The French video game giant switches into the red and sees its annual revenues fall by 18%. The next few months will show the concrete effects of its new editorial strategy.
By issuing a major earnings warning in January, Ubisoft warned that its 2022-2023 fiscal year would be disappointing to say the least. The publication on Tuesday of its financial performance for this financial year, ending on March 31, 2022, confirms this. The group’s revenues, of 1.7 billion euros, fell by 18.2% in one year. The dropout even exceeds 50% in the fourth quarter. The annual operating result has gone into scarlet red with a record loss of 500 million euros, against a profit of 400 million the previous year…
This poor performance is explained by the very low number of games released by Ubisoft this year. ofAvatar: Frontiers of Pandora To Skull and Bones, the group preferred to postpone blockbusters that had not reached the desired quality by several months. Worse, the few games marketed have not met with the expected success. Mario and the Rabbids: Sparks of Hopecreated in collaboration with Nintendo, has “underperformed“, announced in January the CEO, Yves Guillemot.
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But this bad patch will soon be forgotten, promises Ubisoft. This year, “difficult for the group“, was also “a pivotal year“says today the leader. The publisher has started its first major savings plan, with 200 million euros in cost reductions over two years. First tangible effect, the downsizing.
The number of employees fell below 20,000, against 20,700 in September. The group stresses that this drop is due to 80% by the non-replacement of natural departures. But layoffs have also taken place. Sixty employees working for customer service have just been sent back to the United States and the United Kingdom. Ubisoft has also closed five sales offices in Europe. Another cost-saving measure: stopping the development of three games.
Upcoming release of free-to-play games
Alongside this tightening of the belt, the group promises that the fruits of its transformation plan, which began three years ago, will finally be seen in the coming months. This strategy, which aims to expand the potential audience of Ubisoft games as much as possible, results in a tightening of its catalog on a handful of franchises and an expansion towards the economic model “free-to-play» (free game with paid options) on both PC and mobile.
Concrete illustration of this change of course, no less than five in’s Creed games are planned for the near future on consoles, smartphones and even in the video games section of Netflix. Result, “we plan to increase the number of talents working on the in’s Creed brand by 40%», indicates Yves Guillemot.
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The free-to-play strategy will also result in the release by March 2024 of The Division and Rainbow Six licenses on smartphones. Ubisoft also announces that the free-to-play competitive online game XDefiant will be released by next spring on consoles and PC. “Mastering the know-how of free-to-play is a real challenge and you have to be careful“, comments Yves Guillemot in a press release. However, internal indicators would show “that we are on the right track to bring our brands to a wider audience.»
Between these free-to-play releases and the arrival of major premium titles on consoles, including in’s Creed MirageUbisoft is counting on a “high increaseof its revenues and an operating profit of 400 million euros for the current fiscal year. He will tell more about his upcoming productions on June 12 during his annual conference.