Ubisoft cancels three games, slashes targets on worsening conditions

Ubisoft cancels three games, slashes targets on worsening conditions

Tencent has increased its stake in French game maker Ubisoft, the company behind popular franchises such as Assassin’s Creed. But analysts said that effectively closed the door on a full takeover of the company.

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Ubisoft canceled three unannounced games and lowered its full-year financial targets on Wednesday, blaming “deteriorating macroeconomic conditions” that have plagued the video game industry.

The French games publisher said it expects 2022 net bookings to reach 725 million euros ($779.4 million), down from a previous target of 830 million euros.

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The company cited the poor performance of its Mario + Rabbids titles Sparks of Hope and Just Dance 2023, as well as a challenging economic environment.

For the full year, Ubisoft said it expects its net bookings for 2022 to fall 10%. The company had earlier forecast a net increase in bookings of 10%.

“We are clearly disappointed by our recent performance,” Ubisoft CEO Yves Guillemot said in a statement. “We are facing adverse market dynamics as the industry continues to shift towards mega-brands and perpetual live gaming, in the context of worsening economic conditions impacting consumer spending.”

Faced with higher prices and borrowing costs, consumers are cutting back on bargain shopping. Games in particular have come under pressure.

Global sales of games and services, including console and PC games, were expected to shrink 1.2% year-over-year to $188 billion in 2022, according to a July research note from market data firm Ampere. Analysis.

With the industry seeing increased consolidation, Ubisoft is seen by analysts as a potential acquisition target. Its share price sank more than 38% in 2022, wiping €3 billion from the company’s market value.

Meanwhile, the company has also been invaded by internal scandals. Ubisoft underwent an executive shakeup in 2020 following reports of sexual harassment and abuse. Multiple executives resigned, including former chief creative officer Serge Hascoet.

Michael Pachter of Wedbush Securities said that Ubisoft’s lineup of holiday games “just aren’t good enough to get attention.” He said he expects improvement with future games like Avatar, Assassin’s Creed and Skull & Bones, “but they couldn’t get it with Mario + Rabbids this year,” he told CNBC via email.

In September, Chinese tech giant Tencent increased its stake in the company. Tencent invested €300 million in Guillemot Brothers Limited, taking a 49.9% stake in the family investment firm which owns 15% of Ubisoft.

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