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[RSB]

I'm sure they'll be fine, Destiny will be very profitable, especially in the long run. Sequels will have shorter development cycles and will be cheaper to make. There will be lots of DLC for each game, with new areas, more missions, more PvP maps, new weapons and armor, more skins... Activision knows what they're doing.

Personally I can't wait to dive into Destiny's universe. The game looks amazing already, and they haven't showed even 10% of what they are preparing. Bungie has never dissapointed me, I have no doubt Destiny will be my go-to game for the next few years (just like Halo was) Can't wait for the beta. Hype!

 

[DrROBschiz]

The 10 year deal is referenced in the OP. $500 "would be" a record spent on a single game. Luckily for Activision the $500M isn't for a single game.

Yeah

This is supposedly a long term investment and 500Mil on just the first game would be ridiculous

 

[Principate]

The 10 year deal is referenced in the OP. $500 "would be" a record spent on a single game. Luckily for Activision the $500M isn't for a single game.

Again how do you know that this is an assumption. Were you at the conference when they stated that break down? no. That Analyst was and unless he wasn't paying attention he should know what Activison is talking about they wouldn't purposefully make it vague. It's not in their best interest to make it vague.

 

[Fine Ham Abounds]

Good lord, Maplestory and Lineage I are still making that kind of bank?

I didn't realize SWTOR was working out that well either.

 

[Rolf NB]

This story is worthless without splits. But thanks for the shock value Reuters.

 

[Sothpaw]

There are multiple references and sources saying this is for one game, not the franchise.

There is also a reference to the 10 year deal. You guys can argue with me all you want but I do this for a living. Lunch is almost over though...

Do you guys honestly, truly think none of the $500M should be matched to future games?

 

[Overdoziz]

Half a billion dollars and nearly 600 employees and Bungie would be spread too thin for a PC version?

 

[Principate]

There is also a reference to the 10 year deal. You guys can argue with me all you want but I do this for a living. Lunch is almost over though...

Do you guys honestly, truly think none of the $500M should be matched to future games?

An analyst stated otherwise refute him with evidence before you state your assumption as fact.

 

[Sothpaw]

Again how do you know that this is an assumption. Were you at the conference when they stated that break down? no. That Analyst was and unless he wasn't paying attention he should know what Activison is talking about they wouldn't purposefully make it vague. It's not in their best interest to make it vague.

The fact that there is a 10 year deal is in place is all I need to know. There is nothing vague about that. Royalties, salaries, leases, tech; all part of the $500M that will be realized over the life of the agreement.

 

[ViewtifulJC]

May the Elzar be with them

 

[Principate]

The fact that there is a 10 year deal is in place is all I need to know. There is nothing vague about that. Royalties, salaries, leases, tech; all part of the $500M that will be realized over the life of the agreement.

Again how do you know this isn't an estimation of cost for the end of the quarter Destiny is released in.

You need to state a more compelling argument it's your word against someone that was there. All you've stated is assumption with no backing, you could be right but you also could be wrong you do not know how these costs were estimated for this PR statement.

 

[Forsaken82]

Half a billion dollars and nearly 600 employees and Bungie would be spread too thin for a PC version?

Since when does Bungie have 600 employees?

 

[Appollowexx]

As well as I think Destiny will do, that amount of money is just absurd.

I realise they are trying to launch big and set up for a franchise that will run for years to come but even so…

A budget half that size would have been more than sufficient, surely?

 

[Sothpaw]

An analyst stated otherwise refute him with evidence before you state your assumption as fact.

I can't explain what took me 4 years to earn a degree in over my lunch break. Believe what you will.

 

[MoG EclipsE]

The 10 year deal is referenced in the OP. $500 "would be" a record spent on a single game. Luckily for Activision the $500M isn't for a single game.

Of course its not for 1 single game. I do not understand how anyone can think that they will need to put down that much money again for developing and marketing next entries to the series. I mean they have been building this for 5 years and the marketing needs to be big to build their fan base. Once that is achieved, they will watch the $$ rolling in over the next few entries.

 

[Sothpaw]

Again how do you know this isn't an estimation of cost for the end of the quarter Destiny is released in.

You need to state a more compelling argument it's your word against someone that was there.

Because Activision's revenues do not support spending $500M in a quarter on one game.

 

[maabus1999]

There is also a reference to the 10 year deal. You guys can argue with me all you want but I do this for a living. Lunch is almost over though...

Do you guys honestly, truly think none of the $500M should be matched to future games?

And you think you are the only person here who doesn't do something similar? Besides ATVI PR confirmed the 500 M number when you include everything beyond game development (which is at 4+ years with hundreds of people) including marketing (Probably 200M in this alone), infrastructure, royalties, and overhead.

 

[Sothpaw]

Of course its not for 1 single game. I do not understand how anyone can think that they will need to put down that much money again for developing and marketing next entries to the series. I mean they have been building this for 5 years and the marketing needs to be big to build their fan base. Once that is achieved, they will watch the $$ rolling in over the next few entries.

Some people just like to argue I think. I'm a PC gamer anyway and have no dog in this fight. Just want to add a little perspective to the discussion.

 

[Principate]

I can't explain what took me 4 years to earn a degree in over my lunch break. Believe what you will.

Yes you can it's a specific concept. If someone asked me to explain a specific petroleum engineering concept I should be able to do it if I learned the content properly. Accounting doesn't require complex mathematics, if you tried I'm pretty sure you can.

Because Activision's revenues do not support spending $500M in a quarter on one game.

Not one quarter it's obvious these costs were spread over several quarters I'm talking about the costs that end in the Quarter of destinies release. Normally I'd take your word on this but your statement directly contradicts someone else so I want to scrutinise.

 

[SlipperySlope]

I don't even think there has been a half billion dollar movie.

So, this is how the world ends.

 

[Sothpaw]

And you think you are the only person here who doesn't do something similar? Besides ATVI PR confirmed the 500 M number when you include everything beyond game development (which is at 4+ years with hundreds of people) including marketing (Probably 200M in this alone), infrastructure, royalties, and overhead.

I can assure you no one arguing with me is a CPA because any CPA who attributes $500 to the cost of a single game when a 10 year agreement is in place would have their license revoked.

 

[MoG EclipsE]

Some people just like to argue I think. I'm a PC gamer anyway and have no dog in this fight. Just want to add a little perspective to the discussion.

Well, all we can do is wait and see I guess. In my opinion though, this investment makes 100% sense...

 

[Mocca-Bear]

Jesus H. Christ, way to make a press statement understandable by plastering an incorrect headline on all of the gaming websites. I mean good lord is the concept of Activision paying 500 mil. for one game shortsighted when it's a 10 year publishing deal. Ffs gaming media, this is the type of stuff that you're here for!

 

[maabus1999]

Because Activision's revenues do not support spending $500M in a quarter on one game.

Now I don't know what your trying to run with. They didn't spend $500 M in a quarter. Where'd you get that awful idea? This is spread out over 4 to 5 years depending on when they started the project internally until several months after release due to marketing. There are massive sunk costs in starting a new project with an engine and brand new server infrastructure, that is why it is so high. The future games will be much cheaper but most likely still run 100 to 200 million a piece, if not more (if they are greenlit).

 

[MoG EclipsE]

I don't even think there has been a half billion dollar movie.

So, this is how the world ends.

But there has been half billion dollar movie series...

 

[Overdoziz]

Since when does Bungie have 600 employees?

http://www.examiner.com/article/bun...le-working-on-destiny-than-they-did-with-halo

"In Halo, [we] worked with a team of 130 people. Now there are over 500 people working on Destiny.

http://destiny.bungie.org/n/940

With somewhere between 5 and 600 people now in the studio

I guess saying that they have over 500 employees working on it would be more accurate. Either way they have a massive amount of people working on the game so it's kinda disappointing that they apparently don't have enough people to do a PC version.

 

[link1201]

Wow...that's a lot of loot. I hope the game is worth the investment. Talk about pressure to deliver. I want to really love this game not sure just yet though. I hope they have a lot more info at E3.

 

[Pooya]

Half a billion dollars and nearly 600 employees and Bungie would be spread too thin for a PC version?

I imagine they have plans for the PC version, as in building something like battle.net for it (bungie.net!) that handles all the online interactions, digital distribution of content and everything else, and that wont be ready this year. Not just a simple port and putting steamworks on it, that could explain it I think.

 

[Sothpaw]

Yes you can it's a specific concept. If someone asked me to explain a specific petroleum engineering concept I should be able to do it if I learned the content properly. Accounting doesn't require complex mathematics, if you tried I'm pretty sure you can.



Not one quarter it's obvious these costs were spread over several quarters I'm talking about the costs that end in the Quarter of destinies release. Normally I'd take your word on this but your statement directly contradicts someone else so I want to scrutinise.

SOP 97-2, the body of law that governs software revenue recognition, is actually extremely complicated. Accounting firm partners make a LOT of money helping companies like Acti navigate through the law. Acti can't even take all of the revenues and related expenses in the quarter Destiny 1 is released.

The analyst quote is just a headline statement. It is not supported by any governing accounting law.

 

[Sothpaw]

Now I don't know what your trying to run with. They didn't spend $500 M in a quarter. Where'd you get that awful idea? This is spread out over 4 to 5 years depending on when they started the project internally until several months after release due to marketing. There are massive sunk costs in starting a new project with an engine and brand new server infrastructure, that is why it is so high. The future games will be much cheaper but most likely still run 100 to 200 million a piece, if not more (if they are greenlit).

I was refuting a statement that asked how I didn't know the $500M was a period cost. That is how I refuted the statement.

 

[Principate]

SOP 97-2, the body of law that governs software revenue recognition, is actually extremely complicated. Accounting firm partners make a LOT of money helping companies like Acti navigate through the law. Acti can't even take all of the revenues and related expenses in the quarter Destiny 1 is released.

The analyst quote is just a headline statement. It is not supported by any governing accounting law.

But it's a press statement it doesn't need to be scrutinized in such a way, they're not going send that number as report, for various tax calculations. It's 1 significant figure for gods sake. If I said such and such well cost 20 million to produce do you think I need to follow all the various accounting procedures to even make that extremely vague statement. It's a rough estimate to generate buzz.

Is it against the law simply state such a rough estimate?

 

[Toothless Spoon]

500M and no PC version for a FPS - I hope someone gets fired. I have a feeling that they got some coin from the Microsoft and Sony to make it console exclusive, so it wont be all Activision bank.

 

[Apophis2036]

Of course its not for 1 single game. I do not understand how anyone can think that they will need to put down that much money again for developing and marketing next entries to the series. I mean they have been building this for 5 years and the marketing needs to be big to build their fan base. Once that is achieved, they will watch the $$ rolling in over the next few entries.

Activision spent $200 million marketing MW2 in 2009... I don't think it's unrealistic to think that they are spending $250 million on marketing and $250 million on game development for the first instalment of Destiny.

 

[tfur]

Well, they are probably feeling pretty confident.

They are doing a deal with the best selling console.
They are distributing on an assortment of consoles. (they must of had a good laugh when they heard TF was a locked down to certain consoles.)
They have good pedigree for developers.
They have abundant content.

This will be the next big thing, and they are confident they have the content and resources to produce on the contract time line.

This could the next "halo" or "cod", but this time it is going to run on everything*.

 

[Sothpaw]

But it's a press statement it doesn't need to be scrutinized in such a way, they're not going send that number as report, for various tax calculations. It's 1 significant figure for gods sake.

Oh I hear ya. $500M is a ton of money. Just throwing out there that the $500M will be realized over the life of the contract. There is no paragraph in their 10-K that is going to say "total expenditures for new franchise Destiny were $500M" because that isn't relevant or reliable information.

Anyway back to work.

 

[MoG EclipsE]

Activision spent $200 million marketing MW2 in 2009... I don't think it's unrealistic to think that they are spending $250 million on marketing and $250 million on game development for the first instalment of Destiny.

Exactly. Definitely not unrealistic.

 

[Sothpaw]

But it's a press statement it doesn't need to be scrutinized in such a way, they're not going send that number as report, for various tax calculations. It's 1 significant figure for gods sake. If I said such and such well cost 20 million to produce do you think I need to follow all the various accounting procedures to even make that extremely vague statement. It's a rough estimate to generate buzz.

Is it against the law simply state such a rough estimate?

Oh to answer your last question, no it is not. It would be against the law to include that in their Form 10-K though because it would be untrue with a 10 year deal in place. Press is just press, I can't argue with you there.

 

[True Underdog]

To those arguing about whether or not it's $500MM for one game or the entire franchise: I think it's somewhere in between...and I think it's already been discussed in this thread.

The $500MM isn't for the whole franchise but for the first game plus the infrastructure and support for the whole franchise, the "foundation," if you will. It's not as short sighted as some are asserting but it's also not as long term as being the budget for the entire series.

So while most of it seems to be going to the first game, the rest is the groundwork for the rest of the franchise.

I think.


I dunno. :/

 

[Principate]

Oh I hear ya. $500M is a ton of money. Just throwing out there that the $500M will be realized over the life of the contract. There is no paragraph in their 10-K that is going to say "total expenditures for new franchise Destiny were $500M" because that isn't relevant or reliable information.

Anyway back to work.

Fair enough you could be right I don't know, it's just the other fairly specific statement lead me to scrutinize what you stated. All in all a productive argument than you for your time.

 

[AlphaDump]

Analysts said $500 million would likely be a record spent on a single game - especially one without an established track record. To break even, Activision would have to sell about 15 million to 16 million units of a $60 game, analysts said.

this is suicide.

if xbone and ps4 hardware continue to sell at the same pace until next year, would the entire summed hardware base even cover that threshold? I understand it is a cross-gen, but to rely on that to compensate for the inherent "next gen" install base is absolutely batshit insane.

 

[MoG EclipsE]

To those arguing about whether or not it's $500MM for one game or the entire franchise: I think it's somewhere in between...and I think it's already been discussed.

The $500MM isn't for the whole franchise but for the first game plus the infrastructure and support for the whole franchise, the "foundation," if you will. It's not as short sighted as some are asserting but it's also not as long term as being the budget for the entire series.

So while most of it seems to be going to the first game, the rest is the groundwork for the rest of the franchise.

I think.


I dunno. :

Exactly this. Of course developing a new game from scratch and marketing it will be expensive, but like you said, once the "foundation" is complete, they won't need to spend that much money on developing and marketing future entries.

 

[BruiserBear]

Still doesn't make it universally true. We are still in anecdotal territory here.

What reception can we possibly assess beyond the one right in front of our eyes?

 

[Duane Cunningham]

this is suicide.

if xbone and ps4 hardware continue to sell at the same pace until next year, would the entire summed hardware base even cover that threshold? I understand it is a cross-gen, but to rely on that to compensate for the inherent "next gen" install base is absolutely batshit insane.

It won't sell 15 million, but it will become something everyone has heard of and as a result, two years from now Destiny 2 will hit the ground running.

 

[gundamkyoukai]

Activision spent $200 million marketing MW2 in 2009... I don't think it's unrealistic to think that they are spending $250 million on marketing and $250 million on game development for the first instalment of Destiny.

It makes no sense that Destiny 1 cost $250 million to make the game alone .
GTA5 cost $265 million to make along with marketing and Destiny will only take 1 year more with most likely less staff .

 

[Winterfang]

If they only knew how happy that would had made me with just 499 of those millions.

 

[Duane Cunningham]

Next month when Destiny shows up on the side of a Mountain Dew can, that's just a seed being planted in the mainstream's brain. Six years from now, the franchise WILL be selling CoD/GTA/Halo/etc numbers that'll make 15 million seem like chump change. Or at least, that's what Activision is betting on. And if anyone knows how to make it happen, it's them. They think this will be WoW plus CoD. Maybe they're right.

PS I didn't know anything about the premise until I looked it up just now. I'll be rolling Awoken all the way.

 

[JetSetRadio]

Only 500M? Preorder cancelled.

 

[Jarmel]

Oh I hear ya. $500M is a ton of money. Just throwing out there that the $500M will be realized over the life of the contract. There is no paragraph in their 10-K that is going to say "total expenditures for new franchise Destiny were $500M" because that isn't relevant or reliable information.

Anyway back to work.

There are aspects which are long term such as R&D, tech licensing and engine development, and royalties in general. That however is part of any game or franchise in that they can potentially reuse it down the road for cheaper and quicker development times. It however is a cost of developing the first game. By all indicators it looks like they're planning on spending $500 million on the first game alone. That said, paying upfront can allow them to do stuff cheaper down the road so it's also an investment to the franchise as a whole.

The game is almost certainly going to be the most expensive game in gaming history till GTA6 comes out.

 

[Grief.exe]

Good lord, Maplestory and Lineage I are still making that kind of bank?

I didn't realize SWTOR was working out that well either.

I was really hoping SWTOR would continue to tank.

The game in general was just incredibly dated and even rushed out. Does not send a good message to the industry if it is in any way a success.

 

[PanicFreak]

SOP 97-2, the body of law that governs software revenue recognition, is actually extremely complicated. Accounting firm partners make a LOT of money helping companies like Acti navigate through the law. Acti can't even take all of the revenues and related expenses in the quarter Destiny 1 is released.

The analyst quote is just a headline statement. It is not supported by any governing accounting law.

What this guy is saying is that there is specific guidance related to how entertainment companies or software companies recognize the costs and revenues associated with the development of a video game.

Most of the time, you don't have to recognize your costs immediately as cash goes out the door and instead get to accrue it on the balance sheet as an investment. So cash leaving the door becomes an Asset on the balance sheet (isn't accounting fun?!?). After they release the game, they will depreciate the asset and recognize the costs. Therefore, there won't be $500 million in costs associated with Destiny in any one on Activision's quarters.

The guidance likely has specific time lines regarding how quickly the asset can be depreciated but it's probably around a year or two.