Analysts Predict That Titan's Cancellation Cost Blizzard $50 Million Or More
Yesterday Blizzard cancelled its upcoming MMO Titan after seven years in development. The real shock, however, might be how much money Blizzard will lose in the cancellation, according to industry analysts.
Independent analyst Billy Pidgeon estimates that "development costs for Titan may have amounted to tens of millions, perhaps $50 million or more." Wedbush Securities analyst and former Pach Attack host Michael Pachter estimates an even bigger loss.
"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."
DFC Intelligence's David Cole suggest that the reason Blizzard pulled the plug on Titan was due to how much the market has changed in the last seven years.
"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."
It makes sense that a huge project like Titan would have problems finding a profit when MMOs get most of their money from secondary purchases like DLC. Spending that much on (assumably) the base game would start an MMO off with significant debt that DLC just won't cover.
Luckily for Blizzard, they have over $4 billion dollars on-hand to help cover Titan's cancellation. It also doesn't hurt that their digital collectible card game Hearthstone is raking in quarterly earnings of around $481 million. I think they'll be just fine.