Activision investing $500 million into Destiny, won't break even analysts say
by Andrew Yoon, shacknews.com, May 6, 2014 7:00AM PDT
Activision may be breaking records with the amount of money it intends on spending to develop and promote Bungie's upcoming Destiny. According to CEO Bobby Kotick, the price tag on the upcoming game sits at $500 million. But, that's the investment you have to pour into a brand new IP, if you want it to be the next Call of Duty-style blockbuster series--even if analysts don't believe the first game will break even.
"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 (via Gamespot). "The stakes for us are getting bigger."
According to analysts, the price tag would mean Activision would have to sell at least 15 million copies to break even. "It's a head scratcher," Sterne Agee analyst Arvind Bhatia told Reuters. The game is projected to sell 8 million units--far short of the amount the company needs to make the venture profitable.
Still, Activision has a ten year deal with Bungie, making it a costly initial investment that could grow over time. The half-billion dollar amount includes marketing, packaging, infrastructure support, royalties, and other costs, as well. Finally, future games in the series will be much cheaper to make. "Over the long term, we expect the ultimate product costs to be roughly in line with other Triple-A titles," an Activision spokesperson said, noting "robust backend infrastructure are upfront expenditures that should reduce future product development costs."