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 – Shares of Ubisoft are down 6% Wednesday morning, despite the French video game giant reporting record quarterly sales. The company also narrowed its full-year outlook.
Ubisoft posted fiscal third quarter revenue of Euro 1 billion ($ 1.2 billion), exceeding its own target and more than doubling the company’s revenue of Euro 455.5 million in the same period last year .
The company said it benefited from quite a few new titles, including Just Dance 2021, Assassin’s Creed Valhalla, and Watch Dogs: Legion. The strong performance was also supported by the momentum for the next generation of consoles from Sony and Microsoft, which launched in November.
Ubisoft said its Assassin’s Creed Valhalla game brought record sales for the franchise and 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-gen platforms, Ubisoft said.
But it’s not just big new releases that are driving Ubisoft sales. Ubisoft CEO Yves Guillemot said of the company’s earnings call that it also saw “strong engagement” in its back catalog of games, adding that this trend continued into January.
Rainbow Six Siege, a first-person shooter game released by Ubisoft in 2013, now has 70 million players, said Chief Financial Officer Frederick Duguet. That is an increase of 15 million users compared to last year. Rainbow Six Siege is a popular title in esports tournaments.
“In a context of increasing engagement and very supportive industry trends, the first nine months of the year have confirmed that we continue to move towards an increasingly clear repeat of our earnings,” Guillemot said in Ubisoft’s third quarter results Tuesday evening.
“That’s why we expect our highly profitable back catalog to be an even bigger part of our business in the future.”
It’s a sign of how the video game industry is shifting towards longer-lasting games with recurring revenues rather than relying solely on big blockbuster hits.
Video game companies have benefited greatly from the coronavirus pandemic as people are spending more time at home due to public health restrictions around the world.
Ubisoft narrowed its full-year forecast for revenue and profit on Tuesday. The company said it expects net sales of between $ 2.22 billion and $ 2.28 billion for 2020/21, up from the $ 2.2 billion to $ 2.35 billion it previously expected; and an operating profit of 450 million to 500 million, lower than the previous target of 420 million to 500 million euros.
Ubisoft added that it is in the “early stages” of developing a new Star Wars game following the announcement of a deal with Disney’s Lucasfilm Games division. The move marks the beginning of the end of a long-term exclusivity deal between Lucasfilm Games and Electronic Arts.
EA announced on Monday that it was buying mobile game developer Glu Mobile for $ 2.4 billion. When asked if Ubisoft would explore mergers and acquisitions to drive future growth, Guillemot said the company’s approach was primarily to buy new technologies rather than content.
Ubisoft has not yet made a decision on whether or not to increase the prices of its video games to a new standard of $ 70, Guillemot said Tuesday. Major publishers like Take-Two Interactive are raising game prices by $ 10 for next-gen consoles. It’s the first time there has been a major price hike in blockbuster games since 2005, and many figures in the industry say it should have been a long time ago.