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Activision’s big budgets finally come to the fore with Destiny

This week saw the release of Destiny, marking the true beginning of 2014’s AAA season, and the first sign of what a world post-Halo will look like for developers Bungie. More importantly, it also celebrates two things.

First is a return to highly profitable form for publisher Activision-Blizzard, which will appreciate a big win with fans and critics after the mixed reviews of Call of Duty: Ghosts last year.

Second is big, Hollywood-style, blockbuster budgets.

You see, Destiny is the most expensive video game ever made, with Activision chief executive Bobby Kotick announcing earlier this year that over $US500 million would be spent on the game’s development and marketing alone.

City Ship in Destiny (Activision)

$500 million is roughly the amount it would cost to actually build this spaceship. (Activision)

The gamble appears to have paid off though, with Activision releasing a press release featuring quotes from Kotick that “retail and first party orders worldwide have exceeded $US500 million” for the FPS-MMO within the first 24 hours.

It’d be an impressive figure if it was true, but as Business Insider Australia pointed out, jargon matters. Last year, Activision published a similar presser proclaiming Call of Duty: Ghosts had sold more than $US1 billion globally on the first day, a number Activision chief financial officer Dennis Durkin admitted during an earnings call was a “sell-in” figure. Ghosts was actually pipped for day one sales by Call of Duty: Black Ops 2 – and more importantly, Grand Theft Auto V, which moved $US800 million in a single day.

What is true, however, is that more than $US500 million worth of Destiny stock is out there on the market. And semantics aside, it confirms the merit in Activision’s gamble to tie one of the biggest developers in the business to a decade-long contract.

Investors aren’t exactly shouting from the rooftops mind you: after sinking to $US23.59 a share early Wednesday morning, the stock price recovered to $US23.91 by the close of trade. That figure should improve a little today, however, given the news that the gamble has paid off, and with an eye to the next couple of months, where the combined publisher/developer will enjoy a boost in revenue from the releases of Call of Duty: Advanced Warfare and World of Warcraft: Warlords of Draenor, among others.

It’s also another sign that video games are becoming more and more like Hollywood with every year. Leaving the comparisons between Activision, a studio that’s rumoured to be thinking of making their own movies anyway, to one side, it’s not uncommon for most AAA games to have budgets the size of blockbuster films.

Destiny Tower

They certainly do create a cinematic landscape. (Activision)

Grand Theft Auto V, for instance, might have gathered over a billion in sales but that Call of Duty-beating trophy came with a price tag of $US265 million. Star Wars: The Old Republic is an MMO that most gamers considered a failure, thanks to a lack of innovation and its early, ignominious conversion from a subscription-based model to the free-to-play market.

It’d be a ghastly image if it were true, but The Old Republic is actually one of the most lucrative MMOs according to SuperData. The research firm compared all the major MMO games for 2013 and found that Bioware’s attempt at an MMO actually controlled 6 per cent of the market, earning $US165 million in revenue last year. That’s not a bad figure for a game released in 2011 that reportedly required over 800 developers and $US200 million in investment.

Even the most surprising games can cost a lot of money. IMDb’s business database estimates that last year’s Deadpool cost $US100 million, which is an awful lot of money that, with some other Marvel games, you can’t even buy on Steam, Xbox Live or the PlayStation Network anymore. Disney Infinity, Disney’s response last year to the smashing success of Activision’s collectible platforming series Skylanders, which was described by one former Disney employee as a “Hail Mary”, also cost $US100 million.

Infinity at least has the manufacturing and distribution of collectible figurines to fall back on though. Too Human came out in 2008 from Silicon Knights after first being announced in 1999 – well before the Xbox 360, the platform Too Human eventually launched on, was even released. The developers made a rod for their own back later on when they developed their own engine, before using Epic’s Unreal Engine 3 – which the latter successfully sued in court after it was found that Silicon Knights was using UE3 without paying royalties.

The tale of Too Human is even more depressing for those unfortunate enough to have played the game. For something with a rumoured budget of between $US80-100 million, a Metacritic score of 65 isn’t something to crow about. Too Human was pulled from the Xbox Marketplace last year after Microsoft received a recall notice from Silicon Knights, a sad end for one of one the sorriest tales in development.

On the bright side, at least Too Human got out the door. Ensemble Studios and Microsoft dumped a combined $US90 million into a Halo MMO – which Destiny most certainly is not, although it does work as an elevator pitch if you’re trying to describe the game to someone – that never even shipped. “Microsoft, from its gaming division, was really changing directions. They were looking really hard at the Nintendo Wii and they were really excited by the numbers that the Wii was turning,” Dusty Monk, an Ensemble alumni, told Incgamers.

“So part of this changing of the guard at Microsoft came along with the changing of the attitude to this very expensive, very long and very protracted $UA90 million project we were working on, which was Titan. To cut a long story short, Titan was closed down.”

It’s a reminder that despite the billions of revenues games will generate over the next few months alone, development is very much still a calculated gamble. And Activision’s Destiny is the largest gamble to date.

Thankfully, it worked. Now it’s up to the other blockbuster releases to deliver.

About the author

Alex Walker is a freelance journalist writing for ABC Technology & Games, and games.on.net. You can follow him on Twitter @thedippaeffect.

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