By Jeremy Hannaford (Contributor) – Email
Print Edition: September 24, 2014
It was barely a year ago that Grand Theft Auto V was released, and at the time it was the most expensive game produced in history, with a budget of $250 million. Then came Destiny, the MMO shooter from Bungie and Activision hefting a price tag of $500 million! To some, that seems like a very extreme number for making a video game. As the saying goes, “in order to make money, you have to be willing to spend it” — but two weeks after Destiny’s launch, has that gamble paid off?
GTA V debuted to resounding reviews and purchase sales that set world records, according to Gamerant.com. The game made $800 million within 24 hours of its release and went on to generate over $1 billion in revenue. But this was a sequel in an already very well-established franchise. Destiny is a new IP, such deep investment was extremely risky. It was a risk Activision CEO Robert Kotick was willing to take.
“If you’re making a $500 million bet, you can’t take that chance with someone else’s IP,” Kotick said on Polygon.com at the Los Angeles Milken conference in April. “The stakes for us are getting bigger.”
But while $500 million is a lot of money, that isn’t all going into the game’s production. There are marketing costs, advertising, additional content, and a pre-release live action trailer. Unlike major Hollywood productions that only reveal their production budgets, Activision is publicly stating how much it cost to put everything in motion. And for some, that number seemed necessary.
Ben Kuchera from Polygon speculated in his article in June about how the investment wasn’t just for the game but for the franchise’s future.
“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.”
Activision used a similar tactic with another one of their billion dollar franchises. After the huge success of Call of Duty 4: Modern Warfare, Activision wanted to cement the series as the juggernaut it is today. For the Modern Warfare 2 sequel, the production value came up to $200 million. It was the most expensive game in the series, but that risk has paid off tenfold, with new Call of Duty entries garnering billions in sales each year despite smaller production values.
The Destiny open beta did provide some impressive stats leading up to the official release. According to Bungie, over 4.6 million people played, making it the most successful beta test in developer history. The number of pre-orders for the limited edition copies were so high that retailers like Best Buy had to cancel orders due to lack of supply.
But while certainly impressive, lack of limited edition copies is to be expected — ergo the title “limited.” Mass Effect 3 had a limited edition that was almost entirely sold out prior to the game’s release. These pre-orders tied in to the sales report released by IGN, which stated that Destiny had sold in over $500 million as of day one. The phrase “sold in,” however, means the cost of copies sent to retail stores — not how well those copies sell.
While some believe the game will make decent coin, there are those who are skeptical about its overall success. In the previously mentioned Gamerant.com article, market analyst Mike Hickey from Benchmark Company stated that while the game would likely sell well, “there’s no way they would come close to Grand Theft Auto.”
But there’s more to come. Although Destiny was released on September 9, Bungie has a plethora of additional content that will be released via several massive expansion packs. This is also just the beginning of a four-game contract spanning 10 years between Activision and Bungie.
While the game’s reviews haven’t been outstanding, the criticisms are irrelevant when you look at how much money the game is making. After two weeks, Destiny has made $325 million in physical sales; as long as that number continues to grow in the coming months, it looks like Bungie and Activision’s gamble will pay off.
