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Console market "not supporting full range of products," says Ubisoft

Tue 31 Aug 2010 7:00am GMT / 3:00am EDT / 12:00am PDT
BusinessPublishing

"Games that are not triple-A are not profitable"; publisher cautious of new IP as console cycle has peaked

The home console market is no longer supporting alternative products for big publishers, leaving only blockbuster titles to break the top ten and become profitable.

Thatís according to Ubisoft Euro MD Alain Corre, who told GamesIndustry.biz that itís safer to invest in one AAA title rather than hedge bets on a handful of smaller productions.

"The games that are not triple-A are not profitable anymore," said Corre in an interview published today. "And thatís changed in the last 18 months.

"When you have a triple-A blockbuster it costs more money to develop, but at the end of the day thereís also the chance of a good return on it because thereís a concentration at the top of the charts. To a certain extent it becomes less risky to invest more in a single game or franchise than spreading your investment between three or four games. Because if those three or four games are not at the right quality level, you are sure to lose money," said Corre.

"So the business model has changed and weíre changing our way of making hardcore games. With hardcore games that weíre not sure are reaching the right level, we stop work on them. And thatís why we concentrate more on key franchises, because thatís what the market wants - something new with huge quality production behind it. The market is not supporting the full range of product that it used to anymore."

Although the French publisher has brought new IP to market successfully this generation with Assassinís Creed, Corre said that upcoming strategy game RUSE might be the last new franchise from Ubisoft until a new generation of home consoles, as establishing new brands is proving too expensive.

"It is more difficult now. To launch a new IP you have to invest much, much more marketing to establish it, and if you add up the huge costs of development plus the investment in marketing you cannot be 100 per cent sure the target audience youíd expect, which is needed for the comeback on the investment.

"Especially in this part of the cycle of the consoles, we are cautious now to introduce new brands. Weíll concentrate on the ones we have and make sure we bring them to the next level in terms of quality."

The full interview with Alain Corre, where he also discusses his view on monetising console multiplayer, can be read here.

13 Comments

This is a interesting commentary.

Perhaps it is not as lucrative to Publishers to publish independant titles, however I still beleive some of the better gems need not be AAA content. Instinct tells me, that the independents and non AAA titles have a higher % of producing a sleeper hit or establishing a good beachhead to subsequently produce a established franchise.

In addition, there was a recent commentary by Bioware founders at the recent Develop Brighton, alluding that AAA costs and development may not be the best approach for most studios currently without the right strategy, reputation for AAA establishement and deep lined pockets to follow through.

Would love to hear other's opinions with regards to this.

Posted:4 years ago

#1

Alfonso Sexto Lead Tester, Ubisoft Germany

819 652 0.8
Have to disagree a bit with Mr. Corre here... "The games that are not triple-A are not profitable anymore" Is generalizing too much.

How about downloadable games like "Limbo"? this one even saved the company from going to bankruptcy. Without mentioning all those Casual games on the Wii and DS. There would not be a lot of em if they were not profitable and few of em can be considered a Triple-A.

Posted:4 years ago

#2

Sergey Galyonkin Marketing Director, EMEA, Nival Network

24 0 0.0
But those are indies, they are profitable for developers, not for big publishers.

Posted:4 years ago

#3

Kingman Cheng Illustrator and Animator

954 182 0.2
AAA or Indie, it doesn't matter which one it is, either is profitable. Also profitability is relative.

Posted:4 years ago

#4
Indeed, and thus if one reads the above commentary carefully it states:

"The home console market is no longer supporting alternative products for big publishers, leaving only blockbuster titles to break the top ten and become profitable."

Thus, we should comment around this point perhaps. Basic instinct states AAA or Indie, if its a good game that catches the fire of the peoples/gamers imagination it can become a good hit. Profitability is a different issue.

Posted:4 years ago

#5

Patrick Frost QA Project Monitor

400 196 0.5
Hang on, what about the Rabbids series? Surely that's making Ubisoft a small fortune.

Surely this is simple Maths talking though. AAA titles have a higher budget and therefore higher investment from the publisher. And that leads to a higher cut in profits not to mention leverage to own IP and so on.

If publishers had enough vision to see what was really a good and fun game more of the time then I don't think that they would complain as much. It should also be noted that for everyone one of those new IPs that goes right then they have a guaranteed money spinner for at least 1 or 2 more titles.

Small picture thinking. That and other factors that publishers ignore.

Posted:4 years ago

#6

Mike Clegg Marketing/Design

15 0 0.0
Mr Corre is talking about console games - and he is quite right the margins are now very tight. R&D and traditional marketing methods for these blockbuster titles cost a fortune. However casual game developers have much much bigger margins due to the limited scale of development, lower costs, shorter timescales and greater demographic reach. There are not enough hardcore gamers to make all console games a success. The numbers just don't add up.

Posted:4 years ago

#7

Finlay Thewlis Studying Game Design & Production Management, University of Abertay Dundee

26 0 0.0
what mike said!

Posted:4 years ago

#8

Umikado Ki Studying Business School, Doshisha University

2 1 0.5
Well, I think that Mr. Corre is some kind of conservative, but I can not say he was wrong, some companies -like Capcom, indeed lose many on Non-AAA games. However, one thing that must be remembered is that many consumers buy games just for various and different game experiences, if games were limited and lack of original titles, consumers may lose their interest in games, which would be the worst situation for the game industry.

Posted:4 years ago

#9

Jim Webb Executive Editor/Community Director, E-mpire Ltd. Co.

2,270 2,439 1.1
I can see this being a problem for Ubisoft. They produced dozens of Imaginez titles which initially sold fantastic (several topping 1 million units) but as of late have sold very poorly. In this instance, Ubisoft is more likely to find a better return on big budget investments.

For most other publishers it is either more balanced or still in favor of casual titles to provide solid profits. Ubisoft's problem is they went overboard on the casual end and flooded the market beyond capacity.

And one final thing (pay attention Ubisoft)....market your games if you want them to sell. Too many publishers use an equal ratio of development budget to marketing budget and that's nonsense. If you want your game to sell, market the dang thing...regardless of the development budget. It's frustrating to watch a publisher complain about poor sales of a causal title or series of which they failed to put forth any marketing efforts. THQ is even more guilty of this - having at one time admitting to not buying any TV marketing time at all for a product and then publicly complaining about sales.

Posted:4 years ago

#10

Christopher Bowen Owner, Gaming Bus

118 0 0.0
This is a problem with a simple solution, to me: take down the developing budget a bit by not focusing on having the best looking technology. The market has responded to games like Limbo specifically because they're fun and do something drastically different. We WANT new games. We WANT innovation. But we're not getting it because companies are spending so much of their money forcing our hands into AAA titles. It becomes a self-fulfilling prophecy.

It also doesn't help that Ubisoft - through their mergers, staff cuts and that horrible DRM shit they use - have become The Problem.

Posted:4 years ago

#11

J Bernard Moore CEO/Creative Director, Broken Switch Studios, Inc.

2 0 0.0
Mr. Corres' argument is circular and very small minded. Better to invest in a big budget and pull it when it reaches a certain level than invest in 10 or 12 smaller new IPs that will make it to market and some possibly becoming the next successful franchise? Even the most popular games where risky at the beginning and many have failed even with huge budgets (Lair comes to mind). Not taking risks makes games like Death Spank not exist and creates an incredible morass of boring "seen that, not interested" games.

Posted:4 years ago

#12

Mike Clegg Marketing/Design

15 0 0.0
Yes I agree - in part - with most of the sentiments here. However console developers are nearly always product led. It is a real strength when you are a small company but a weakness when you are a huge company. Two duds and you are finished. On the other hand casual developers are good at servicing those products, iGaming and online distribution based companies are classic examples of a service led - product limited games sectors. They are cash rich and they buy in IP when they need to - and are doing so.




Posted:4 years ago

#13

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