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State of Play: Ubisoft

Thu 08 Sep 2011 7:00am GMT / 3:00am EDT / 12:00am PDT
Gamescom 2011Publishing

CEO Yves Guillemot and executive director of EMEA territories, Alain Corre on the publisher in 2011

Ubisoft has a 25 year pedigree in the industry, producing AAA titles like Assassin's Creed, arthouse risks like From Dust and a wealth of content for the family market. It's also recently turned it's attention to free to play titles, purchasing developer Owlient and expanding into Facebook and online.

At Gamescom this year, GamesIndustry.biz spoke exclusively to CEO Yves Guillemot and executive director of EMEA territories, Alain Corre about the changes the company has seen, how it's diversifying from games to films and television with Ubisoft Motion Pictures, and its hopes and predictions for the future.

It was recently revealed that From Dust had been a surprise success for the company, breaking Ubisoft sales records. It may not match up to Assassin's Creed in sales revenue, but Guillemot was keen to point out its potential.

"Assassin's Creed is doing $250 million, and From Dust is going to do between ten and $20 million," he explains.

"So it's more in the five to ten per cent of the revenue. But what's very interesting is that From Dust can evolve from XBLA, PSN, PC download to a broader game that we can enrich to become another Assassin's Creed maybe one day."

Creativity is for us a motto, we need to surprise the consumers, we need to astonish them, because otherwise they do something else.

Alain Corre

"I think that it's a good sign that the market is still very excited for new innovations, good products and they are ready to go for it," adds Corre.

Both men agree that taking those sort of risks is very much at the heart of Ubisoft's culture.

"I think that we have always been in the spirit of taking risks. Creativity is for us a motto, we need to surprise the consumers, we need to astonish them, because otherwise they do something else," says Corre.

Guillemot was similarly enthusiastic about embracing new concepts. In fact, I Am Alive, another game that seems to steer clear of the AAA conventions, is rumoured to be a pet project of Guillemot's, despite its troubled development history.

"It's very important to bring creativity to the industry on a regular basis otherwise the industry will not continue to keep people and attract new players," he argues over the sounds of the show floor.

"Giving diversity to the console is a way to make them consider the company and to consider its capacity to bring new stuff. So for gamers and for Ubisoft it's very important to be able to have new ideas and come with those innovative concepts. Because those innovative concepts don't always stay small, they can really grow and become huge in the industry."

And there's no questioning Ubisoft's commitment to diversifying. Not content with producing games for every possible gamer, from the hardcore shooter fan to teenage girls who want to be fashion designers, the French company has recently expanded into the film and television business with Ubisoft Motion Pictures. This branch of the company is already working on Assassin's Creed, Ghost Recon and Splinter Cell projects.

"We hired some very talented people from the cinema and they are working to take the best out of our franchises, discussing them with Hollywood and so on," reveals Corre.

"The most important thing for us is to control the quality, the production, but to limit the risk and have pre-financing before we launch the creation."

Guillemot explains in more detail just how the company is limiting the risks. "So we are developing three movies, which are Assassin's Creed, Ghost Recon and Splinter Cell, but we develop the first concept and scenario and then they will be published by a studio that is going to work to make it of high quality."

With next generation consoles, TV series and games will have the same quality in terms of graphics.

Yves Guillemot

"And for the TV series we are also working to pre-finance the development so that we have zero risk in the creation of those series because we feel that they are two business really, the series and the movies, and that the two business will actually be very close to the videogame creation in the future. Because with next generation consoles, TV series and games will have the same quality in terms of graphics."

According to Guillemot, Ubisoft's plans to make it's brands known beyond the worlds of games as a "Disney" strategy, extending IPs across as many formats as possible, from books to action figures and advertising. The Raving Rabbids, for instance, can now be spotted in adverts for the New Renault Grand Scénic.

Unsurprisingly for a company that wants its brand to take on Mickey Mouse, Ubisoft always seems keen to ensure a presence early on in the life cycle of new consoles, and has already confirmed it's working with Wii U and developing an Assassin's Creed game for PlayStation's Vita handheld.

Corre was keen to praise the Vita, but it was Guillemot who really explains its attraction as a platform.

"Because the machine is extremely powerful it's a great first step to go for mobility with a game that will be close to what you have on 360 and PS3," he says.

"Here we have the possibility to really go with a very deep game that is very similar in technology to what we have on the 360 and PS3, but with a different setting, a different hero and so on. So afterwards, with the improvement of those handheld machines, in one year, two years, three years, they will be as powerful as Vita, so we will be able to put that game on all those devices."

Basically, fans can expect to see the Assassin's Creed game currently in development for Vita, and due for release in 2012, popping up on any number of other mobile devices, whether they come from Nintendo or Apple, at some point in the future.

I think it's part of our DNA, to be early and to bring innovation on new machines.

Alain Corre

"I think it's part of our DNA also, to be early and to bring innovation on new machines," adds Corre.

"Because again we have people, very talented people, who go there very, very quickly, so that's one force of our company."

Unlike Crytek's Avni Yerli, Guillemot didn't foresee any problems for a handheld launching in today's smartphone overloaded market. But he argued that Ubisoft would need to make sure that the game is a "piece of art" to make a worthwhile investment. Only when specialised machines are used to their full capacity do they have "real value."

And as for the next generation? Prepare your pads and pencils Microsoft and Sony, because Guillemot has some demands.

"So we need the next generation quickly so that creativity increases a lot," he said, and was happy to list what he thought was vital for their success.

We need the next generation quickly so that creativity increases a lot

Yves Guillemot

"More interaction with people, the possibility to adapt content to the time that people want to play. So to be more of a service to consumers that can get out. So the software will have to be very different so that everyone can play and can take from those the games the bit they want to get."

He also backed Avni Yerli's suggestion that publishers should able to update and change content more quickly, to allow for free-to-play and other business models iss also vital.

"But it's not only the free-to-play models. The concept is being able to change the experience on a regular basis, easily and fast. And that's something I think will be needed for the next generation, the possibility for the publisher to actually change his games very quickly so they are adapted to the consumer."

And if anyone knows the more casual consumer and free-to-play models, it's Ubisoft.

"Last year casual games was 40 per cent of our revenue," reveals Corre. He sees the family audience as keen to buy games, if only people will develop games that suit their needs. And Guillemot used Ubi's Just Dance series, which has been a huge success for the company, as an example.

"We were amazed by the success of Just Dance and it showed that lots of people, when you really bring the game that they are interested in, they actually buy huge quantities."

"In the long term there's no reason why the casual would not overcome the hardcore business because there are more people that are interested in buying casual," he explains.

Unsurprisingly, they're looking for new ways to tap into the market, and building on their browser and free-to-play titles.

In the long term there's no reason why the casual would not overcome the hardcore business.

Yves Guillemot

"They are good models and it's funny because we have gotten so many customers so quickly," said Guillemot.

"Smurfs went from zero to 4.2 million without marketing in two weeks. So it's amazing how fast, when the content is adapted, those products can grow. So it really shows that people are very interested by new content in games. So we will continue to develop and make sure the quality of the game experience is adapted to what people are looking for."

As EA snaps up Popcap, Microsoft focuses on Kinect and Sony plays with its Eyepet, it feels like everyone is obsessed with accessing that casual, family demographic. The thing is, Ubisoft are already doing that, and they've been doing it for years. And with the Imagine brand currently the next area of Ubisoft lined up for an online makeover, the percentage of revenue from that sector will only grow.

"With the arrival of the free-to-play and the world again is open to buy games, because the free-to-play model you are connected so you can't pirate," said Guillemot.

"And because you can't pirate it generates revenue and you can put marketing in all those territories. So your brand continues in a way it doesn't when people pirate your games."

"So this huge revolution is extremely positive for the games industry because it's going to help the companies that are already present in the industry to actually expand their brands to a very broad audience in all the world."

10 Comments

Darren Stewart
Videogame investor

52 17 0.3
Interesting stuff but does it avoid the "elephant in the room" which is that Ubisoft's stock price is at an all time low and Guillemot hasn't convinced anybody that their strategy is actually working. The key issue with Ubisoft seems to be that they throw money at absolutely everything and while they have a few wins (Just Dance, Assassin's Creed) most of their stuff is just a drain.

I can't think of any other publisher that just immediately throws money at whatever there is. Vita launch? Check. Wii-U launch? Check? 3DS launch? Check. Films? Check. Mobile? Check. So on and so forth. They don't seem overly bothered whether any of this stuff will actually make any money - they just go ahead and do it. To some extent that is a natural development of the fact that the whole video games market is broadening but Ubisoft's shotgun approach is quite extreme and probably the reason why they have such a lot of shovelware in their line-up.

I do wonder if they've built up such a lot of development capacity over the years (buying studios and setting up Montreal) that they just need to find stuff for them to do regardless of whether it's good stuff.

If anybody is interested in Ubisoft from an investment perspective then you'll find some interesting stuff in the forum at Bougafer which is a website for people who want to invest in video game companies. Obviously there's lots of stuff about all the other (listed) companies too and the market in general.

I'd really like Ubisoft to do well because they do bring some Gallic quirkiness to the market, and their stock price is (in theory) a steal at under 5 euros which is less than half what it reached in the depths of the 200/2009 recession.....but it just seems that they need to bring some control to what they are doing. Both in terms of execution (they are constantly cocking up releases like the "From Dust" DRM debacle and the recent Driver:SF U-play pass) and also in project selection.

Edited 2 times. Last edit by Darren Stewart on 14th September 2011 10:52pm

Posted:2 years ago

#1

Zan Toplisek

44 16 0.4
It looks like I'm not the only one who thinks Ubisoft has been completely out of touch this generation. Assassin's Creed is the only thing they have going for it at the moment (well that and Just Dance).

Edited 1 times. Last edit by Zan Toplisek on 8th September 2011 1:12pm

Posted:2 years ago

#2

Matjaz Puhar
Associate Producer

2 0 0.0
@Darren, maybe you have missed the news where it was said that the "U-Play pass" principle will be adopted by all other big publishers? Ubisoft was just the first to announce it - and at that, it will be the cheapest of the "big ones". IMHO this is not really a cock-up, but it is interesting that they get bad rep for anything, even if EA or Activision sell the exactly same thing under a different name, a week later.
Shovelware? Yeah, a derogatory term, coined by the "hard-core" market. They weren't the intended target group, so why bother with it in the first place? If kids enjoy these games, who are we to say: "This is crap."?

@Zan, are you suggesting that trying to innovate is being out of touch? I know that every publisher has hits and misses, but would developing only the AC brand (like COD) seem "in touch"? Imagine the number of negative comments regarding "milking the franchise" first triple and then quadruple ...
I think that if anything, a diverse portfolio only helps them "feel" the market and react accordingly.

Posted:2 years ago

#3

Darren Stewart
Videogame investor

52 17 0.3
Matjaz, with regards to U-play I was referring to the cock-up in the US where they didn't put the code for the passport in with the boxed copies ("due to a printing error") and so had to make all u-play content available to all.

Shovelware? I mean the mediocre games that don't sell (and were never going to) rather than the critically savaged but commercially successful games (which I'm all for as an investor). I take your point that "shovelware" is a lazy term but I mean it as shorthand for the "not awful but not brilliant enough" games that there isn't room for in today's market (and I would argue never were having followed the industry for 15 years).

Posted:2 years ago

#4

Antony Johnston
Writer & Narrative Designer

112 18 0.2
@Darren, I feel like we had a very similar conversation back when Ubi announced setting up the movie unit... ;)

I understand you're commenting from your perspective as an investor, but speaking for myself as a creative and more importantly as a gamer, I'm very glad a publisher as big as Ubi is still willing to experiment and "throw money" at offbeat projects that aren't guaranteed commercial hits, but nevertheless try new things and help to push the envelope.

Posted:2 years ago

#5

Darren Stewart
Videogame investor

52 17 0.3
Antony, yes we did :)

I'm all for a bit of experimentation, neither Assassin's Creed nor Just Dance were "me too" titles, and you need to create new ip to replace ageing ip. But, as a publisher, you need to get the balance right and I think you need to pick and choose where you focus your time, energy and money. What aren't Ubisoft doing? I can't think of anything. And the problem with trying to do everything is a) you end up dropping the ball on the things that really matter and b) the money you lose on all the stuff that didn't work outweighs the stuff that does.

We all know that being a video game publisher is hardly plain sailing (Rage, GT Interactive, Infogrames, Eidos, SCi, Acclaim etc) so getting that balance right is about survival.

Posted:2 years ago

#6

Zan Toplisek

44 16 0.4
@ Matjaz: That's not actually what I meant. It's true that they are experimenting with a lot of things and also invest in projects which don't have a 2 or 3 at the end of the title and I support that (though, the fact they haven't had many hits as of late is definitely hurting them. Lie to yourself as much as you want, but financial performance matters too. Why do you think they throw money at new projects? In hope of getting that next hit). But they have been rather clumsy when it comes to having a consistent line-up of games consumers get excited about. Now that I think a little further back, I admit I was too harsh, as the first few years were great for the company with successes such as Advanced Warfighter and Vegas. I also applaud them for giving us the excellent remake of Prince of Persia - an incredible game experience that was. The last couple of years though? Just dry really. Future Soldier seems to be having a roller coaster ride, just like Conviction did. The same goes for Beyond Good and Evil 2 and I Am Alive. It's good of them to hold these back due to quality concerns (and I don't say this as only a gamer but also from the business perspective - if the first release is shitty, then you can kiss goodbye all the potential subsequent releases; so please don't go "innovation this, innovation that" on me again), but their rather dull upcoming release schedule leaves much to be desired.

What I'm trying to get at is that it's clear that something isn't right at the company and I wish they were doing a better, more consistent job. Being a fan of their franchises, it kinda hurts me to have it fall off my radar due to these problems.

P.S. I feel you should also know that I simply detest Activision's business strategy with Call of Duty. In fact, I used it as an example of how NOT to manage franchises in my thesis (which is still work-in-progress).

Edited 2 times. Last edit by Zan Toplisek on 8th September 2011 8:34pm

Posted:2 years ago

#7

Darren Stewart
Videogame investor

52 17 0.3
@Zan, that's going to be an interesting thesis. I'm not a big fan of Activision but that's because they've mis-managed every other franchise except this one. COD is the one where thing that they've (by luck or judgement) managed incredibly well. They wrestled the FPS throne away from Medal of Honour and have built the franchise/genre into one of the biggest money-spinners in the whole industry.

Sorry, off (the Ubi) topic but I think it had run out of steam anyway.

Posted:2 years ago

#8

Zan Toplisek

44 16 0.4
@ Darren: I agree for the most part. From its inception in 2003 until 2007, their handling of the franchise is commendable. 2008 and 2009 were OK too. But Black Ops and now Modern Warfare 3 clearly show that they have "forgotten" to evolve the franchise. It's growing stale and now, compared with, Battlefield 3 that shows more than ever.

If they don't evolve the series more by next year, they will lose more and more market share to EA, as the quality will drop (I predict a lower Metacritic score this year because it's same old, same old) and so will the sales (maybe not next year, but soon if they won't innovate properly). With MW 3 I think there won't be any sales growth YoY.

In one of the articles today, Tippl (who two years ago said that franchise fatigue was an excuse) admitted that the Guitar Hero series didn’t evolve fast enough to meet the changing state of gaming. I think the same is happening to CoD. It won't be such a drastic drop, because of the difference in genres and all, but it'll be enough to make Activision realize that at some point they will need to start innovating more to sustain their performance.

Edited 1 times. Last edit by Zan Toplisek on 9th September 2011 5:13pm

Posted:2 years ago

#9

Darren Stewart
Videogame investor

52 17 0.3
@Zan, well you've got a few wider themes and old chestnuts in there which have vexed the video games industry for as long as it's been round.

Firstly, can you have annual iterations of a franchise (excepting sport franchises) without suffering fatigue?

Secondly, when you have a success how far do you "evolve" the formula with sequels. You obviously risk boring people after a while but, on the other hand, you don't want to throw the baby out with the bathwater.

Thirdly, do franchises have a natural life and is it best bet to sweat the asset and strike while the iron is hot or to space things out to keep your audience fresh.

The evidence is that any annualised franchise (apart from the sports games) dies. However, on the flip side, if you look at the revenue that Activision have got from the CoD franchise then even if it tails off over the next few years the overall contribution that franchise has made is enormous. It's already surpassed things like GTA and although GTA will keep running, Activision have made more out of CoD in a few years than Take Two have out of GTA over 10 years.

So, mis-managed or managed? Depends on your perspective probably.

And Guitar Hero was a fad wasn't it? Again you could argue that they struck while the iron was hot rather than milked the thing dry but it was only ever a fad wasn't it?

Sorry, we've gone way off topic but very interesting debate. Would be great to see you over at http://www.bougafer.com

Edited 1 times. Last edit by Darren Stewart on 14th September 2011 10:52pm

Posted:2 years ago

#10

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