Details of the contract between Activision and Bungie have emerged via the Call of Duty court case, and by the looks of things it’s one of the biggest contracts in videogame history.
Here are some key points from the 27 page document:
Destiny and Comet
Destiny is the codename for an online-centric action game series currently in development at Bungie for Activision. Comet is the codename for an unknown standalone expansion to the Destiny series. Destiny and Comet will be released in alternating years, starting with Destiny in 2013 and ending with a Comet expansion in 2020, when the contract between the companies will end. Bungie will provide online support for the games for three years afterward.
Destiny was to be released on the Xbox 720 as well as the 360, however this may have changed. PlayStation versions are also hinted at. From Destiny 2 onward, the games will be released on PlayStation 4, Xbox 720 and Windows PC.
Bungie has been granted the exclusive rights and ownership of the Destiny IP, and will receive a USD $7.5 million bonus if the game ships on time, a USD $2.5 million bonus if the game rates above 90 on Gamerankings.com, USD $25 million if Activision makes $750 million in operating income during the twelve-month period when the game comes out, and an extra USD $25 million on top of that if Acti’s operating income crosses the USD $1 billion mark.
Bungie will also be entitled to 20 per cent of Activision’s annual operating income related to the Destiny and Comet business, up to a total of USD $20 million, unless said annual operating income climbs above $400 million, in which case they are entitled to 35 per cent.
Activision has agreed to go up to a maximum budget of USD $140 million for the first Destiny game on Xbox 360. However, this includes marketing costs, and because it is the maximum amount before royalty penalties are issued to Bungie, it should not be considered as an accurate guide to production costs.
Bungie is banned from developing action shooters other than Destiny until 2018 (after the release of Comet 3), regardless of other stipulations. After then it would have to wait until 2021 to publish such a game, but in any event must give Activision first rights to negotiate a publishing deal.
In 2022, Bungie will have rights to publish Destiny projects for itself, or with a publisher other than Activision (assuming previous deadlines and terms are met). However, Activision has first negotiating rights to publish future Destiny games.
A maximum of around five per cent of key staff and five per cent of all other employees are free to prototype and self-fund a project called Marathon, which appears to be a reimagining of a previous Bungie game of the same name. Once USD $375 million in operating income is made through the Destiny business, Marathon will be free to be published, and at this stage around 10 per cent of staff may work on the project.
Up to 25 per cent of the studio (including no more than 25 per cent of its key members) are free to work on non-Activision games after USD $750 million is made through the Destiny business. Activision's in-house studios may develop conversions of these projects provided Bungie agrees with the terms.
Activision’s Right To Terminate
The publisher can pull away from the deal under the following conditions:
1) If Destiny 1 sales do not reach 5 million units after six months.
2) After the release of Comet 2 for any reason (2016)
3) If Halo Reach didn’t score more than 80% on Metacritic
4) If Halo Reach didn’t sell six million copies in its first six months
If Activision terminates, the IP goes to Bungie and Activision can only publish previous releases for another two years.
If, before 2016, a company merged with Bungie or bought it outright, Bungie would need to pay Activision 19.9% of the acquisition transaction fee. Bungie is free to reduce this penalty fee to 14.9 per cent, or even 9.9 per cent, if such an event were to happen. However, in order to do this it would need to achieve the two USD $25 million sales bonuses - mentioned above – but not accept them.
Key staff must sign a new, long-term employment contract with Bungie that Activision approves the terms of. It stipulates that ‘key members’ will lose their equity in the studio if they leave before Destiny project number two, due for release Fall 2015 on PC, PS4 and Xbox 720.
(There is only one loophole that allows staff to get their equity back, and the Destiny project will need to make $1 billion in operating income for such a loophole to possibly come into effect).
The Destiny project will legally have entered ‘critical risk’ if 33 per cent of the Bungie staff leave the studio within any twelve month period prior to the master copy of Comet number four (due 2020). In this phase, Activision has, in certain circumstances, the authority to assume control of the game’s IP, as well as a licence to use the proprietary ‘Destiny Game Engine’.
A small section of Bungie staff (identified as ‘key-key members’) have signed a no-compete clause, meaning they are prohibited from joining rival companies during the spell of the contract.
Activision CFO Thomas Tippl has the final authority to decide whether the Bungie project has entered a ‘critical risk’ period, which is determined as the project not meeting certain completion or quality milestones. In this event Activision has the right to resume control of the Destiny series without Bungie’s approval until 2020. (Bungie must still be paid royalties for games already produced).
Valve, Epic and Gearbox are specifically banned from developing any Destiny or Comet conversions or adaptations.
Before commercial release of all games in the contract, Bungie must provide Activision with a list of Easter eggs it has spliced into the game.
Each Bungie employee will receive two Activision games per year as a gift.
Bungie will receive one thousand copies of Destiny games after their release, to keep, play, share and promote the game.
Bungie has agreed to build a game it believes will fit within the parameters of a ‘Teen’ or ‘PEGI 16’ rated game. Failure is not breach of contract.
Bungie must patch ‘critical’ bugs within thirty days of them being discovered after the commercial release of a game. If such a bug is found twelve months after the release of a game, Activision will not pay for repairs.
Now doesn’t reading all that make you wish you were a lawyer?