Activision funding Bungie development

As part of its exclusivity agreement with Bungie, Activision will be funding the development of the new IP in question and could make as much as $65m from the first game to be released.

That’s the prediction of – yes, you guessed it – Michael Pachter, who claims that Bungie and Activision’s mystery IP is already well along in its development.

Activision is funding some or all of the development and getting first dollar payback and a healthy revenue share in exchange,” Pachter told Gamasutra.

It’s clear that this is a publishing partnership and not a distribution arrangement. That means that instead of normal distribution margins of around ten per cent, the deal probably allows Activision to participate in profit upside, suggesting that their margins could end up between 15-20 per cent if a future Bungie game sells a crazy number of units.

He goes on to point out that a typical Bungie game on Xbox 360 will sell around 10m units. Add more platforms to this mix and sales could reach as much as 15m units. 15 per cent profit on that equals around $65m for Activision.

Pachter also adds that he believes the first title is unlikely to emerge until 2012, with further instalments arriving every two years.