Activision investing $500 million for Bungie’s Destiny

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May 6, 2014

Activision will spend $500 million--half a billion dollars--on development and marketing for Bungie's upcoming "shared-world" shooter, Destiny. CEO Bobby Kotick revealed the figure during the Milken conference recently, as reported by Reuters.

In addition to development costs, the $500 million figure includes marketing, packaging, infrastructure support, royalties, and "other costs," a spokesperson for Activision confirmed.

How does that stack up with other AAA games? Analysts estimated the Grand Theft Auto V total budget (including development, production, and marketing) at $260 million. However, directly comparing GTAV and Destiny is somewhat problematic.

For one, Destiny is expected to unfold over the period of 10 years, while GTAV was a single release. An Activision spokesperson also explained that the company's investment in the game's engine, as well as a "robust backend infrastructure," are upfront costs that they expect should help reduce future development costs. "Over the long term, we expect the ultimate product costs to be roughly in line with other AAA titles," the Activision representative said.

GTAV generated $1 billion in revenue in three days and has shipped over 32.5 million copies to date.

No matter how you look at the $500 million figure, however, it's obvious that Activision is making a big bet on Destiny. A total budget that large dwarfs other video games and movies. "If you're making a $500 million bet you can't take that chance with someone else's IP," Kotick said. "The stakes for us are getting bigger."

Analysts explained that Activision will need to sell between 15 million and 16 million copies of Destiny to break even. Sterne Agee analyst Arvind Bhatia said this will be a tough task. "It's a head scratcher," Bhatia said. "For brand new IP, it's tough but it could post a big surprise."

Activision's significant investment in Destiny should come as no surprise. After all, the company said earlier this year that it expects Destiny to become Activision Publishing's third billion-dollar franchise, joining Call of Duty and Skylanders. Activision Blizzard subsidiary Blizzard Entertainment also has major franchises in its portfolio, including World of Warcraft, StarCraft, Diablo, and now Hearthstone: Heroes of Warcraft.

Destiny launches September 9 for Xbox 360, Xbox One, PlayStation 3, and PlayStation 4. A beta for the game begins this summer, first on PlayStation platforms.