Preorders not as important as they once were - Ubisoft
Publisher says there are many ways games with underwhelming reservations can wind up winners as Rainbow Six helps power half-year sales spike
With the first half of Ubisoft's fiscal year in the books, its top performers are games it launched last year, or even the year before. The company today reported its results for the six months ended September 30, and put a focus on the continued contributions of older titles to its bottom line.
The company singled out The Crew (released December 2014), Rainbow Six Siege (December 2015) and The Division (March 2016) as three of its strongest contributors, noting that each title has more than 10 million registered players. In a post-earnings conference call, Ubisoft CEO Yves Guillemot even said The Crew posted revenues in the first half of the year that were the equal of what it posted in the first half of last year.
The absence of more recently released titles no doubt played a part in the company's reliance on those games; Ubisoft only released a single packaged game in the first half of its fiscal year--the PC real-time-strategy game Champions of Anteria, with the rest of the release slate featuring digital-only titles and expansions for Rainbow Six and The Division.
For the half-year, Ubisoft posted revenues of €281.4 million, up 36% year-over-year and well ahead of the €239 guidance it gave after the first quarter. However, that didn't translate into profits, as the company posted a net loss of €35.9 million for the half-year, improved from the previous year's €65.9 million net loss in the first half.
Despite those results, Ubisoft still downgraded its full-year sales guidance. Previously, it had expected to bring in €1.7 billion over the full fiscal year, but it's now telling investors to expect a number between €1.61 billion and €1.67 billion. The change was made "in order to factor in more conservative sales projections for the second half," the company said. There was some modest upside, as Ubisoft said its operating income for the year could come in between €230 million and €250 million. Previously, it had projected €230 million flat.
The back half of Ubisoft's fiscal year includes some anticipated games--Watch Dogs 2, For Honor, Steep, and Ghost Recon: Wildlands among them--but it lacks a major Assassin's Creed game, which had been a staple of Ubisoft's holiday quarters in prior years.
Preorders were a subject of much discussion during the post-earnings call, and it could be inferred from executive comments that they haven't been up to expectations for some titles.
"We do consider that preorders are important," Guillemot said when asked about how reservations were shaping up for Watch Dogs 2, "but they are not completely [crucial] for the success of the game."
It was clear from the call that Ubisoft considers preorders less reliable indicators of a game's eventual performance than they used to be. Part of that is due to customers knowing that scarcity is no longer an issue; if they decide to buy a game at launch, they can always download it instead of being forced to locate a physical copy in a local store. But it also varies from game to game. The executives pointed to Far Cry 3 as an example, saying that preorders for the title weren't great because players wanted to see if it received good reviews and word of mouth before committing to it. Rainbow 6 Siege was another example given of a game that didn't do very well at launch, but turned its performance around as a result of the publisher committing to improving the game over months and adopting player feedback.
A slide presentation accompanying Ubisoft's numbers underscored that point. Titled, "A More Dependable and Profitable Industry," the slide charted the rising profitability of the four largest AAA console publishers (EA, Activision Blizzard, Ubisoft, and Take-Two) since 2007. The slide indicates that trend has been boosted by rising barriers to entry in the market and the impact of digitalization on the industry.
Guillemot talked about the impact specific to his company in comments released alongside the results, saying, "The Crew, The Division and Rainbow Six Siege each have more than 10 million registered players, demonstrating that we are effectively executing our business development plan and moving towards an ever-more recurring model. All of our actions and initiatives are aimed at achieving this objective. We are creating powerful franchises that offer long-term visibility. Our multi-studios organization enables us to have regular games releases. And the Live experiences for our consoles and PC games, including our investments in eSports, encourage long-term player engagement."
