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Titan cancellation cost Blizzard $50m or more, say analysts

By James Brightman

Titan cancellation cost Blizzard $50m or more, say analysts

Tue 23 Sep 2014 8:50pm GMT / 4:50pm EDT / 1:50pm PDT
PublishingDevelopment

It's a painful blow but it's better than publishing a mediocre game that fails to attract an audience

Activision Blizzard

Headquartered in Santa Monica, California, Activision Blizzard, Inc. is a worldwide pure-play online...

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When Titan first came to light in 2007, most people assumed it would be Blizzard's next big thing, ultimately taking the place of World of Warcraft which was likely to see further declines in the years ahead. Fast forward seven years, WoW clearly has been fading (down to 6.8 million subs as of June 30) but Blizzard has no MMO lined up to replace it, and that fact was really hammered home today with the surprise cancellation of Titan. In fact, the developer stressed that it didn't want to be known as an MMO company and one may not be in its future. Cancelling the project this late in the game may have cost Blizzard several tens of millions of dollars, analysts told GamesIndustry.biz.

"Development costs for Titan may have amounted to tens of millions, perhaps $50 million or more. This is not an unusual event, however. Blizzard has cancelled several games in various stages of development in the past. Costs for unreleased games can be significant, but launching substandard games can harm the reputation of a successful publisher such as Blizzard. Expenses for development can be considered R&D, and benefits can include invaluable training, IP and technology that can be applied to other games," explained independent analyst Billy Pidgeon.

Wedbush Securities' Michael Pachter estimated an even higher amount lost: "My guess is 100 - 200 people at $100,000 per year, so $70 - 140 million sunk cost. It's pretty sad that it took so long to figure out how bad the game was. I expect them to go back to the drawing board."

Indeed, the market has changed considerably in the last seven years, and while MMOs like EA's Star Wars: The Old Republic struggle to find a large audience, free-to-play games and tablet games like Blizzard's own Hearthstone are finding success. Blizzard has no doubt been keenly aware of the market realities too.

"As far back as 2013, they had already stated Titan was not likely to be a subscription-based MMORPG. This is consistent with a market that is increasingly dominated by multiplayer games that are either free to play or are an expected feature included with triple-A games such as Call of Duty. Titanfall and Destiny sold as standalone games supplemented by paid downloadable add-ons. Blizzard maintains very high standards of quality, so expectations will be steep for new franchises as well as for sequels," Pidgeon continued.

DFC Intelligence's David Cole agreed, noting that after seven years of development in an industry where trends and technologies change at a rapid pace, Blizzard simply had to pull the plug on Titan.

"They realized that unless a big MMO is out-of-this-world unbelievable it won't work in today's market where it competes against a bunch of low cost options. If they felt that it just wasn't getting to that point it makes sense to cut your losses," he noted. "Also, you see games like League of Legends and their own Hearthstone which are doing very well on a much lower budget."

"For Blizzard, I am expecting to see them continue to focus on high quality products but also focus on products with shorter development cycles and less cost. The market is just not in a place where you can have games with 7+ year development. It is changing too fast."

For most developers, junking a seven-year long project would instantly spell turmoil, but thankfully for Blizzard, it's part of the Activision Blizzard behemoth, which has a market cap of over $15 billion and, as of June 30, cash and cash equivalents of over $4 billion on hand. It's a nice luxury to have.

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20 Comments

Andreia Quinta Creative & People Photographer, Studio52 London

253 716 2.8
Popular Comment
Michael Pachter: "It's pretty sad that it took so long to figure out how bad the game was."
Oh shut it, Patcher. What do you bloody know about Titan's condition anyway.

Posted:A year ago

#1

Andreia Quinta Creative & People Photographer, Studio52 London

253 716 2.8
It seems a pretty understandable decision, coming from Blizzard anyway. It's not the first event of them canceling a game they didn't feel it had a strong sense of direction. With Starcraft they stuck to it and built an engine from scratch because they had faith and trust that it would work, with Warcraft Adventures and Starcraft: Ghost the Blizzard feel just wasn't there apparently.

I've seen 'full' play-throughs of Warcraft Adventures, and despite itching to play it myself and seeming oh so interesting, it did seem a bit... off. But if I remember correctly it was outsourced to another studio. All in all, I think it's a wise decision so not to harm the reputation of (as of today in my opinion) 1/1 product launched to excellent quality ratio. Intentionally forgetting the Diablo III pre-expansion.

The thing with titan in my view is that they set sail 7 years ago to find the next gen WoW as a means to improve upon the MMO genre and apply all they knowledge they gained from it into something fantastic. However the course of development of Blizzard games is so extensive and exhaustive, that entire markets shifted and changed, and oh boy have they changed since 7 years ago.

I respect Blizzard a lot because, slow as they may seem, they react to changes & target audiences in the industry very quickly (see Hearthstone and Heroes of the Storm), and this was no different. I think they just finally sat down for a serious conversation, placing their thoughts on the table on how their MMO was probably using formulas that other MMO's meanwhile tried and failed over the course of 7 years, formulas and concepts that aren't unique or trend starters, and also just simply saturation of MMO's everywhere you look.

The WoW killer never came - Oh I remember the 'promises': LotR, D&D online; Tabula Rasa (shut down); Everquest 2; Conan Hyborean Adventures, Vanguard (shut down).

Here's hoping they can withdraw all the knowledge, concepts and tech they learned these seven years and apply it to a truly revamped WoW engine (if anyone could pull it off, they would) and/or a truly heavy story driven immersive single player game in an already existing or new universe.

Although I would kill for a Starcraft MMO ^^

Posted:A year ago

#2

Alfonso Sexto Lead Tester, Ubisoft Germany

1,113 1,217 1.1
@Andreia:
Again, that statement could pretty much sum his career. A person unable to see why a company tries to push a product in whitch 1) They expend a lot of money into and 2) they expend a lot of work into, I really don't know what he is doing inside the games industry.

Aside from that, this is the third time that Blizzard cancels something and I think is a wise movement considering they live mostly on reputation for their good games and and high standard on quality. Releasing a lower than average product just for the sake of releasing it an take at least some profit can hurt you in the middle/long run.

Edited 2 times. Last edit by Alfonso Sexto on 25th September 2014 1:47pm

Posted:A year ago

#3

Klaus Preisinger Freelance Writing

1,431 1,766 1.2
Shouldn't everybody know by now that Blizzard operates on a different order of magnitude when it come to money, which is why you cannot compare mere numbers. For a normal developer, this figure might be shocking, but we are talking Blizzard here. Considering the BILLIONS they made off WoW, At $50M, this is like "yeah, we sunk 2.5% of one year's revenue into a project which never went anywhere after years.

Posted:A year ago

#4

Tom Keresztes Programmer

741 389 0.5
For a normal developer, this figure might be shocking, but we are talking Blizzard here
Activision might be spending a lot on things that are not related to Blizzard.

Posted:A year ago

#5

Martin Echenique Manager, Online Engineering - Sony WWS Online Technology Group, Sony Computer Entertainment Europe

8 10 1.3
Although I would kill for a Starcraft MMO ^^
That's what some people were hoping Destiny would be like, myself included.

Posted:A year ago

#6

Marty Howe Director, Figurehead Studios

152 95 0.6
Michael Pachter: "It's pretty sad that it took so long to figure out how bad the game was."
Oh shut it, Patcher. What do you bloody know about Titan's condition anyway.

Michael's right. It should take 5 minutes to determine whether a game is good or not.

Shouldn't it?

Or do you need 5 years to work it out...?

Edited 3 times. Last edit by Marty Howe on 24th September 2014 3:57pm

Posted:A year ago

#7

Anthony Gowland Consulting F2P Game Designer, Ant Workshop

313 1,362 4.4
Popular Comment
Sunk cost fallacy. They've just saved themselves from throwing hundreds of millions of dollars down the drain.

Edited 1 times. Last edit by Anthony Gowland on 24th September 2014 4:01pm

Posted:A year ago

#8

Jason Schroder Senior Programmer, Io Interactive

20 42 2.1
I think it would take a bit longer than 5 minutes to build an MMO and determine if it was fun...

Even in simple offline games the fun might not come together till all the pieces of the puzzle are built and assembled. MMOs are a puzzle an order of magnitude more complex. The pieces of the puzzle could take years to build.

Developing the engine & tools, the flashy new features, along with the lore, the story, the characters, the gameplay mechanics and the content to keep players interested for years and years - it all takes time. Longer for new original IP.

As with any game you constantly evaluate and iterate until the fun is there. The problem with long development schedules is not only the cost, but the passion from the team can be lost along the way. It takes great leadership to steer the direction of development and keep big projects on track over short durations, nevermind long ones. Even unlimited money may not be enough in some cases.

Posted:A year ago

#9

Alex V Executive Editor, New Game Network

12 29 2.4
"it's better than publishing a mediocre game that fails to attract an audience"

Destiny didn't have that problem.

Posted:A year ago

#10

Anthony Chan

138 174 1.3
... it took me 5 minutes to realize that max payne was run of the mill garbage... but they still made it.

Anyways, I hope Blizzard still has something on the horizon in terms of a new MMO IP. Honestly, (this being my opinion) I have not played a better MMO than World of Warcraft since the birth of World of Warcraft. Before WoW, I loved FFXI, Anarchy Online, and Everquest! But after, as I experienced the birth of WoW and worked through its growing pains, it has become the ultimate engrossing and refined MMO experience. That is not to say other MMOs are not as good, i.e TOR, Aion, Rift, etc. But honestly, all other MMOs appear to be copying most or even all the elements of WoW, i.e. questing pace, PvP arenas, even graphic UI and skill placement. So left with the choice of playing the original WoW or TOR for example, i end up gravitating back to WoW. It is my confort zone.

My hope for Titan was that it would bring us a new experience, completely reimagined and unique. Blizzard revolutionized MMOs through the decade with WoW. If Blizzard felt they could not recreate the awe and wonder most players felt when they cracked open vanilla the first day, then I agree the sunk costs of development are worth throwing away. The new MMO will have extremely high expectations from the fan base. They will expect the feeling they had when entering Lordaeron/Azeroth for the first time. Anything less is not acceptable.

If the fan base felt a WoW clone experience would be satisfactory, then we would just play WoW clones as it seems the gaming industry just knows create clones of great ideas. But the fact is, WoW is one of the remaining MMOs that carry a subscription. It doesn't matter that the subscription base has shrunk to 6.8million. The message is they still have 6.8million more subscribers than any of those MMOs who had to become F2P to stay alive. That alone should speak volumes of what WoW is and what we expect of its next MMO.

Edited 2 times. Last edit by Anthony Chan on 24th September 2014 6:30pm

Posted:A year ago

#11

Roland Austinat roland austinat media productions|consulting, IDG, Computec, Spiegel Online

157 112 0.7
Wedbush Securities' Michael Pachter estimated an even higher amount lost: "My guess is 100 - 200 people at $100,000 per year, so $70 - 140 million sunk cost. It's pretty sad that it took so long to figure out how bad the game was. I expect them to go back to the drawing board."
Hm.

Blizzard had senior staff on the project, and those will most likely earn more. However, many tech companies in the Bay Area pay junior staff more, so that guess is really just a guess. Even in the LA region experienced tech people will earn more than 100k.

An even wilder guess is 100-200 people. That's full-on production, really. Was anyone under the impression that Titan was in full-on production the whole time?

I expect Mr. Pachter to go back to the drawing board to come up with more funny numbers.

Posted:A year ago

#12

Marty Howe Director, Figurehead Studios

152 95 0.6
... it took me 5 minutes to realize that max payne was run of the mill garbage... but they still made it.

That's your opinion. 4 million other people liked it. lol.

Also Anthony, how many video games have you made. None? Then shut up.

Edited 2 times. Last edit by Marty Howe on 25th September 2014 7:26am

Posted:A year ago

#13
How many years till folks figure out Patcher doesnt have a foggy clue about anything during his analysis on anything...

Posted:A year ago

#14

Colin Berry Game Developer, Lucid Games

3 13 4.3
Alternatively it cost them about a months revenue from WOW at its height. Painful but not fatal (assuming the guesses are even remotely close; for example you would assume the team size was not fixed and ramped up and down depending on project status during that period)

The idea that you can tell in '5 minutes' that a game in development will be good or not makes little sense (its different to a player judging final product). A game can sound awesome at concept, and can then become a bad game. Likewise a bad concept can be worked or adapted into something good (rare but possible). 5 years is a long time, but it might not be that its a bad game, one companies bad game for example, might actually be a worthy 7/10 to another company, as developers have different standards.
Blizzards are, as is evident from their history, exceptionally high (even if you dont like some of their games, the quality can't be denied).

Its not like it is 5 years of wasted work either, there will be plenty to salvage (not even counting actual work), from experience, to training, to learning things that do and dont work. Its an expensive training lesson for sure, but its not like its 5yrs over; everything in the bin, nothing learned.

Projects get cancelled all the time, and if the company can afford it, as would appear evident, then its not a 'bad' thing.

Posted:A year ago

#15

Dave Smeathers Senior Software Engineer, Fireproof Studios Ltd.

4 9 2.3
... it took me 5 minutes to realize that max payne was run of the mill garbage... but they still made it.
You're missing the point: you have to make the game before you can judge it. Titan would've gone though loads of iteration, and would've changed drastically over those seven years.

All this news really means is that they're not going to make another MMO on that scale again.

Posted:A year ago

#16

Istvan Fabian Principal Engineer, Sony Computer Entertainment Europe

96 80 0.8
I think this was simply the result of re-evaluating their market and some research, and has nothing much to do with the game quality.
They would either have to go F2P and compete with lots of popular F2P titles - not good - or use the subscription model.
Chances of convincing their own players to subscribe to another game would be slim; they could switch to the newer experience, but not many of them would pay for both.
Getting subscribers from other games is almost impossible, until some technological breakthrough happens in MMO world, like really decent VR based games.
So they would mostly end up cannibalizing their own subscriber base, but having two MMOs maintained is vastly more expensive than having a single one. So you end up with two games, that share barely more than the same number of subscribers as just one game before, and maintenance and development costs significantly increased.
I think the decision was pretty easy if you consider this.

Posted:A year ago

#17

Klaus Preisinger Freelance Writing

1,431 1,766 1.2
When WoW came out, it just found perfect conditions for its success. It was still the height of the fantasy boom. It was the time when broadband spread like wildfire, Those were factors for its success that cannot be replicated by just making a good game and finding the right audience.

The ironic thing from the leaks is how the game tried to mimic life by making everything real, with sprawling cities and shops to wander around. While back in reality, we try the exact opposite and have an UI on our phone for every thing we want to buy. We do not need sprawling shopping areas, just more warehouses and delivery services.

Posted:A year ago

#18
I think unless its a WOW beater and WOW is being closed down, no point making another MMO

Posted:A year ago

#19

Gil Salvado 3D/2D Artist

35 37 1.1
Well, a destiny which would've also been the best choice for Duke Nukem Forever, Colonial Marines and etc.

A 4+ year development cycle is gettig more questionable by every passing quarter.

Posted:A year ago

#20

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