French video game giant Ubisoft on Wednesday announced game delays and budget cuts following a “disappointing” performance in 2022 — citing “worsening macroeconomic conditions”. It comes only days after the World Bank warned the global economy was "perilously close" to sliding into recession this year.
The company said it had cancelled three unannounced titles, on top of the four already announced in July last year, and was pushing back the release of the coming title Skull and Bones for a sixth time. Even though the company assured investors that it was still planning to release the game, alongside Avatar: Frontiers of Pandora and Assassin’s Creed Mirage, which have both already been delayed, this year.
It will be revising its third-quarter net bookings estimate from €830 million ($893.2 million) down to €725 million, while increasing its write-down estimate by €100 million — depreciating €500 million of research and development on coming premium and free-to-play games.
Marking a shift in strategy, following a “surprisingly slower than expected” holiday season, Ubisoft indicated it would cut back in order to double down on “mega-brands and long-lasting titles”. The move comes after a series of recent “disappointing” launches, said Ubisoft chief executive Yves Guillemot.
On a call with investors, Guillemot said: "We are clearly disappointed by our recent performance." He added: "We are facing contrasted market dynamics as the industry continues to shift towards mega-brands and everlasting live games, in the context of worsening economic conditions affecting consumer spending."
While the company has been focused on building long-lasting brands and franchises, it says that games from this investment phase have not yet been released.
“Despite excellent ratings and players' reception, as well as an ambitious marketing plan, we were surprised by Mario + Rabbids: Sparks of Hope's underperformance in the final weeks of 2022 and early January. Just Dance 2023 underperformed as well. In this context, we have had to update our revenue expectations.”
Chief financial officer Frederick Duguet said: "There was significantly weaker spending around the critical sales period." He said there had been a contraction in overall consumer spending due to rising inflation and the wider economic environment. Duguet added that "the biggest megabrands" had taken a particularly high market share, leading to less consumer spending on other game launches.
The 20,000-employee company announced it would be cutting down on costs by €200 million over the next two years through measures that include staff reductions through attrition, targeted restructuring and divesting non-core assets.
According to gaming publication Kotaku, Guillemot sent out an email to staff saying: “Today more than ever, I need your full energy and commitment to ensure we get back on the path to success." He added: “I am also asking that each of you be especially careful and strategic with your spending and initiatives, to ensure we’re being as efficient and lean as possible."
Scroll through images of the most anticipated games of 2023 below
