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Japan Today
14-05-2025
- Business
- Japan Today
'Assassin's Creed' no savior for struggling Ubisoft
'Assassin's Creed' came through with strong sales but could not keep Ubisoft from a net loss By Kilian FICHOU A bumper release for the latest "Assassin's Creed" instalment did not save French video games giant Ubisoft from falling back into the red in its 2024-25 financial year, the company said on Wednesday. The company had won through to profitability in 2023-24 after a near half-billion-euro loss in the previous period. But a string of disappointing releases undermined this year's performance, with a net loss of 159 million euros ($178 million) on revenues of 1.9 billion -- down 17.5 percent year-on-year. Over the past 12 months, Ubisoft's would-be blockbuster "Star Wars Outlaws" fell short of sales expectations on release, while it cancelled multiplayer first-person shooter "XDefiant" for lack of players. "This year has been a challenging one for Ubisoft, with mixed dynamics across our portfolio, amid intense industry competition," chief executive Yves Guillemot said in a statement. Ubisoft's preferred performance indicator, so-called "net bookings" -- which excludes some deferred revenues -- also fell by more than 20 percent year-on-year, to 1.8 billion euros. The group expects the measure to hold steady in the coming 2025-26 financial year, during which it will release a new "Prince of Persia" game, strategy title "Anno 117: Pax Romana" and mobile versions of shooters "Rainbow Six" and "The Division". Disappointing shipments have been matched by a tumbling stock price. But in recent weeks the publisher's biggest money-spinner has been as dependable as ever, with "Assassin's Creed Shadows" winning over more than three million players with its story of medieval Japanese intrigue since its March 20 release. "Shadows" swiftly rose to become the second-best-selling game of the year so far in the United States, according to data from consultancy Circana. Moving to address its business woes, Ubisoft said in late March that it would create a new subsidiary to manage its three top franchises: "Assassin's Creed", "Far Cry" and "Rainbow Six". Around 3,000 of the group's 17,000 employees worldwide will work in the new unit, Guillemot has said. It will not own the games' brands, instead paying royalties to the parent company to use them. The subsidiary has been valued at more than four billion euros, or twice Ubisoft's current market capitalisation, after Chinese tech giant Tencent agreed to invest 1.16 billion in exchange for a stake of around 25 percent. Spinning off the biggest-selling games "was the least committal of the available options without simply returning to shareholders empty-handed," said Martin Szumski, an analyst at Morningstar, ahead of the earnings report. One activist fund with a minority stake in Ubisoft had tried to rally other investors to demand a change of course. Leaving investors "underwhelmed", according to Szumski, the subsidiary plan has not kept the mothership's stock from eroding further in value, hit in part by fears over U.S. tariffs. Since January, the shares have lost more than 12 percent, touching their lowest price in over a decade in April. Ubisoft has promised details of more restructuring moves by the end of 2025 and aims to save a further 100 million euros over the coming two years as part of a cost-cutting drive launched in 2023. The company on Wednesday also reported net debt of 885 million euros, down from 1.4 billion in September. Ubisoft's restructuring means Tencent, which climbed aboard as an investor in 2018, will have a bigger say in the French firm -- although Guillemot insisted to French senators at a hearing last week that he will "retain control" over the new subsidiary. Looking ahead, "if Ubisoft is unable to use the money Tencent invested in a meaningful way, it is certainly possible that Tencent pursues buying the firm outright" even in the face of fierce resistance from the founding Guillemot brothers, Szumski suggested. Ubisoft's belt-tightening program has brought closures of several foreign studios and thousands of job cuts. Worldwide, the company is replacing only one in three departing workers, Guillemot told the Senate. © 2025 AFP
Japan Today
13-05-2025
- Business
- Japan Today
Tariffs set to level up game console prices
Tech products usually fall in price as their release date fades into the past, but Trump's tariffs have had an impact By Kilian FICHOU The U.S. tariffs barrage and the bounding cost of producing games have prompted manufacturers like Sony and Microsoft to announce price hikes on consoles, in an industry shift experts say is set to last. Sony's 2020-vintage Playstation 5 has seen its price hiked by tens of dollars worldwide in recent weeks, a move matched on Microsoft's Xbox Series X. While tech products usually fall in price as their release date fades into the past, games industry analysts say these are clear impacts of US President Donald Trump's border levies on major trading partners. Last year, "75 percent of all consoles shipped to the U.S.... were made in China," market research firm Niko Partners wrote in an April note. Niko Partners analyst Daniel Ahmad said Microsoft's global price hike aims "to soften the actual price increase in the U.S., which is Xbox's largest market" -- and the only one affected by Trump's swinging tariffs on imports from China. Nintendo's hotly anticipated Switch 2 console appears for now to be spared a big price hike ahead of its June 5 release. The Japanese heavyweight moved some production to Vietnam in 2019 -- a country hit by Trump with 46 percent additional tariffs which have been delayed for 90 days. If Vietnam does face such a steep trade bill "we're looking at costs increasing by hundreds of dollars" for every console, industry specialist Christopher Dring warned last month on his website "The Game Business". The United States and China agreed on Monday to reduce massive tit-for-tat tariffs, also for 90 days -- but the effect of the temporary pause on the games industry remains to be seen. As well as console hardware, games software is getting pricier too. Fans reacted angrily when Nintendo announced that flagship Switch 2 game "Mario Kart World" would bear its highest-ever price tag of $80 in the U.S. and up to 90 euros ($102) across the Atlantic. Microsoft plans to increase prices of games developed by its studios to as much as $80 -- a $10 hike. "These price points are set to become industry standard over the next two years," Niko Partners predicted. Behind the sticker shock is a crisis in growth for the games industry over the past two years, leaving developers scrambling to protect their profitability. For many gamers, especially the younger generation, that may mean cutting back. "I'm going to have to be a lot more selective" about purchases, said Nassim Amegrissi, an 18-year-old high school student in Paris. He said he had already decided to "pass" on the Switch 2, priced at 470 euros ($450 in the U.S.). Matthieu Rodolphi, a 31-year-old French policeman, said price would be "the deciding factor" in which titles he picks up. Many gamers are turning to releases from smaller studios that are often less prohibitively priced, such as "Split Fiction" or surprise hit "Clair Obscur: Expedition 33", both of which have shifted millions of copies. Other fans are signing up to major console makers' subscription services that allow access to a library of titles on demand for around 15 euros per month. Even with prices soaring, most experts agree that games are in fact historically affordable when looked at in real terms. Taking inflation into account, many consoles were far more expensive in the past, such as the 600-euro release price of the 2007 PlayStation 3 that would today put it at over 700 euros. "Game prices have never been lower in real terms than they are today," said Matthew Ball of consultancy Epyllion in a report on the state of the games industry in 2025. By contrast, "development costs have as much as tripled over the past five years," Dring wrote. If sold at $70 -- the standard price for new video games in the United States -- Grand Theft Auto VI "would be the cheapest-ever GTA" in real terms, Ball said. But the game cost significantly more to produce than the previous installments, which is why Ball expects it to break the $100 psychological barrier when it is released in May 2026. © 2025 AFP
