A month-old story about the budget of Activision and Bungie’s Destiny is making the rounds again, because there’s no expiration date on outrage or headlines with huge numbers. $500 million is a ton of money, and that’s a giant figure even by the standards of Hollywood accounting.
So of course Destiny is going to flop and lose everyone a ton of money and Activision and Bungie will be punished for their hubris, right?
Not so fast
Let’s take a step back. That number isn’t really crazy, and it makes a ton of sense when you look at the whole of what Destiny wants to be, and what it takes to create an online game of this nature across so many systems.
"Of course we have very precise and well modeled projections of what we think the audience size is, who we think the game will or could appeal to if we market it correctly," Activision Publishing CEO Eric Hirshberg told Polygon in a previous interview. "But at the end of the day, doing big things is nothing new for Activision. Investing in big ideas is nothing new for us. We're doing it across all of our main franchises and we've made a big bet on Destiny for good reason."
And the $500 million budget is many things. It’s production, and it’s marketing. It’s everything. You can see some of the money when you look at the game’s presence at E3. Every time you see a commercial for Destiny you’re seeing some of that cost. The $500 million isn’t the cost to make a single game, it’s the cost to get a franchise rolling, in the public eye and ready to ship.
Those processes are intricate and cost a ton of money, and the reported budgets of Hollywood films usually only include the cost to make the film, not the array of other costs that go into promoting the film, and including the marketing spend for the biggest blockbusters can add tens, if not hundreds, of millions of dollars to the total budget.
Activision gave a lump sum for everything when describing the budget, and the number is hard to make sense of unless you break down where each chunk of money is going, although it’s doubtful Activision will be willing to open its books in this way.
The $500 million isn’t the cost to make a single game, it’s the cost to get a franchise rolling
The other thing to remember is that it’s unclear if the $500 million number is just for launching this game, called Destiny, or the franchise that Destiny will become. Bungie has told me in the past that the company spent six years creating the tools that they’re now using to create the game, not to mention the engine Destiny runs on.
That’s a massive upfront investment that will make the creation of post-launch content and sequels much less expensive than the first game. If Destiny is a hit, and spawns successful sequels, the cost to bring those sequels to market will be greatly diminished by the initial investment in infrastructure and proprietary tools to create content.
$500 million is a huge sum for a single game, but it’s merely an impressive number when you look at the possibility of three or more games stretched across the ten-year deal that Activision signed with Bungie. We don’t know what that budget means, how it’s broken down, or if the other games will require other discrete investments from Activision once Bungie has shipped, but the conversation around the number and what it means is deeply flawed.
So no, this isn’t hubris, and it’s not crazy.
This isn’t the price of one game, this is the amount of money Activision is willing to spend to create a framework from which to launch multiple games, post-launch content, and the tools and technology to ideally allow easier and faster development on the sequels.
Seen through that lens the investment is still incredibly daunting, but understandable. It’s doubtful either of the companies need to make back all the money on the launch of the first game, and investing heavily on the whole of the franchise upfront creates great opportunities for future growth.
The tools and engine could now be mostly sunk costs, and that’s a huge advantage moving forward.
So no, this isn’t hubris, and it’s not crazy. It’s a company taking the launch of a huge, multi-year, multi-game franchise very seriously, and respecting the difficulty of launching new IP in terms of marketing and content creation. It could still be folly, but it’s not insane.
One last quick note: The bigger the budget, the more likely we are to get that PC version to help recoup costs. I'm pretty confident that's going to happen in the near future.
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