UBISOFT’S battle to maintain its share price has become almost as epic as its Assassin’s Creed franchise as the video game giant confronts stuttering sales, buyout rumours, and now a strike that starts Tuesday (Oct 15).
The creator of the historical action game and Just Dance was booming as recently as 2020, rivalling its US and Japanese competitors.
But its share price is at a 10-year low following disappointing sales of recent games such as Skull and Bones and Star Wars Outlaws, as well as the latest version of Prince of Persia.
It says that Assassin’s Creed has now sold more than 200 million copies, but the scheduled release of the next version has been delayed for three months until February.
‘Old-fashioned’
Ubisoft’s “open world” games, where players roam a virtual universe, was the dominant model in the 2010s, but is now “beginning to look a bit old-fashioned”, said Oscar Lemaire, who founded the Ludostrie website that reviews games.
Lemaire said that Ubisoft cannot afford a new “failure” with the next Assassin’s Creed.
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Since the success of online games such as Fortnite, made by Epic Games, which generates massive revenue by constantly selling updates and new content, all the big publishers are trying to copy the new “service game” model.
Ubisoft tried in May with the release of XDefiant but sales did not meet expectations, said Ubisoft founder Yves Guillemot.
“They’ve really been left behind by the rest of the gaming industry by not being able to really utilise this shift towards live services and post-purchase monetisation,” said Martin Szumski, a financial analyst at Morningstar financial services.
Labour issues
With close to 45 studios in France, Canada, Italy, China and other countries, and about 19,000 employees, Ubisoft remains a key player.
But, hit by its own problems and the overall crisis affecting the video game business, in January 2023 it announced a cost reduction plan that involved cutting 1,700 jobs over 18 months.
In France, where Ubisoft employs 4,000 people, discontent is growing over working conditions and salaries.
Several unions called a three-day strike starting Tuesday to protest a decision to impose at least three days a week of working in the office.
Towards a buyout?
On Oct 4, Bloomberg reported that Chinese tech giant Tencent and the Guillemot family, Ubisoft’s largest shareholder, were working on a buyout that would take the company off the stock market.
Ubisoft would only confirm that it “regularly examines all its strategic options”. Tencent holds about 10 per cent of the company and the Guillemot family about 14 per cent.
“Tencent is very strong in China, especially in mobile game apps and ‘free-to-play’ games,” said Lemaire. A buyout would give Tencent a toehold in Western markets and the big-budget games that are Ubisoft’s speciality.
It would also allow Ubisoft’s management “to let their strategy play out without the market constantly looking over their shoulder”, said Michael Hodel, an analyst at Morningstar. AFP
