The old adage “you’ve got to spend money to make money” has probably sent a lot of people spiraling into bankruptcy, but in the video game industry there are certainly times when it seems to hold true. Rockstar Games recently claimed the world record for the most expensive video game ever made with $265 million spent on developing and marketing Grand Theft Auto V, but any fears of not breaking even were defeated when GTA V made $800 million within 24 hours of its release.
There are still plenty of stories out there to counter-balance Rockstar’s success, however. In general, the video game industry’s growing trend of over-inflated budgets and overly ambitious sales projections has led to massive pressure to shift millions of copies upon release. Square Enix, for example, was shocked and disappointed when Tomb Raider sold “only” 3.8 million units.
It seems that Activision Blizzard Inc. prefers Rockstar’s success story to the video game industry’s cautionary tales, however, and the publisher isn’t holding back when it comes to funding Bungie’s new open-world sci-fi RPG shooter, Destiny. Reuters reports that Activision CEO Bobby Kotick estimates total spending on Destiny‘s development and promotion will reach around $500 million, dwarfing Grand Theft Auto V‘s budget and leaving Activision with a big sales quota to fill in order to make the money back.
The size of this bet is indicative of just how much Activision has riding on this new IP. Activision’s long-running cash cow Call of Duty has been experiencing flagging growth of late, with Call of Duty: Ghosts‘ year-by-year sales down by 19% compared to Black Ops 2 as of December 2013. Though Eric Hirshberg said last year that Destiny and Call of Duty can co-exist peacefully, the intention is most likely for Destiny to take dominance over the next decade. As promising as the trailer may have looked, Activision definitely did not drop $500 million into Call of Duty: Advanced Warfare.
That said, Destiny itself doesn’t currently look like a $500 million dollar game. The gameplay footage and early previews don’t suggest too many changes in the gunplay from Bungie’s previous franchise, Halo, and the character classes and looting look pretty standard for the RPG genre and even the blending of co-op and solo campaigns has been done before in titles like Borderlands. As a result, some might argue that there isn’t all that much in Destiny that looks new and exciting, let alone new and exciting enough to make it the must-have new sci-fi shooter of the new console generation. And it is just for console gamers; Destiny isn’t releasing on PC.
For context, the Halo games have sold a collective 50 million copies over the 12 years since the franchise began, and Destiny needs to sell 15-16 million units to break even. Grand Theft Auto V is currently on track to reach $2 billion in retail sales, but obviously an established franchise is a much safer bet than a new IP. Kotick is confident, however, and says that Activision Publishing expects Destiny to become its next billion-dollar franchise. Market analysts are a bit more reserved, with Sterne Agee analyst Arvind Bhatia predicting that Destiny will sell 8 million units, and Benchmark Company’s Mike Hickey saying that although the game will likely sell well, “there’s no way they would come close to Grand Theft Auto.”
This investment plan definitely shows that Activision is banking on the long-term success of Destiny rather than immediate rewards; Bungie has a 10-year plan for the game, so it’s more accurate to compare it to games like League of Legends and World of Warcraft than individual Halo titles. A spokesperson for Activision confirmed this, saying that, “Over the long term, we expect the ultimate product costs to be roughly in line with other Triple-A titles.” Talk of microtransactions and other monetization models for Destiny also suggests that Activision intends to continue making money from players long after they’ve paid for the base game.
Tell us in the comments what you think of Activision’s budget for Destiny. Is the publisher crazy to spend so much, or does the gameplay footage make it looks like money well spent?
Destiny releases September 9, 2014 for the PS3, PS4, Xbox 360, and Xbox One.