Ubisoft has postponed the release of the next title in the popular “Assassin’s Creed” game franchise – called “Assassin’s Creed Shadows” – by three months to February 14, 2025.
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French video game publisher Ubisoft is facing questions about its future as it struggles with a poor run of games and pressure from investors to pursue a sale.
The company, which produces the “Assassin’s Creed” franchise, said in updated guidance last week that it has delayed the release of the next title in the popular game series – called “Assassin’s Creed Shadows” – by three months to February 14, 2025. .
Ubisoft also lowered its guidance for the 2024-2025 financial year, saying it now expects net bookings to fall to around €1.95 billion. Ubisoft said it expects net bookings for the fiscal second quarter to come in at 350 million to 370 million euros, up from 500 million euros previously expected.
“The revised targets primarily reflect the decisions made for Assassin’s Creed Shadows and the softer-than-expected launch for Star Wars Outlaws,” Ubisoft said.
It comes after the company’s game “Star Wars Outlaws” — an action-adventure title based on the iconic sci-fi film series, which was released this summer — was met with disappointing sales performance and mixed reception from players. Ubisoft said its lessons from the release of Star Wars Outlaws prompted it to give Assassin’s Creed Shadows more time to polish.
The company also said it is scrapping plans to launch its new Assassin’s Creed game with a “Season Pass,” which was a paid add-on that gave access to a bonus quest and additional downloadable content at launch.
Ubisoft added that it now plans to release Assassin’s Creed Shadows on Valve Corporation’s Steam online game store on its release day, ending its history of exclusively distributing PC versions of its games on Epic Games’ digital storefront.
Yves Guillemot, CEO and co-founder of Ubisoft, speaks at the Ubisoft Forward live streaming event in Los Angeles, California on June 12, 2023.
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“In light of recent challenges, we recognize the need for greater efficiency while pleasing players,” Ubisoft CEO Yves Guillemot said in the statement last week, adding that the company’s executive committee is launching a review to further improving its performance.
Ubisoft shares have fallen to decade lows amid gloomy investor expectations about the triple-A game series and its financial prospects.
To further compound the company’s woes, the company faces a possible strike in France after the country’s video game workers’ union SJV called for three days of industrial action on October 15-17 over the company’s offer to bring workers back to the office three days on week.
Pressure from an activist investor
Following the decision to delay the upcoming Assassin’s Creed game, AJ Investments, an activist investor with less than a 1% stake in Ubisoft, said it was working with other company shareholders to push for the French company to be sold to private equity firms. or to the Chinese gaming giant Tencent.
Tencent owns one about 10% of Ubisoft’s shares.
In an open letter last week, AJ Investments said it had gathered the support of 10 percent of Ubisoft’s shareholders for the lobbying campaign, adding that it plans to work with proxy advisory firms to prepare the vote at the company’s next general meeting. CNBC could not independently verify that amount.
“We have spoken to industry experts as potential board members and executives to replace current management and deliver on our strategic objectives, we will recommend our candidates in due course,” AJ Investments said.
AJ Investments noted that it is set to speak with Ubisoft management on Tuesday to discuss its proposals. The company added that it would demonstrate in front of Ubisoft’s headquarters in Montreuil, Paris, if necessary.
Several banking analysts lowered their price targets for Ubisoft following the news of delays to its upcoming game, though many kept their ratings unchanged.
Deutsche Bank, which downgraded the stock to “hold” from “buy,” said Ubisoft’s guidance cut was “larger than we expected” and that the postponement of Assassin’s Creed Shadows is “pushing a significant amount of revenue” toward the next financial year. .
Deutsche Bank’s George Brown also said he expects Assassin’s Creed Shadows to perform worse than he initially expected, predicting sales of 7 million units in the 12 months after release. This is down from a previous forecast of 8 million.
Meanwhile, JPMorgan said in a note last week that they now expect lower unit sales of Ubisoft’s triple-A game releases and see a slower pace of releases going forward. JPMorgan maintained its “neutral” rating on Ubisoft’s stock, but lowered its target price to €11 from €21.
“Mid-sized developers continue to be squeezed by development cost inflation, which has not been matched by sufficient volume/revenue improvement to sustain attractive returns,” JPMorgan analysts Daniel Kerven and David W Peat said in a note.
“UBI’s capital structure and lack of cash generation in recent years has left it under increasing pressure to reduce its investments/costs.”
Reaction
However, some analysts were more sympathetic to Ubisoft’s struggles.
Analysts at Wedbush Securities suggested the company had been the victim of concerted “trolling” by people trying to lower average user ratings for the company’s Star Wars Outlaws game on review sites.
“We believe Star Wars Outlaws was affected by a concerted effort to troll Ubisoft games specifically and Star Wars content in general,” Wedbush analysts Michael Pachter, Alicia Reese and Kade Bar wrote in a note last week.
“The game received an unusual number of user reviews with a clear negative bias (including a large percentage of ‘zero’ reviews), despite seeing acceptable review scores from reputable review sites. This is a case of a rare incel victory that has led to Ubisoft having to lower his numbers,” they added.
Wedbush analysts said that despite delays to the upcoming Assassin’s Creed title, they expect the game to sell 7 million units in its first quarter and believe it has “the potential to become one of Ubisoft’s best sellers ever.”
Industrial recession
Ubisoft’s woes come as the wider video game space faces an industry-wide downturn.
The global game market is it is expected to grow only 2.1% annually in 2024, according to research firm Newzoo. This is it from an increase of 0.5% in 2023but nowhere near the increasing levels of growth seen during the 2020 and 2021 Covid-19 pandemic years.
James Lockyer, technology research analyst at British investment bank Peel Hunt, said part of the problem for game publishers today is that players are spending more time on older games than newer titles.
“In the years since Covid, the number of games released annually has increased significantly,” Lockyer told CNBC via email. “Consequently, consumers have had more choices over the past two years.”
“However, more choice plus a squeezed wallet with the cost of living means consumers’ cash is spread more thinly, driving revenue and ROI [return on investment] of these games often come out below expectations,” he added.
