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Finance

Ubisoft suffers 18% drop in sales

Tue 18 May 2010 4:04pm GMT / 12:04pm EDT / 9:04am PDT
FinancePublishing

French publisher also reports a 60 million operating loss, despite slight rise in Q4 performance; Assassin's Creed II passes 9m sales

Ubisoft has reported its full year financial results, with a disappointing fall in total revenues of 17.7 per cent.

The company posted sales of 871 million ($1.1 billion), while rising costs led to an operating loss of 60 million ($74 million) and a net loss of 44 million ($54 million).

Total research and development costs hit 304 million ($376 million), up 36 per cent on the previous year as the publisher continues to ramp up its development teams, despite strong sales from its key products.

Assassin's Creed II was a particular highlight, recording 9 million units shifted since launch late last year, making it one of the best-selling games of 2009, while Just Dance - a Wii exclusive - has now passed the 3 million mark.

The publisher also gained market share in its two primary markets of Europe - up from 8.5 per cent in fiscal 2009 to 9.9 per cent this year - and North America - up from 5.3 per cent in 2009 to 6.8 per cent this year.

But the general market contraction in the past twelve months has taken its toll, admitted CEO Yves Guillemot.

"The global economic crisis had a pronounced impact on the video game industry in 2009, which contracted by nearly 10 per cent year-on-year," he said. "Ubisoft's sales were hit particularly hard, falling 18 per cent over the full year despite a stabilisation in the second half of the year, when figures came in on a par with the corresponding period of 2008-09.

"This overall contraction in sales, combined with additional write-downs recorded for games already launched as well as for upcoming releases, led to a 60 million operating loss."

That second half stabilisation saw Ubisoft improve its fourth quarter numbers, with sales in the three months to the end of March 2010 up 1.9 per cent to 210 million ($260 million), slightly higher than the 200 million predicted when its Q3 figures were reported earlier in the year.

But the operating loss was higher than the expected 50 million ($62 million) thanks to "additional write-downs recorded both for games launched during the year and for upcoming releases," read a statement.

However, Guillemot remained bullish about significant improvement in the next 12 months: "We forecast 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," he said. "We also expect to see the first concrete results from our investments in on-line games and services.

"Lastly, the upcoming launches of new consoles, including Natal and Sony Move, should enable us to capitalise on the technology investments that we have undertaken in recent years and re-energize the casual games segment. At the same time, we will continue to reorganize our studios and enhance our development teams' productivity.

"These reorganisational 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."

First quarter sales highlights for the company revolve around Splinter Cell Conviction, Prince of Persia: The Forgotten Sands and Pele Futbol.

The company's sales fell mostly in Europe (49 per cent), followed by North America (43 per cent) and the rest of the world (8 per cent).

It's most lucrative platform was the Nintendo Wii, accounting for 26 per cent of total sales, followed by the PlayStation 3 with 23 per cent and the Xbox 360 with 22 per cent.

7 Comments

Private
Industry

1,176 182 0.2
Not sure about blaming the global economic crisis for the drop. The only good game that comes to my mind from last year was AC2, while the year before there was a Brothers in Arms, Far Cry 2, Rainbow Six and a PoP alongside the usual more kids friendly games.

Posted:4 years ago

#1

Haven Tso
Web-based Game Reviewer

255 8 0.0
The funny thing is, Ubisoft was saying they are reducing support for Wii although it provided most of its revenue for the year...

Posted:4 years ago

#2

Jim Webb
Executive Editor/Community Director

2,232 2,161 1.0
Their plan isn't to actually reduce support, just shift their portfolio structure.

Using hypothetical numbers here, say they had $20 million to spend on Wii development per FY since launch. They'd usually spread that across X number of titles (we'll say 10 for this demonstration). That averages to $2 million spent per title. But the problem became that 10 titles per year from Ubisoft (and the flood of product from other publishers) is too many. The market cannot absorb that many titles effectively. So they are keeping the investment value the same but reducing the total number of products. This will create higher quality product with a higher per title absorption rate.

Posted:4 years ago

#3

Antony Cain
Lecturer

263 21 0.1
I thought piracy would be the obvious excuse here... not even a passing mention!

Posted:4 years ago

#4

Kingman Cheng
Illustrator and Animator

943 157 0.2
You took the words out of my mouth Antony...

Posted:4 years ago

#5

Jeff Wilson

46 0 0.0
I wonder how much of the the 304 million ($376 million) Research and Development costs went into producing Just Dance ? A game that sold 3 million copies. By the look of the interface and gameplay, virtually zero. Just where is this money going ? Perhaps they should approach Epic Games to teach them a lesson in producing great games on a budget. Ubisoft already have major titles that sell. The numbers should be better than this.

Posted:4 years ago

#6

Private
Industry

1,176 182 0.2
Maybe the money went to I Am Alive and Beyond Good and Evil 2, both games are more or less missing in action at the conventions since they where announced. A big chunk of the R&D is probably also going to the games for Natal and Move.

Posted:4 years ago

#7

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