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Ubisoft Posts Losses As Assassin's Creed II Nears 9 Million
by Kris Graft [PC, Console/PC]
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May 18, 2010
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French Splinter Cell publisher Ubisoft recorded a decrease in sales and a loss for the fiscal year ended March 31, 2010, blaming worldwide economic downturn.
The company on Tuesday recorded a 17.7 percent drop in annual sales to €871 million ($1.08 billion), and posted a loss of €43.7 million ($54.02 million).
Ubisoft CEO Yves Guillemot said in a statement, "The global economic crisis had a pronounced impact on the video game industry in 2009, which contracted by nearly 10 percent year-on-year."
"Ubisoft’s sales were hit particularly hard, falling 18 percent over the full year despite a stabilization in the second half of the year, when figures came in on a par with the corresponding period of 2008-09," he added.
Fourth quarter sales were €200 million ($247.32 million), slightly higher than guidance but lower than the €206 million ($254.76 million) recorded for the same quarter a year ago.
During Q4, Ubisoft said that it had strong sales of Just Dance for Wii, which has seen 3 million units sold-in. The publisher also said that November's Assassin's Creed II has reached nearly 9 million units sold-in during the fiscal year.
Ubisoft noted the strong reviews of Red Steel 2 for Wii, and said the game's performance was in line with recently-revised forecasts. In addition, sales of Avatar exceeded forecasts, "notably on Wii," Ubisoft said.
Guillemot said during a conference call that Ubisoft will continue to support Nintendo's platform, but with a focus on family-friendly titles.
"Wii is a more mass market machine now," he said, with sports and movie games selling well on the platform. "There still be lots of casual games like [Just] Dance … that will sell very well because of the number of machines installed."
The company did not offer specific full-year forecasts, but CEO Guillemot said Ubisoft expects "a return to profitable growth in 2010-11 with positive cash flow generation, driven by a games line-up that is more closely tailored to growth segments and based on strong franchises."
Ghost Recon: Future Soldier will be a "big booster" for the current fiscal year, according to CFO Alain Martinez. But the company said that it would push the game out from fiscal Q3 (the calendar holiday quarter) to fiscal Q4 (January-March, 2011).
For the first quarter ending June 30, 2010, the company expects sales of €145 million ($179.29 million), up 75 percent year-on-year. Driving factors include April's Tom Clancy's Splinter Cell Conviction, which Guillemot said has sold 1.8 million units to date. The company also expects the movie tie-in Prince of Persia: The Forgotten Sands to be a sales driver.
Guillemot added that Ubisoft expects to see positive results from investments in online games and services, as well as investments in Natal and Move development on Xbox 360 and PlayStation 3.
He also said, "we will continue to reorganize our studios and enhance our development teams' productivity. These reorganizational moves will enable us to release new iterations of our major franchises on a more regular basis, and guarantee high quality levels."
"This will allow us to secure a level of highly profitable recurring sales while continuing to tap the new growth opportunities in our industry."
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If by that he means low-budget titles expect Ubisoft losses next year.
Disappointing to see their reaction to good sales of Red Steel 2 is "well, that was great, time to give up entirely".
Are you saying that the DRM is the only factor in the increased sales?
Did anybody even bother asking the people that bought AC2 for the PC why they bought it?
I know why I didn't buy AC2, not a major loss for me because there were a lot of other games that needed my attention.
"Disappointing to see their reaction to good sales of Red Steel 2 is "well, that was great, time to give up entirely".
That wasn't the impression I got from the article. Regardless, Red Steel 2 is a fantastic game but sales have certainly been soft.
Developers should be happier to have a larger market. Hackers will quake in their boots.
They'll only quake so long. Crackers will do what they do.
But even then they still made around $450,000,000. At least as it looks at first appearances.
The publisher surely don't get 60 US$ for the game. He has to sell the game to the distributor (if he doesn't distribute it alone) and the distributor has to sell the game to the retailer, everybody wants to earn money from that, so you can't multiply the 60 US$ with the ammount of games, to get the revenue the game made for the publisher.
During my studies, I interned as a financial analyst in Paris and analyzed Ubisoft. At a conference, Alain Martinez (Ubisoft's CFO) explained that Ubi sells its AAA games at around €/$30 (about half the price you and I pay at Gamestop); $30/game is their turnover, not their profit (!!). A game like Assassin's Creed usually costs around $20m to develop. Add to that $15m in marketing, and Mr. Martinez explained that to make a profit, big budget games like AC have to sell 2 to 3 million units to make a profit - everything extra goes almost straight down to the bottom line.
@Sam: If I remember correctly, casual gaming took a harsh beating and is down 40% at Ubi year on year, plus margins in that business are inferior to AAA titles. I'm not sure of the exact figure, but I think casual gaming represented 30% of Ubi's turnover in 08/09. That should partially explain it.