A gamer uses a PS4 controller while playing the new Ubisoft video game Watch Dogs Legion on October 28, 2020.
Kenzo Tribouillard | AFP via Getty Images
LONDON – Ubisoft shares fell 6% on Wednesday morning, despite the French giant of video games reporting quarterly sales. The company also narrowed its lead for the full year.
In its fiscal third quarter, Ubisoft achieved sales of 1 billion euros ($ 1.2 billion), which exceeded its own target and the sales of 455.5 million euros that the company discussed in the same period a year ago, more if doubled.
The company said it benefits from a strong lineup of new titles, including Just Dance 2021, Assassin’s Creed Valhalla and Watch Dogs: Legion. The strong performance was also boosted by the momentum for the next-generation consoles from Sony and Microsoft, launched in November.
Ubisoft said that its Assassin’s Creed Valhalla game generated record sales for the franchise and that it was the second best-selling game on the PlayStation 5 and Xbox Series X and S machines. Watch Dog: Legions was the fourth best-selling title on next-generation platforms, Ubisoft said.
But it’s not just big new versions that are driving Ubisoft’s sales. Ubisoft CEO Yves Guillemot said in the firm’s earnings call that he saw ‘strong engagement’ in his back catalog of games, and this trend continued into January.
Rainbow Six Siege, a first-person shooter game released by Ubisoft in 2013, now has 70 million players, Chief Financial Officer Frederick Duguet said. This is an increase of 15 million users from last year. Rainbow Six Siege is a popular title in esports tournaments.
“In a context of increasing engagement and many supportive trends in the industry, the first nine months of the year have confirmed that we continue to move toward an increasingly pronounced repeat of our revenue,” Guillemot said Tuesday night in Ubisoft’s third quarter ‘s income statement said.
“Therefore, we expect our highly profitable back catalog to be an even bigger part of our business going forward.”
This is a sign of how the video game industry is moving to games with longer lifespan and recurring revenue, rather than just relying on big blockbuster hits.
Video game companies have benefited greatly from the coronavirus pandemic, as people spend more time at home due to public health constraints around the world.
Ubisoft narrowed its full-year earnings and earnings forecast Tuesday. The company said it now expects net sales of 2.22 billion to 2.28 billion euros for 2020/21, compared to the 2.2 billion to 2.35 billion euros it previously expected; and operating income of 450 to 500 million, more stringent than its previous target of 420 to 500 million euros.
Ubisoft added that it was in the ‘early stages’ of developing a new Star Wars game after announcing a deal with Disney’s Lucasfilm Games division. The move marks the beginning of the end of a long exclusive deal between Lucasfilm Games and Electronic Arts.
EA announced on Monday that it is buying mobile game developer Glu Mobile for $ 2.4 billion. Asked if Ubisoft would investigate mergers and acquisitions to boost future growth, Guillemot said the company’s approach was primarily to buy new technology rather than content.
Ubisoft has not yet made a decision to raise the price of its video games to a new standard of $ 70, Guillemot said on Tuesday. Major publishers like Take-Two Interactive are raising $ 10 prices for next-generation consoles. This is the first time that there has been a huge price increase in blockbuster games since 2005, and many figures in the industry say it is no longer necessary.