Why Activision is spending $500 million on Destiny

Yes, it's true: Activision is spending half a billion dollars on Bungie's Destiny. Yes, that's true despite Bungie's statement that, "the budget for Destiny, including associated marketing costs and pizza Wednesdays, is nowhere near 500 million dollars." And that's because, when Activision head Bobby Kotick revealed that gargantuan number earlier this year, he was speaking to the entire franchise, not just this September's game.

"That number has been widely misinterpreted as a production number for the first game," Activision CEO Eric Hirshberg explained in an interview today at Gamescom. "That number is an all-inclusive number that's several years worth of investment, including marketing and several games, and a lot of up front investment in things like engines and tools that will be able to be used for years to come."

This should come as no surprise to anyone closely following the tale of Destiny and Bungie working with Activision. The two companies signed a 10-year contract to produce a series of games under the Destiny moniker; the partnership was announced in April 2010, putting us just over four years into that 10-year deal. Despite being nearly halfway finished, Hirshberg said the $500 million includes more than just marketing, production and "pizza Wednesdays." It includes additional entries in the franchise, even.

"When you see it play out, it'll be fairly familiar: we'll have packaged games, follow on content," Hirshberg told us. All that is to say that Activision (and presumably Bungie as well) don't see Destiny as the MMO-like game (think World of Warcraft) that the beta led many to believe: there's no monthly subscription, no servers to manage, etc.. "I think that people are ascribing more mystery to the business model of Destiny than they need to," he said.

So, yes, Destiny costs $500 million. But not this fall's game -- that's the beginning of a much larger plan to make Destiny into the next blockbuster franchise. The next Halo. The next Call of Duty. Or even something bigger.

"Even with all that context, no one should be surprised that Destiny is a huge undertaking," Hirshberg said, "An ambitious vision takes an ambitious investment. We wouldn't be making it if we didn't believe in the potential of the game."