Activision Blizzard's (NASDAQ:ATVI) Destiny 2 put up strong release numbers and received good reviews from critics when it debuted last September, but the game's player base is dwindling. Recent comments from management also seem to support the idea that the game is floundering -- a significant setback for a property that has been important to Activision's growth story in recent years.
Should investors be concerned that Destiny is heading down a path toward irrelevance?
How did Destiny get here?
Following Destiny 2's release, Activision Blizzard announced that the game had surpassed its prequel's first-week engagement metrics. That was a promising indicator that Destiny 2 was off to a good start. The game released on console platforms on September 6 and wound up as North America's second-highest grossing game in 2017, so there's reason to think that strong performance continued past launch week, but it's now hard to deny that the title is in a troubled state. Management certainly didn't during the company's earnings call in February.
Here's the CEO of the company's Activision segment, Eric Hirshberg, giving some context on how Destiny 2 went from being a hit to being hated by its player base:
Now after that, meaning after players had poured a significant amount of hours already into the game, we have definitely seen some real sentiment issues surface in a couple of areas, and we have got plans to address those. For example, one of the things we wanted to do with Destiny 2 was to make the game a little bit less of a grind based on feedback we heard, and we also wanted to provide players with more direct paths to getting the game's best rewards. And that actually allowed our core players to consume the content faster than we anticipated. And that has led to an increase in players calling for more challenges and better rewards in the ongoing game.
One of the takeaways here is that the Destiny franchise once again debuted a major installment that was lacking in content. Some reports suggest that the Destiny 2 project was dramatically retooled late in development, which would do a lot to explain that deficiency. However, the objections from players are not limited to the game being light on things to do. Customers also seem to be dissatisfied with changes to the fundamental gameplay experience -- things like how fast players move, character attributes, and enemy variety.
Overall, the user base seems to want the game's developer to revert the game's mechanics closer to those of its franchise predecessor. Activision President and Chief Operating Officer Coddy Johnson noted during the last earnings call that the game's developer has made changes to the experience and said they have been positively received by the player base, but that doesn't seem to be the case -- even as more dramatic updates have been rolled out.
A significant misstep for Activision Blizzard
The need to deliver on the content front is something the company publicly addressed years before Destiny 2 released. It was the single biggest complaint when the first Destiny debuted back in 2014, so not having that weakness addressed for the launch of the sequel is a clear failure. Activision and Bungie came up short, here. Whether or not Destiny 2 experienced significant setback during its development, the product has not met customer expectations, and that has implications for the future of the franchise.
The assurances that the game's player base is warming up to the experience following the changes were dubious during the company's full-year conference call, and they look even worse following the game's recent update. Many of the most active online discussion communities dedicated to the game still seem to be characterized by a broad element of dissatisfaction, and belief that the franchise is dying is not a rare sentiment.
The company is set to release a new content pack in May. This will be followed by a more substantial downloadable content expansion in September. The player base is not happy, and that makes the prospect of selling add-on packs in the $20 to $30 price range much weaker.
Can Destiny be saved?
Bouncing back from a disappointing release isn't unheard of for a gaming franchise. The crucial difference with the Destiny series in that regard is that the first game already got off to a rough start after being hugely hyped. The title wound up being a success thanks to the strength of the core gameplay experience and a slew of updates that delivered content that was closer in line with what the player base was looking for prior to release. It seems unlikely that players will be as patient with the evolution of Destiny 2.
There's also the fact that the shooter genre is even more competitive than it was when the first Destiny released. Activision Blizzard's own Overwatch has overshadowed Destiny, Call of Duty is still going strong, Electronic Arts' Battlefield franchise has seen a resurgence, and titles like Player Unknown's Battlegrounds and Fortnite are soaking up tons of play time and moving the genre in a new direction.
In a lot of ways, Destiny seems like a franchise that isn't quite settled on what it wants to be. The ability to shift your product post-release is valuable and vital to success in the current industry climate, but having the trust of your consumers is crucial as well. Destiny 2's strong launch was due in large part to the goodwill that its developer had managed to build with the player base, and much of that goodwill appears to have been lost.
Activision Blizzard has invested a lot in Destiny, and seeing it continue to dwindle would be a significant setback. As it stands, it's probably fair to say that the franchise is dying. That doesn't mean the series won't get another installment, or that Destiny 2 can't be elevated to a better state, but success on those fronts is looking like a long shot.