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For Activision, giving up Destiny 2 was the result of 'missed financial expectations'

Before that point, Activision was concerned about ongoing Destiny support “tying up one of our scarcest resources, which is developer time."

Bungie ended its partnership with Activision ahead of schedule last month, taking ownership of the publishing rights for Destiny 2 in the process. 

Now, in Activision Blizzard's quarterly earnings call (transcribed by Seeking Alpha) Activision COO Coddy Johnson has shed some light on the breakup from Activision’s point of view, calling attention to IP ownership woes and missed financial expectations that led up to the mutual decision to call the partnership off.

He says that Activision itself was showing concern about Destiny’s future given a few other factors and, when the company learned that Bungie was willing to acquire the publishing rights for the game, a deal was forged. Johnson says that, before that point, Activision was concerned about ongoing Destiny support “tying up one of our scarcest resources, which is developer time” since it had internal teams supplementing Bungie’s own development work. 

On top of that, Johnson says that the Destiny intellectual property rights themselves were owned by Bungie, not Activision, which makes it difficult for the company to boost the franchise in the way it does with properties it itself owns.  

“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,” says Johnson.

At the same time, Johnson says that Destiny underperformed in the long run and wasn’t meeting Activision’s financial expectations. He notes that this occurred despite Destiny 2 being “highly critically acclaimed, high-quality content.” The company, he explains, didn’t foresee the game being one of its big earners in the upcoming fiscal year.

Johnson’s earlier comments about “developer time” being one of Activision’s scarcest resources is something reflected through Activision Blizzard’s latest earnings report. The company announced that it would be reducing its workforce by an overall 8 percent, something that will be accomplished by “reducing certain non-development and administrative-related costs across our business” in order to invest “more in development for our biggest internally owned franchises.” That 8 percent reduction ultimately sees an estimated 800 employees laid off.

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