Activision places $500 million bet on its next blockbuster franchise Destiny

Activision Blizzard Inc intends to spend $500 million developing and promoting "Destiny," potentially breaking industry records as it seeks to build the sci-fi role-playing videogame into its next multibillion-dollar franchise.

CEO Bobby Kotick revealed the number, which dwarfs Hollywood spending on some of its biggest firms, during the Milken conference in Los Angeles last week. A company spokesperson said on Monday the number was accurate but also included marketing, packaging, infrastructure support, royalties and other costs.

Activision, eyeing the flagging growth of its long-running "Call of Duty" action-shooter franchise, is eager to lay the foundation for its next multi-game blockbuster series.

[Kayant]

Well this isn't going to go well. Way too much money for something that's not unproven and established even with a studio like Bungie.

"Some analysts estimate that Take-Two Interactive, the publisher of "Grand Theft Auto," spent over $260 million to develop, produce and market the fifth installment, though it's unclear whether that's comparable with Activision's own $500 million figure" - This is crazy because Activision is still going to be potentially spending more money than 2K here on something that needs a big following to do really well.

[Kayant]

Meant to say unproven...

"The company signed a 10-year contract with Bungie in 2010 that gives it worldwide distribution rights and significant control over the potential franchise's development.

"If you're making a $500 million bet you can't take that chance with someone else's IP," Activision CEO told the Milken conference. "The stakes for us are getting bigger."

Analysts said $500 million would likely be a record spent on a single game.

Ahhh so read that wrong thought it was just for the first destiny but looks like it's for the franchise as a whole? If so that's not as crazy but still a massive bet.

Well that confirms the game cliffy b was talking about before --> https://twitter.com/thereal...

[Army_of_Darkness]

Okay everybody, let's all not purchase destiny just to screw with Activision ;-)

[Spinal]

Yeah you underestimate how much Activision makes. Activision-Blizzard got that ££$$$$

I'm glad that they invest so much into Destiny. Bungie are great devs and look to be doing a great job with Destiny. Got it pre-ordered for my PS4 and got my beta code waiting.

[FlameHawk]

@Army, so they go out of business and games like Destiny which require huge amount of money are never created because there aren't publishers with tons of money to publish them?

[Jsoc]

Well for activision to break even is more like 15-16 million , and the way things look and read about destiny if it plays that way I can see them making there money back .... But if bombs it will be the biggest lost in gaming history... I can't wait to play this game ... I've been looking forward to this....

[DefenderOfDoom2]

to kayant > Funny thing is i was gonna leave a comment about Cliffy B saying that at the "E3 2013 GIANT BOMB hang out with developers interviews " If you wanna watch CLIFFY B saying that quote. You can watch it on YOUTUBE "E3 2013 GIANT BOMB part 1" the video is over 3hours long, so good luck finding CLIFFY B 's quote . Also in that same video he said he does not like the fact that developers are told to make big production cut scenes for trailers for E3 , that do not even make it final game and shows nothing about the actual gameplay!

[jazmac]

I think you meant to say proven.

[MrSwankSinatra]

I don't think you even realize how big Activision as publisher truly is. The problem with you're argument is that you say it's a risk for activision all while comparing them to other publishers. the problem with that is no other publisher generates the amount of revenue that acitvision does year after year. even if destiny were to fail, acitvision will continue on. If take-two were to invest that type of money and have their investment be wasted, you can bet they would be in serious trouble.

[lelo]

"Activision places $500 million bet on its next blockbuster franchise Destiny"

That's one hell of a bet. EA had a similar bet with their Star Wars MMO and that didn't go well.

[Jughead3416]

We'll, destiny isn't an MMO

[lelo]

"We'll, destiny isn't an MMO"

Destiny is a massively multiplayer online action role-playing first-person shooter video game... so yes, Destiny is a MMO.

[DeadlyFire]

Well EA went in the wrong direction. The bet isn't just on Destiny's first episode. Its on the whole deal for the franchise's benefit over the next 5-10 years.

[lelo]

"Well EA went in the wrong direction. The bet isn't just on Destiny's first episode. Its on the whole deal for the franchise's benefit over the next 5-10 years."

Wrong direction? Don't you think EA wanted to span Star Wars in 5-10 years? Don't you think EA wanted to release future expansions for Star Wars?

EA wanted Star Wars MMO to be like WOW. They wanted to release expansions like Blizzard releases for WOW. EA wanted to take over Blizzard's WOW market share. Activision with Destiny wants the same thing... but Activision is being smarter. Since consoles don't have any relevant MMO, they are going after console players instead of PC players.

[Darkstares]

Destiny is a 10 year plan and I imagine they will be adding additional content to the game and charging extra for that content. The first game is just the building blocks.

Star Wars MMO had a subscription based model, Destiny doesn't.

[Jughead3416]

Bungie has classified destiny as an action FPS, and actually have gone to lengths to not classify it as an MMO. It has MMO & RPG elements, but it's an action FPS. People will make it what they want it to be I guess. Despite what the devs themselves labeled it as

[showtimefolks]

people wondered why Bungie chose Activision, well this is why. Activision may not get a lot of things right but they do know how to create and handle billion dollar IP's(which in gaming business you can count on 2 hands)

I fully expect Destiny to do well, i don't expect any review score under an 8. Part of the reason is i expect the game to be excellent but on the other side activision will be writing a lot of checks for these gaming sites, so these gaming journalists won't bite the hand that feeds them(if you know what i mean aka original kane and lynch got jeff fired)

[DefenderOfDoom2]

to showtimefolks /, I agree that there is a lot of "payola" in the video game industry, but since JEFF GERTZMANN got fired from GAMESPOT back a few years ago, people do not depend on game reviews to make their purchases ! If that was the case, SYNDICATE should have sold millions of copies because JEFF GERTMANN (now working for GIANT BOMB) said SYNDICATE was his favorite game of 2012 ! SYNDICATE did not even sell 300thousand copies worlwide ! The movies series " "TWILIGHT" brings in hundreds of millions of dollars and TWILIGHT movies get very bad reviews!! When people buy DESTINY (including me and you)we are buying the game because we believe it will be 'excellent" not because some paid reviewer said it is good!

[fr0sty]

$500 million may sound like a lot for ONE GAME, but Activision is investing in an entire franchise. They do not expect to make their money back the first game. This first game is just to establish the story and build a fan base. From there, they won't have to invest as much to promote sequels and DLC, as it'll get out there on its own.

It does show they have a lot of faith in Bungie, but lets look at the dollar figures Bungie has raked in during their existence...

[3-4-5]

$500 Developing & Marketing, not just marketing.

Basically, that confirms AT LEAST one sequel to this game.

* $150 million on Destiny
* $ 50 million marketing

* $150 Million - Destiny 2
* $50 Marketing.

^ just a theory

[rainslacker]

They haven't spent $500 million yet. Destiny is supposed to be a long running franchise, so that $500m is likely over the course of ten years, with a lot of it being the upfront costs of getting it out the door. The chance it becomes another call of duty sales wise is quite high.

If the game sells really well initially, which it's looking like it will given pre-order numbers, they will make that back on the first game. The rest is mostly just gravy for them.

They're exploring a new business model for this type of game. It's hyped enough I doubt it's going to cause them a loss.

[ArbitorChief]

So they need Destiny to sell 8.3 million copies at $60 each to break even and that's not even considering manufacturing costs, retailer cut, Sony/MS cut, etc. I get the feeling Destiny will flop from a financial perspective.

But as they say, if you want to make money, you need to spend money, this could pay off for Activision.

[GarrusVakarian]

I'm pretty sure he means $500 million for the entire franchise, not just the first game.

[theDivision]

I bet Destiny will be able to sell 8.3 million copies. So long as there isn't a massive graphics downgrade for release or some game breaking glitches in the opening weeks it should do just fine.

[Dark11]

oh boy .. it's going to bomb so hard.
could have invested that money in 8-10 new IPs and dozens of smaller titles including marketing costs.

[slivery]

In this day and age I feel like promoting your product is the most important thing you can do, that is if it is promoted properly.

So best of luck to you but I have an odd feeling that their own doing (Call of Duty) will be their downfall with this one, I still don't understand how people still even get excited over Call of Duty anymore but regardless of how quickly it is regurgitated, people still slop it up every single time. Now we have another coming already which I think might actually hinder the sales of this.

Activision is well known but sadly for only one thing now and that is Call of Duty. So we will see how this pans out.

Not saying it won't do good, no doubt it will probably do very well I just think they might have created their own conflict, maybe trying to bite more than they can chew. I can't say they wouldn't deserve it either with how many times they have just copy and pasted Call of Duty without ever putting in all the absurd amounts of money they make into the game itself... I mean for how huge Call of Duty is, it should be literally the best FPS there is period without question.

[chrissx]

Crazy money considering destiny is an online only game

[DC777]

Um...you really shouldn't gamble on an mmo like that but good luck.

Ten years??

[skydragoonity]

That's a lot of money

[cfc83]

production costs and making the game = 89m

bribery's/good review department budget = 60m

advertising = 350m

* it probably won't cost this much to make, but you get the idea. $15,000 has already been spent on getting the press to make gamers believe that the game could cost 500m to make.

[SaturdayNightBeaver]

ahah , so true and sad.. but somehow can't blame them.. they are taking advantage of todays "gamer" "dudebro" mentality ,sadly they are after all just another business company and doing it for money 1st, things were bit different 10-15 years ago.

[Jdoki]

Good luck Activision. They're taking a 'go big or go home' approach.

Destiny is a game I am excited about, and has the potential to really shake up the FPS genre.

500mill is a crazy amount of money, but it's not like it'll sink Activision if it flops.

Also, Kotick doesn't specifically state the 500mill is only for the one game...

He say's "If you're making a $500 million bet you can't take that chance with someone else's IP,"

So if he is actually referencing the IP "Destiny", rather than the single game - then 500mill is more realistic if spread across two, or even three, games over the next 10 years.

[F4sterTh4nFTL]

I would take the $500 Million and give it away in charity rather than spend it on marketing a stupid videogame no matter how good it is and that will earn me much more publicity than any amount of bribed reviews could.

Also $50 Million is too much let alone $500 Million

The Witcher 3 is being developed on a total budget of $40 Million and that will be one of the most technically advanced game that has ever been created.

Even Star Citizen will be using around $45 Million.

[shivvy24]

Uncharted 2 was 20 million

[F4sterTh4nFTL]

Exactly my point, great games sell themselves.

[LightDiego]

I hope they include microtransactions on the game, we need to help Activision to pay for it.

[F4sterTh4nFTL]

They can make 50 games costing $10 Million each and make much much more money.

[DarthSocio]

Don't they earn a billion dollars with every COD game? it's hardly going to be a "catastrophe" if the game financially disappoints.

[shivvy24]

It takes them about 1 week into cods launch to make 1 billion, so definitely far more

[dragonopt1]

After watching the gameplay I'm not that impressed at all, maybe it's just me .

[cfc83]

It certainly isn't just you. The game, just like Halo, doesn't look groundbreaking at all. Infact it looks as if it's using an outdated graphics engine, with a game based on ideas it has nicked from other games.

[candy_mafia]

Wow!!!

$500 Million is like a few Avatar movies or three Grand Theft Auto V's or, how about the R&D cost of the Dreamcast console back in 1999.

Activision have placed a huge amount of faith in this IP. I totally intend to purchase Destiny (PS4) day 1. Destiny has a 10 year lifespan :)

[Activemessiah]

Well let's hope for their sake this game isn't destined to fail.

[Fishy Fingers]

Ridiculous amount of money but when you already own a franchise that's bringing in billions annually I guess you can afford to take the gamble.

They'll probably recoup a fair amount in micro transactions.

[deathtok]

Whether this is a good business move or not will really be determined by how the game is received. I'd be curious to know the pre-order statistics.

[Summons75]

If they can invest 500 mill into Destiny why can't they invest in Call of Duty and build a new engine and give developers nearly unlimited resources to make it an actually good game with great game design, balance, story.

[Npugz7]

This game looks so much like halo that it's kinda a turn off!! Floaty gliding characters!!

[aviator189]

Ouch.
I don't think they'll make up the costs. That's way too much cash. Surely they could have found more ways to be efficient? It's as if they just spurted out a bunch of money because they needed to finish the game by the end of 2014.

[rivencleft]

Man I can see this game becoming the biggest IP in a long while, and I say that with love because I honestly cannot wait for this game to come out, been watching an eagerly waiting since E3, so come on September!

[modesign]

if destiny is as good as it was hyped, it will be a multibillion dollar franchise and money well spent,

[Picnic]

What these games makers seem to fail to take in to account is that, with such unproven franchises as this, they should be spending all the time that God sends on every major internet forum trying to seduce gamers in to buying the game.

Why am I, of all people, who doesn't even have Destiny on my personal radar, on N4G even talking about this?

Why aren't there people from Activision or their marketing company on N4G 27 /7!!

It's a question that I actually wonder about everyone in the entertainment business. Yes they may have some very good artistic reasons to feel superior ARTISTICALLY to most of the public. But even so- you won't get my cash unless I speak to someone from Activision personally. It's not that hard- N4G is a major forum, THE major news forum. Does nobody at Activision ever come on here? Can you afford to take THAT gamble? If the game goes in the red, will you wonder what more you could have done? Or will you lie and say 'we tried our best with marketing'? Because -I repeat none of your other strategies will work on me. I'm hoping to start a revolution in marketing here! You MUST come on the forums if you intend to get sufficient word of mouth to sell your game. Every single copy of that game you sell is through the individual choice of the buyer. There is no blanket marketing strategy guaranteed to work just enough that you never have to 'lower' yourself to talk directly to potential buyers. A twit on Twitter is not an internet selling strategy!

Do you REALLY have to spend hundreds of millions on faceless advertising when you could employ someone on £20,000 a year to come on all the forums? Is this as hard as getting a man on the moon? It's weird how little games makers directly communicate with potential fans (presumably unless they e-mail them directly).

[Flames76]

If your spending $500 million on a game then you need new people to run things.This is just crazy and the game will sell about 10 to 15 million copys in all