plays COD or other games that follow that lead, and perhaps MS with the double-dipping on fees. The industry as a whole would actually likely bring in more money.