Ubisoft today reported earnings for its third fiscal quarter ended December 31, 2017, underscoring not just a successful holiday season but the company's strategy going forward.
For the quarter, Ubisoft posted €725.0 million ($890.73 million) in revenue, up 36% year-over-year and well above both the publisher's original and revised revenue targets. Among the studio's major releases for the quarter were Assassin's Creed: Origins and South Park: The Fractured But Whole.
Assassin's Creed in particular was singled out for praise by the company, which noted that it was the third-best seller in the Europe, Middle-east and Africa region last year. While executives declined to discuss sales figures in a post-earnings conference call, Ubisoft CEO Yves Guillemot said the game is on track to double lifetime revenues of its predecessor, 2015's Assassin's Creed: Syndicate, and that its season pass attach rate is a lot better than that of its predecessors.
"Our very strong third-quarter performance highlights two areas in which we have made major strides," Guillemot said in the company's earnings release. "First, our games' live operations are making steady progress. This has fueled momentum for digital and back catalogue, which both hit record highs this quarter. Second, the increasingly recurring profile of our business has had a very positive impact on our new releases. By taking additional time to develop our games, we have been able to deliver three top-quality titles since August, including the grand return of Assassin's Creed."
The third title Guillemot referenced there would be Mario + Rabbids: Kingdom Battle for the Switch, which launched in August. The game has helped make Ubisoft the leading third-party publisher on the Switch (along with two installments of Just Dance, Rayman Legends: Definitive Edition, and Monopoly), and is the best-selling third-party game on Switch.
Beyond those titles, Ubisoft also touted the success of its games-as-a-service efforts, like the Tom Clancy games (which boast 60 million unique players) to For Honor (fifth most viewed game on Twitch last year). Engagement metrics aside, the more tangible effects of those efforts can be seen in the company's recurrent consumer spending and back catalog revenues.
For the first nine months of its fiscal year, Ubisoft saw back catalog sales jump 31.5% to €608.8 million ($747.97 million). For the current fiscal year, it expects back catalog sales to make up about 45% of its business, and an even larger share next year.
As for recurrent consumer spending (which Ubisoft calls "player recurring investment"), revenues from digital item sales, DLC, season passes, and subscriptions are up 87.4% to €318.5 million ($391.31 million) over the first nine months of the publisher's fiscal year, representing 26.7% of all revenue compared to 20.9% at the same point the year prior. At the same time, the publisher sees that as an area with considerable room for improvement, noting that EA and Activision Blizzard (excluding World of Warcraft subscriptions) are making nearly 40% of their money from recurrent consumer spending.
That shift toward recurrent consumer spending and a stronger back catalog should also help offset the impact of quarters or years with reduced full-game sales. Ubisoft today reiterated its guidance for its next fiscal year, even though it downgraded its sales expectations from 28 million to 23 million for a quartet of AAA releases planned to launch in the year.