Ubisoft delayed Skull and Bones and cancelled three unannounced projects, as recent launches have “underperformed.”
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In a financial update for January, Ubsisoft explained their plans “strengthens strategic focus on biggest brands and live services with a new set of measures, cementing long-term growth and value creation prospects.” They also provided an update on their 2022 and 2023 financial targets, and introduced their targets for 2023 and 2024.
While praising their portfolio of IPs and revenue from live service games, Ubisoft admitted they’re “facing major challenges as the industry continues to shift towards mega-brands and long-lasting titles than [sic] can reach players across the globe, across platforms and business models.”
Further, Ubisoft noted there are games from “this investment phase” that have not launched, and revealed “recent launches have not performed as well as expected.” The economy was also blamed as “the trends over the Holiday season, in particular the last weeks of December and beginning of January, have been markedly and surprisingly slower than expected.”
“This overall context has triggered a full review of our revenue prospects leading to increased cautiousness over the coming years,” Ubisoft stated.
They then noted, “Considering this, combined with the significant additional investments that resulted from lockdown and new working patterns that have had a profound impact on productions across the industry over the past 3 years, Ubisoft is announcing today a set of measures dedicated to strengthening its long-term growth and value-creation prospect.”
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Three major points were then unveiled by Ubisoft, all seeming to focus on less titles overall, but more focus on those that remained. The first being to “Ensure all our energy is focused on building our brands and live services into some of the most powerful within the industry. As a consequence, we have decided to cancel three unannounced projects, on top of the four already announced in July 2022.”
The second was to “depreciate around €500m of capitalized R&D [$541 million USD], concerning upcoming premium and Free-to-Play games and the newly cancelled titles.” The third was to “adapt our organization to a more challenging market, with an expected net reduction of our non-variable costs base of more than €200m [$216 million USD] over the next 2 years.”
The latter would be via restructuring, divesting non-core assets, and natural attrition.
CEO and Co-Founder Yves Guillemot admitted Ubisoft was “clearly disappointed by our recent performance,” yet “surprised” that Mario + Rabbids: Sparks of Hope and Just Dance 2023 “underperformed.”
Nonetheless, Guillemot insisted “The industry’s long-term prospects remain promising, and I am convinced Ubisoft is well positioned to benefit from this momentum thanks to the strength of our teams, brands, production capacity, technology and balance-sheet.” Ubisoft’s back-catalog of titles and “generally solid performance from our live games” were once again praised.
“We expect our strategy to build long-lasting live games and transform our biggest brands into truly global phenomenon with multiple offerings across platforms and business models, to ultimately generate significant value creation, with strong topline and operating income growth over the coming years,” Guillemot closed.
In the Updated Financial Targets, Ubisoft reduced their net bookings target for Q3 2022-23. It was reduced from €830 million EUR to €725 million EUR or $898 million USD to $784.69 million USD.
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As for Skull and Bones the company noted, “Players will be able to discover the beauty of Skull and Bones in the upcoming beta phase. The additional time has already paid off and brought impressive improvements to its quality, which has been confirmed by recent playtests. We believe players will be positively surprised by its evolution.”
Despite this, Ubisoft stated, “We have decided to postpone its release in order to have more time to showcase a much more polished and balanced experience and to build awareness. Skull and Bones will now be released early 2023-24.” The title was previously slated for March 9th, 2023.
Skull and Bones has now been subject to six delays and issues since it’s announcement in 2017, though part of the issues can be attributed to the COVID-19 lockdowns. One of these was reportedly a full blown “reboot” of development in 2020.
Anonymous sources speaking to VGC claimed the game was struggling to stand out among other open-world Ubisoft games, and would be reworked into a live service title like Fortnite, with “live storytelling” (i.e. a narrative that continues as the game updates). In late 2022, Ubisoft confirmed Skull and Bones would be their first $70 title, along with their future AAA titles.
Ubisoft’s financial update also noted “net bookings expected to be down more than 10% year-on-year versus a prior expectation of up more than 10%.” In addition, the above news meant non-IFRS operating income had fallen from €400 million EUR to minus €500 million EUR or $432.9 million USD to minus $541 million USD.
Chief Financial Officer Frédéric Duguet closed the statement, emphasizing “Our decisive reaction and our additional cost optimization measures should help us navigate the current challenging economic environment and ensure a leaner organization for the years to come.”
“Leveraging the biggest pipeline of games in the Ubisoft’s history, 2023-24 will see the releases of Assassin’s Creed Mirage, Avatar: Frontiers of Pandora, Skull and Bones and other yet-to-be-announced premium games, including a large one, as well as promising Free-to-Play titles for some of our biggest brands.”
What do you make of Ubisoft’s decision to scrap these three games and delay Skull and Bones again?