Activision: Destiny Not Meeting “Our Financial Expectations,” States Bungie Tied Up Internal Resources

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Possibly one of the biggest news to come out early on this year is the announcement that Activision was parting ways with Bungie and the studio’s Destiny franchise, which was shocking since a lot of people (including me) assumed Destiny was pulling in great money for Activision.

During today’s Activision earnings call, Activision shed some more light on the recent break up, and long story short: the Destiny franchise wasn’t meeting the publisher’s financial expectations, and that the franchise tied up Activision developers.

Brandon Ross (BTIG): Hi. Thanks for taking the question. I was just hoping you could provide a little more color on your rationale for parting ways with Bungie and the Destiny franchise and kind of what happened with that game. Thanks.

Coddy Johnson (Activision): Our decision was reach the mutual agreement with Bungie to sell back the commercial rights. And for us, at least, it was rooted really in our strategy overall. First, as you know, we didn’t own the underlying Destiny IP and we do for all our other major franchises, which we think is not just a differentiator for us in the industry, but also controlling the underlying IP gives us the chance to move with new experiences and new engagement models which also come with new revenue streams and of course structurally higher economics when you own the IP.

And that leaves to probably the second factor in our decision process, which is Destiny, it is highly critically acclaimed, high quality content, but it was not meeting our financial expectations. As we went through at the end of the year our financial planning for 2019, it indicated that Destiny would not have been a material contributor in operating income to our business.

And third, we had internal resources supplementing Bungie’s work, and that means they’re tying up one of our scarcest resources, which is developer time, which now under the arrangement we have reached, will be freed up after short transition period. So late last year when we’re exploring all our options on Destiny, in November after earnings release we learned that Bungie was willing to acquire our rights and we engage discussions with them and ultimately wound up consummating the deal in late December.

What’s surprising here is, most people might have assumed that Destiny was raking in a ton of cash for Activision (and Bungie) given the franchise’s Season Pass model, and how it integrated microtransactions. Apparently, whatever revenue it was generating wasn’t enough for Activision.

Do you think Activision made a mistake in letting Bungie walk away with the Destiny IP or did the publisher make the right move?

Source: Seeking Alpha (login required)

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