(AOF) –
Ubisoft
(-13.38% to 9.89 euros)
The video game specialist collapsed this Thursday, the day after issuing a warning on its 2024-2025 financial year results. Following the poor start of Star Wars Outlaws – a poor performance that has weighed on the stock in recent weeks – the video game publisher has postponed the release of Assassin’s Creed Shadows, the group’s flagship franchise. The new targets also take into account the weak sales of XDefiant. The stock’s decline is close to 25% over the week and has exceeded 55% since the start of the year.
AOF – LEARN MORE
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Key points
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Third largest independent video game publisher in the world, founded in 1986, owning the flagship brands Assassin’s Creed, Just Dance, Watch Dogs, The Division, Far Cry, For Honor, Tom Clancy, the Crew, Ghost Recon, Rainbow, Brawlhalla, etc.;
– Turnover of €2.3 billion, 53% of which was generated in North America and 35% in Europe;
– Activity divided between consoles for 56%, computers for 32% and telephones for 6%;
– 5 ambitions: ownership of all brands, integration of technological innovations into the R&D policy, control of internal production at 96%, then increase in recurring revenue (64% provided by the “back catalogue”) and profitability via digitalization;
– Capital held at 25.42% of the capital and 29.64% of the rights by 2 shareholders acting in concert – the founding brothers and the Guillemot family with 15.48% of the shares on the one hand, the Chinese Tencent with 9.99% on the other hand – then by the employees (3.6%);
– Presidency and general management of the 11-member council ensured by Yves Guillemot
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Challenges
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– Business model agility:
– industrial reorganization with a net reduction of + €200 million in the fixed cost base through office closures and workforce reduction, portfolio reduction with game eliminations and construction of more powerful Live brands and services;
– since June, strong commitment to open-world adventure games, with the aim of regaining global leadership, and to native or GaaS experiences – promotion of games and streaming through BtoB partnerships on the back-catalogue;
– innovation based on cutting-edge technologies (Anvil and Snowdrop for engines, Ubisoft connect and I3D.net for distribution), Voxel and cloud computing with Scalar…, accelerated by support for start-ups – 6 to 10 incubated each year – and the deployment of “Lead associates” for the 45 creative studios and Motion Pictures for animation and film,
– increased selectivity in R&D, at the cost of high depreciation;
– Environmental strategy:
– use of renewable energy for French and Canadian data centers,
– sequestration of GHG emissions and constant reduction of emissions per employee, by 10.8% in March 2024 (vs 2019);
– Visibility of the activity with a net booking almost equal to the annual turnover;
– Balance sheet a little tight, with a negative net position of €881 million at the end of September.
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Challenges
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– Activity concentrated in September-January, hence the closing of accounts at the end of March;
– Towards a probable postponement until the end of the year of the release of Star Wars Outlaws;
– Speculations on the capital links of the holding company Guillemot Brothers, founder of Ubisoft, with Tencent, holder of 49.9% of its capital and 5% of its voting rights;
– Confirmation of the initial success of the new XDefiant game and the performance of Rainbow Six Siege or The Crew Motorfest earlier this year, ahead of the late 2024 release of Assassin’s Creed Shadows and the open-world offering of Star Wars Outlaws;
– After a 12% increase in € revenues on 1
is
quarter, 2024-25 target of a solid increase in net booking, a slight increase in operating income and positive free self-financing;
– Company not distributing dividends.
Learn more about the Video Games sector
Amazon’s launch of its “cloud gaming” offering in France highlights the diversity of approaches in this market segment.
Although this niche currently represents only 1% to 4% of the total video game market, its activity should be multiplied by 3 or 4 in the next three years. Betting on this sector, Amazon has deployed its associated service in France, after targeting the United States, Canada, Germany and the United Kingdom. In order to make its Prime offer, at the heart of its economic model, more attractive, Amazon will make this service, called “Luna”, accessible to subscribers. However, the lack of depth of the catalog could penalize the development of this offer. This was the case for Google, which withdrew from this niche last year, after three years of operation.
