Before September 9th, Destiny was being hailed as a favorite for game of the year. A week later, and many people won’t even have Destiny in the discussion. Critical reception has been a mixed bag with Destiny’s Metacritic score hovering in the high 70s. A disappointment for Bungie, who is used to seeing their games heralded universally.

Another party expressing disappointment seems to be investors. Shares of Activision-Blizzard (ATVI) have been tumbling since last Thursday. Is this in reaction to Destiny’s reception and sales, or something else? Let’s take a look.

Activision Announces Sales

I’ll touch on two different figures from Activision. Last Wednesday, Activision announced sales of more than $500 million into stores. Into is the key word here. That means how much Destiny stock was sold to retailers, not to consumers.

Today, Activision announced another sales figure. $325 million sold-through worldwide in its first five days. This is the true sales figure. These sales are extremely good and makes Destiny the best-selling new IP ever.

So, what’s the problem? Activision placed a big bet on Destiny. A $500 million bet. $325 million sounds great, and it is. But, Activision isn’t getting the entire $60 for every title sold. A Reuters report from May reads, “To break even, Activision would have to sell about 15 million to 16 million units of a $60 game, analysts said.” $325 million would equal about 4-5 million based on various editions of the title, different price structure across the world, etc.

Now, analysts tend to see the near term picture. Destiny isn’t some one-off title for Activision. A 10-year plan has been mapped out for this franchise. Selling 15 million to 16 million copies for a brand new IP isn’t likely to happen. Activision is betting on Destiny becoming their next big thing in order to recoup this initial investment and profit in the future.

The big question is, can Bungie fix the blatant issues with Destiny and retain the player base? Mission variety, story and social features all need to be addressed. There’s a solid core here, Bungie just needs to listen to the community and build on it.

A Look Back

‘Buy the rumor, sell the news.’ Everyone has heard the popular investing phrase. In Activision’s case, that could very well be true. Activision-Blizzard shares have been in a steady climb since early May. Share price jumped from around $19.50 to $24 a share over that time period. Activision-Blizzard was trading below $17 in February before it starting its move higher. Check out the chart below to see the move.

ATVI chart

It’s not unusual for investors to take their profits after such a substantial move. What better time to unload then when Destiny is dominating the headlines.

An Eye on the Future

It’s not uncommon for stocks to ease off highs as a way to make room for a higher move. Plus, Destiny is far from Activision-Blizzard’s only title coming this year. Call of Duty: Advanced Warfare and Warlords of Draenor will keep Activision in the news and the attention of investors.

As for Destiny, Activision and Bungie just need to tighten up some of its flaws. Not everything can be fixed (story), but a lot of the game’s criticisms can be addressed in patches and content updates.

Chart image: Yahoo Finance


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