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$70 million price tag rumoured on Activision's Bond deal

By Rob Fahey

Tue 16 May 2006 5:02pm GMT / 1:02pm EDT / 10:02am PDT

Activision will pay $70 million up front for the James Bond 007 license under the terms of its recently announced agreement with movie studio MGM, according to senior industry sources familiar with the deal.

The seven year deal, which was announced by Activision earlier this month, sees the videogame rights to Hollywood's longest-running franchise changing hands from former license holder Electronic Arts.

Although financial terms were not announced, has learned that the $70 million figure is being discussed by senior industry executives - a figure which seems likely to be Activision's up-front payment to secure the license.

According to our sources, the firm has also agreed to develop a game based on the James Bond 007 franchise every year for the duration of the deal, with the up front payment being credited against royalties payable to MGM from those titles.

Speaking to today, Wedbush Morgan Securities analyst Michael Pachter agreed that this figure seemed "quite reasonable" in the light of other similar deals which have been struck in recent months.

"Our best guess is that the royalty rate is somewhere between 10 - 12.5%, and I would guess that the guarantee is close to the $10 million annual figure your sources provided," he commented. "This implies that Activision will plan to generate $80 - 100 million in annual sales from the games. The figure therefore sounds quite reasonable to me."

Activision wasn't shy about rubbing in what some perceive as its victory over EA at the E3 trade show, with an area of the firm's stand facing EA's booth being dedicated to showing off the 007 logo and scenes from old films in the series, despite the fact that no products based on the franchise have been announced by Activision as yet.

However, Electronic Arts for its part claims that it dropped the Bond license because it no longer fitted with the firm's plans going forward - although the company has not yet elaborated on what change of direction, exactly, this refers to.

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