The lights are on
We know that only a subset of our readers care about quarterly financial reports, year-over-year gains (or losses), and the difference between GAAP and non-GAAP reporting. But still, every three months we spend a couple of weeks bouncing from one conference call to the next, reporting and analyzing. Today’s Ubisoft sales call is a perfect example of why we go through the effort.
On Watch DogsWatch Dogs has been a strange game to follow. It was a major surprise at E3 2012, and one of the first “next-gen” games we were shown by any publisher. For that reason (and many others), the October 2013 delay of the title just one month before its schedule release came as a shock.
Since then, the PR for the title has been dark, with no guaranteed launch window or revisiting of anticipated platforms. That changed today, but with it came some interesting developments.
Watch Dogs was already delayed out of the current fiscal year (ending March 31, 2014). Ubisoft will make good on its Spring 2014 release… mostly. The Wii U version of the game has been delayed until some time after the Xbox One, Xbox 360, PlayStation 4, PlayStation 3, and PC versions arrive between April and June.
“We made the difficult decision to further delay the release of Watch Dogs on Wii U to focus the team’s resources where they could have the broadest possible benefit for both our customers and Ubisoft,” CEO Yves Guillemot said during today's financial call.
In the last line, the “broadest possible benefit” phrasing strongly suggests that Ubisoft no longer feels that the Wii U is worth the same level of resources as the other platforms, because of install base (customers) and revenue (Ubisoft). As the publisher that has provided the most consistent support to Nintendo, it’s hard not to see this as a portent of future lack of support for the console. Given that the Wii U only represented two percent of the company’s sales in the third quarter, it’s easy to understand why support might be waning.
This is also a reverse of the Rayman Legends situation. Publishers usually try for platform parity because it provides the greatest opportunity for revenue. If Ubisoft isn’t concerned with a simultaneous launch on the Wii U, it suggests the publisher doesn’t see much to lose on the revenue side for that platform.
All is not lost, though. Ubisoft is only projecting a delay at this point. Should that become a cancelation, we’ll revisit this topic. Regardless, Wii U isn't the only struggling platform for Ubisoft. The Vita and 3DS together represented a whopping zero percent of sales in the last quarter.
On The DivisionNot only did Ubisoft leave The Division out of most of its discussion, but it refused to comment on the release window. Instead, the publisher pointed to its “five major game releases” statement, dodging the question of The Division’s projected arrival.
Those five games, by the way, only have one open spot. On that list already are Watch Dogs, The Crew, and Just Dance. We can safely assume that the annual Assassin’s Creed series is the fourth game. Ubisoft has a number of franchises that could sit in that final spot, with the rumored Far Cry sequel being the most likely candidate. This also doesn't include smaller releases like Child of Light and Valiant Hearts.
Furthermore, Ubisoft just leveraged 40 percent of Ubisoft Reflections to aid in the development of The Division. I suspect that we’ll see that game no earlier than mid-2015.
On Digital and Back CatalogUbisoft evidenced two pieces of data that stood out to me in its reporting. While most publishers are experiencing significant growth in digital, Ubisoft reports a four percent decrease from this time last year.
Assassin’s Creed IV should have helped make up the difference from the absence of a title like Far Cry 3. With Xbox One and PlayStation 4 offering day-and-date digital releases, there is a larger install base of digital buyers.
Also alarming was the 21 percent decrease in back catalog sales. This seems born of Ubisoft’s ongoing struggle to recapture PC gamers. Uplay digital rights management has been a sore point with that segment. PC represents only 10 percent of Ubisoft’s sales in the third quarter (and only 7 percent for this fiscal year so far). Given that PC drives much of back catalog (and digital), it’s easy to see where sales have stumbled.
Ubisoft is currently projecting a €65 million ($88.6 million) loss for the year ending March 31, 2014. South Park is likely to sell well based solely on the license, regardless of the quality (remember, there have been no hands-on press previews). Watch Dogs still has momentum, but it needs to be solid if Ubisoft wants to transition it into a new series.
The coming months aren’t going to be easier for the publisher, but if Watch Dogs benefits from its additional time in development, South Park offers good gameplay (in addition to being a funny South Park experience), and The Crew hooks Need for Speed fans looking for a new, social racing experience, 2014/15 could be a turnaround for the company.