Of all the problems 2020 brought, you wouldn’t think excess revenue would be one of them. That was Bungie’s mistake.
For several years, Destiny 2 looked like one of the strongest live-service businesses in gaming. The game had survived a split from Activision, kept a loyal player base, and turned annual expansions into major revenue events. During the pandemic, that model looked even stronger, as more players spent more time online and expansion launches continued to break records.
The problem is that Bungie appears to have mistaken a powerful demand spike for a permanently larger earnings base. Bungie hoped to expand from being a one-game studio to maintaining at least five games across four separate IPs in the early 2020s. That might have worked if the pandemic-era demand curve had held. But six years later, we know that wasn’t the case.
The Pandemic Made the Model Look Stronger Than It Was
Bungie’s pandemic-era growth wave was real. Steam engagement spiked to levels usually associated with a major new expansion in summer 2020—without any such concurrent drop. Similarly, the launch of Destiny 2: The Witch Queen (2022) was only ~2500 users short of setting an all-time record for concurrent players on Steam. On the surface, this looked like confirmation that Destiny 2 could remain the center of Bungie’s business while the studio built new franchises around it.
But launch strength is not the same thing as durable earnings power. A franchise can produce enormous expansion spikes without supporting the fixed costs of a much larger company year-round. That distinction became the core problem—Bungie seems to have scaled as if COVID expansion-window demand represented the new normal, when a large share of that upside was likely a temporary product of quarantine.
Bungie Chose the Evergreen Platform Bet
The foundational strategic decision came in 2020, when Bungie chose not to build Destiny 3. Instead, it argued that Destiny 2 would become an “everlasting evolving world,” supported by annual expansions, technical renovations, and the Destiny Content Vault. Just as much as this was a product decision, it was also a capital allocation bet.
A sequel would have been expensive and risky, but it also would have reset the franchise technically, narratively, and commercially—a dangerous play, since it would have disrupted the continuous engagement that live-service depends on. So, Bungie chose the opposite path: keep the existing platform alive, renovate it over time, and use live-service continuity as the foundation upon which it could build future growth. While engagement was high and expansion launches were strong, that strategy looked rational. The problem is that it concentrated the company’s risk in one aging live-service franchise for as long as that property served as its only revenue stream.
Then Bungie Built for a Bigger Future
After the early validation, Bungie stepped on the accelerator. In 2021, it announced a major headquarters expansion from 84,000 square feet to more than 208,000 square feet, planned an Amsterdam office, and said it intended to bring at least one new IP to market before 2025. At the same time, The Witch Queen was delayed because COVID disruption and the scale of the roadmap required more time.
That combination matters. Bungie was already facing execution strain, but management still interpreted the business as strong enough to justify structural expansion. The company was not merely adding people to support Destiny 2, but building a studio for a multi-franchise future—while already struggling to deliver on its only proven revenue engine.
Sony Bought the Strategy, Not Just the Studio
In January 2022, Sony announced it was acquiring Bungie for $3.6 billion. This made sense on paper—it wanted Bungie’s live-service expertise at a time when PlayStation was trying to expand beyond traditional single-player console releases. Bungie, meanwhile, entered the deal with more than 900 employees and a dual aim to expand Destiny while creating new worlds.
For a while, the thesis looked intact. Destiny 2: Lightfall (2023) launched with the game’s highest-ever player counts (even as player sentiment toward the expansion was broadly negative), and Sony continued to point to Bungie as a model for live-service development. But the acquisition depended on cash-flow durability that turned out to be weaker than expected. Instead of becoming a self-funding live-service engine for Sony, Bungie became a restructuring case.
The 2023 Inflection Point
The contradiction became visible in 2023. Lightfall was commercially strong at launch, with it boasting the game’s highest concurrent player count in years and stronger daily active users than The Witch Queen. But later that year, Bloomberg reported that Bungie’s revenue was running 45% below projections after a poor post-launch reception of the most recent expansion. That is the moment the story changes.
A company can miss projections for many reasons, but the timing matters. Bungie missed revenue expectations only months after its largest-ever expansion launch. That suggests the problem was not simply launch demand, but rather post-launch retention—and a cost structure that had grown too large for the actual recurring base of the business.
The Cost Structure Got Too Heavy
Bungie’s headcount growth was dramatic. By the time Sony announced the acquisition, Bungie had more than 900 employees. By August 2023, it had over 1,400 full-time employees. That means the studio grew by more than 55% from the acquisition-signing level to its 2023 peak, while still relying heavily on Destiny 2 as its primary revenue engine.
The restructuring numbers show where Sony’s strategy fell apart. In October 2023, Bungie laid off 8% of its workforce, and in July 2024, it eliminated another 17%. Sony transferred roughly 12% of employees into PlayStation Studios and spun out an incubation project into a new studio, leaving just over 850 people focused on Destiny and Marathon. This marked a full reversal of the scale plan.
The Company Admitted the Core Problem
Bungie’s own explanation is the clearest evidence. In 2024, Pete Parsons said the studio had pursued the goal of shipping “three enduring, global franchises,” seeded several incubation projects with senior leaders, stretched talent too thin, and scaled support structures beyond what Destiny and Marathon could support. He also said the company exceeded its financial safety margins and was running in the red.
At its core, this is a capital-allocation story. Bungie tried to finance Destiny continuity, Marathon, and multiple incubations before it had proven that more than one franchise could carry the load. The studio was building as if future revenue already existed.
The Project Slate Was Too Ambitious
Still, Destiny 2 continued through Beyond Light, The Witch Queen, Lightfall, The Final Shape, The Edge of Fate, and Renegades. Marathon was revived as Bungie’s next flagship and eventually delayed beyond 2025 after alpha feedback, launching in March 2026. Bungie also spun out an unnamed action game in a new science-fantasy universe into a new PlayStation studio, widely reported as Gummy Bears.
Other reported projects make the pattern sharper. A fourth IP, Matter, was reportedly canceled in stages by late 2022, and a reported Destiny universe spin-off called Payback was said to have been canceled in 2024, with much of that team shifting toward Marathon.
Bungie was trying to support too many growth options while Destiny remained its only proven money printer. Expanding from one game to at least five in roughly five years would strain even a well-resourced studio. Doing so on the back of quarantine-era earnings made the strategy untenable from the start.
Sony Eventually Put the Miss on the Books
By 2025, the strategic problem had become an accounting problem. Sony recorded a ¥31.5 billion impairment against Bungie assets tied to Destiny 2 and an additional ¥18.3 billion expense connected to prior development-cost capitalization issues. Sony also said Destiny 2 sales and engagement had not met the expectations it held when it acquired Bungie.
That is the cleanest endpoint of the arc. Bungie and Sony had carried assets and plans based on expectations that Destiny 2 could keep generating enough demand to support a much larger studio and broader portfolio. When those expectations no longer held, there was no back-up plan, and the value had to be written down.
What Bungie Could Have Done Instead
A different path was available. Instead of treating pandemic-era demand as a permanent expansion of its earnings base, Bungie could have used that windfall to reset its core franchise before attempting to scale beyond it.
That would likely have meant building a true sequel. A Destiny 3 would have been expensive and risky, but it would have addressed the technical and structural constraints that had accumulated over years of iteration, eliminating the need for content vaulting and giving Bungie a cleaner foundation for long-term development. Just as importantly, it would have created a natural moment to re-engage lapsed players and reset expectations around the franchise’s future.
Only after that foundation was established should Bungie have expanded outward. Rather than seeding multiple incubation projects and committing to a multi-franchise future all at once, the studio could have sequenced its bets, developing one new title at a time while Destiny provided stable cash flow. Marathon, or a similar project, could still have emerged as the second pillar of the business, but only after the first was secure.
This approach would not have eliminated risk, of course. A sequel could have underperformed, and new IP is always uncertain. But it would have aligned the company’s cost structure with proven revenue at each stage of expansion. Instead of building for a future that had not yet materialized, Bungie would have been earning its way into that future, one successful step at a time.
The Real Lesson
Bungie’s mistake was not ambition. The studio was right to want a future beyond Destiny, and Sony was right to see value in live-service expertise. Rather, the error was scaling fixed costs and project commitments ahead of proven revenue diversification. Destiny 2 generated the cash, but the company behaved as if Marathon and several new worlds were already supporting the business.
This is why the Bungie story resembles the broader post-pandemic tech cycle. When, COVID pushed more activity online, companies interpreted that demand as structurally permanent, hired aggressively, and then had to cut back when behavior normalized. Bungie followed the same arc, but with less margin for error because its business depended heavily on one aging franchise.
Final Thought
Destiny 2 was a money printer, but even a money printer has limits. Bungie treated a transient spike in engagement and monetization as proof that it could finance a multi-franchise transformation before a consistent second engine existed. When the spike faded, the strategy’s fragility became obvious.
The lesson is not that companies should avoid growth, but that headcount, project slate, and fixed costs should expand only as fast as the funding that actually sustains them. Bungie had a valuable franchise, a talented studio, and a coherent long-term ambition. What it did not have was enough recurring cash flow to fund the future it had already started building.