Activision Blizzard to spend R5.2 billion on Destiny
Activision is backing Destiny to be its next billion-dollar franchise
Activision Blizzard intends to spend $500 million (around R5,2 billion) developing and promoting Destiny, potentially breaking industry records as it seeks to build the sci-fi role-playing video game into its next multibillion-dollar franchise.
CEO Bobby Kotick revealed the number during the Milken conference in Los Angeles last week. A company spokesperson said 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 franchise, is eager to lay the foundation for its next multi-game blockbuster series.
Investors hope that Destiny, scheduled for release on 9 September 2014 from Bungie – the same studio that created Microsoft’s best-selling Halo franchise – could re-invigorate Activision’s revenue, which slid 6% in 2013.
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 (intellectual property),” Kotick told the Milken conference. “We expect Destiny to be Activision Publishing’s next billion-dollar franchise.”
Analysts said $500 million would likely be a record spent on a single game – especially one without an established track record. To break even, Activision would have to sell about 15 million to 16 million units of a $60 game, analysts said.
“For a brand new IP, it’s tough but it could post a big surprise,” said Sterne Agee analyst Arvind Bhatia.
Bhatia expects the game will sell 8 million units. Grand Theft Auto 5, which hit stores in September 2013, was a runaway success with over 32.5 million units sold as of February 2014. But it was the fifth instalment of a critically acclaimed series.
“Bungie’s very ambitious plan is designed to unfold over a 10-year period,” said an Activision spokesperson. “The depth of creative content, scope, and scale is unprecedented and is required to bring Bungie’s vision to life.”
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