Gamasutra: The Art & Business of Making Gamesspacer
View All     RSS
October 30, 2014
arrowPress Releases
October 30, 2014
PR Newswire
View All





If you enjoy reading this site, you might also want to check out these UBM Tech sites:


Activision spending $500 million on  Destiny , says CEO Kotick
Activision spending $500 million on Destiny, says CEO Kotick
May 6, 2014 | By Mike Rose

May 6, 2014 | By Mike Rose
Comments
    30 comments
More: Console/PC, Business/Marketing



In the run-up to the Destiny release this September, Activision's Bobby Kotick has said that his company plans to spend around $500 million developing and marketing the game.

As reported by Reuters, Kotick put forward the figure at the Milken conference in Los Angeles last week, stating, "If you're making a $500 million bet you can't take that chance with someone else's IP. The stakes for us are getting bigger."

An Activision spokesperson later clarified that it included marketing, packaging, infrastructure support, and royalties, as well as other costs.

This would potentially make Destiny the most expensive video game to date. For the sake of comparison, Grand Theft Auto V is estimated to have cost around $260 million to develop, produce and market.

A rep told Reuters that initial engine and backend infrastructure costs "are upfront expenditures that should reduce future product development costs."

Analysts believe that the game will need to sell more than 15 million copies to break even, although they did not account for any potential DLC or microtransactions that Activision may sell for the game.


Related Jobs

CCP
CCP — Newcastle, England, United Kingdom
[10.30.14]

Senior Backend Programmer
Guerrilla Games
Guerrilla Games — Amsterdam, Netherlands
[10.30.14]

Animation System Programmer
Square Enix Co., Ltd.
Square Enix Co., Ltd. — Tokyo, Japan
[10.30.14]

Programmers
Infinity Ward / Activision
Infinity Ward / Activision — Woodland Hills, California, United States
[10.30.14]

Senior Sound Designer - Infinity Ward










Comments


Innes McNiel
profile image
"Analysts believe that the game will need to sell more than 15 million copies to break even, although they did not account for any potential DLC or microtransactions that Activision may sell for the game."

Even accounting for simple things like a season pass could dramatically cut down that copies sold number. It's 2014 and analysts seem to still look at things through the lens of the 2007 gaming world a lot of the time.

Kaitlyn Kaid
profile image
I think any lens would show a half billion dollar price tag as "big".

Alan Barton
profile image
How many millions of copies do they expect to sell? ... and how much profit do they expect to see after spending $500M?!

Charles Dickens
profile image
They are looking at Destiny as a new product line. IF the game does well, then so do the sequels, toys, books, and God knows what else. The 500M investment is to create all the other high profit items.

Alan Boody
profile image
I just find it funny how Activision (along with other companies like EA) have to throw a half billion at a game while Minecraft was made on a shoestring budget, but has become a cultural icon. Do you guys ever think that Kotick or other execs look at Minecraft and get a bit perturbed?

Rob Wright
profile image
Maybe Kotick and Company do get perturbed, but 1) this assumes that they're not working on funding smaller, lower-budget and potentially more profitable games, and 2) who says they can't do both?

Michael Wenk
profile image
If ATVI could be assured of a Minecraft result on a Minecraft budget, I bet they would do it. The problem is they can't. Most gamers seem to buy based on graphics too. And since that's so bloody expensive in its own, and the fact that marketing costs are sky high, you get a budget that is that high.

For every Minecraft, there are dozens if not hundreds of games that were developed similarly on a shoe string, but are unknowns. They may get a enough of a following on Steam that they're profitable, but even that's not assured. And ATVI as well as the other big public company publishers needs a large amount to grow.

Dane MacMahon
profile image
There are two ways to make a massive hit: 1) make something awesome that people love and market themselves, 2) make something you're not sure about quality wise and market the hell out of it.

Activision are hedging their bets, they've got too much wrapped up in Destiny to let it be average. It literally NEEDS to replace Call of Duty for them.

Karl Schmidt
profile image
If it were possible to manufacture that kind of luck, I'm sure they would be trying to do it.

Dane MacMahon
profile image
They are trying to do it, that's my point.

They might not succeed, no amount of marketing is ever foolproof, but engineering another CoD is exactly what they are attempting.

Ian Uniacke
profile image
What about Hearthstone? Ok so it wasn't a 1 to 2 man team, but it was a pretty small budget and it's generated more lifetime revenue than Minecraft already if I recall correctly.

Alan Barton
profile image
$500 million?! ... With that much, they could fund at least 50 indie games! ;)

$500M is one hell of a gamble. Win and Activision lives another year. Loose and its bye bye Activision.

They can't keep that gamble going with every new project, year after year. Because sooner or later, they will loose one and it'll wipe them out.

In the years to come something has to change and it'll have to be either their business strategy or sooner or later, it'll end in the collapse of their company.

Kujel s
profile image
With $500 million they could fund 10,000 indie games, indie games by definition are low budet projects.

Mark McGee
profile image
Bungie is a privately held independent company. That means Destiny is an indie game. Just an expensive one.

Bruno Xavier
profile image
"Destiny is an indie game".
Best joke I read this month.

Alan Barton
profile image
@"they could fund 10,000 indie games"

Woooshhh.... I was joking about the definition of indie. :)

(On my current indie budget, I would love to get a 1/20000th of that much money!).

@"Destiny is an indie game".

I'm sure they would like to label it an indie game :) ... (If we try to overlook Activision spending $500M on funding it! ;)

Rob Wright
profile image
I don't know about the "bye bye Activision" part. It will certainly hurt the company if Destiny under-performs or outright bombs, but consider this -- Ghosts was widely considered the worst CoD entry in recent years and under-performed in terms of sales and critical response, and the game still sold 13 million copies in 2013 alone.

Alan Barton
profile image
Maybe I need to recalibrate how much I imagine it'll take to sink a big company these days, (they do throw hundreds of millions around) but still, it sounds very high risk indeed.

Michael Wenk
profile image
It is all relative. Right now Activision has a market cap of ~13.69 billion dollars. It has a cash on hand of ~4 billion, with slightly more debt than cash. Assuming that their other franchises can provide enough revenue to service the debt, they could have 8 500 million titles fail and they would be able to just shrug it off.

ATVI is huge, and while this bet seems high in reality, it is not.

Jennis Kartens
profile image
Activision makes more money with Skylanders as with Call of Duty. They do know how to milk the masses.

Kujel s
profile image
I've got a feeling Desinty is going to be a factor in the coming video game crash, this is going to hurt activision badly and other publishers will be watching closely.

Alan Barton
profile image
When a whale dies, a lot of smaller fish get a free lunch.

Kujel s
profile image
Only if said whale eats the same thing as those fish and in this case I don't think that is the situation. The AAA market is focused on teenage boys, the indie market is focused on the 30+ crowd.

Dane MacMahon
profile image
Destiny would have to fail spectacularly for that to happen, which I don't see occurring. It might end up selling less than they hoped for, but I don't see it failing outright. If that ends up the case Activision will likely just try another CoD replacement out a couple years later.

Marvin Papin
profile image
"plans to spend", I'm pretty sure he is speaking about the trilogy (There are 3 episodes forseen if I remember)...

What is the most frightening for me, is that I'm pretty sure he doesn't even know what a shader is. Nor why does call of duty works.

[User Banned]
profile image
This user violated Gamasutra’s Comment Guidelines and has been banned.

Marvin Papin
profile image
me too, the barely mmo/mp wierd aspect, the boorish aspect, the marketing (ok 3 classes and then ? not clear for most). But if they are ready to put much efforts into it. Moreover, if there are Bungie departure, (except O'donnell) it's a low amout or well dissimulated. So much people since to trust the game.

For the moment, it is not on my list.

Marvin Papin
profile image
https://www.youtube.com/watch?v=LeDaevD7cEo

that's how I see the game yet. And heuuuuuuuuu ... sigh
ok I donno how they are trying to gather player... not appealing

Robert Green
profile image
You're definitely not the only one. Kotaku had a big writeup about this last week:
http://kotaku.com/i-played-45-minutes-of-destiny-and-it-was-kind-
of-bori-1568127899
Personally I'm conflicted - I liked the Halo games, and I trust that Bungie will still make an enjoyable shooter, and the game certainly looks the part, but at the same time I just can't feel excited about it. I'm not even sure why not, but I guess that's beside the point - you don't really need a reason not to be excited about something, and Destiny hasn't given me a good reason to think it's anything other than Halo+Borderlands.

Marvin Papin
profile image
Halo without the charism, and with probably a less good narrative approach due to MP (in all case, they do not seems to want to communicate on it + the fact that there's no narrative aspect in CoD MP)

And it doesn't seems to have as various situations (enemies, gameplay, scenes) as Borderland. Close maps shown in videos, same style, same elevation, sight range... If any PR i reading us, please show us we are wrong if it's the case.


none
 
Comment: