Activision Blizzard to spend R5.2 billion on Destiny

Activision is backing Destiny to be its next billion-dollar franchise

May 6, 2014
Destiny

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.”

Destiny

Destiny

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.”

Do you think Destiny will turn a profit? Let us know in the comments and forum.

Source: Reuters

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Tags: activision blizzard, Bobby Kotick, destiny, development costs, headline

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