Ubisoft Q1 2020-21 Results – A Record Quarter Driven by Reveals and Lockdowns
Ubisoft (EPA:UBI) is going through a tumultuous time at the moment. Following massive allegations of systemic issues of sexual harassment, other misconduct as well as the negligence from people high-up within the company, the publisher has been on damage control. This control is continuing at the very start of the Q1 2020-21 report, released today with a statement from Yves Guillemot, co-founder and CEO, that states as follows:
we nonetheless face a very serious challenge following the recent allegations and accusations of misconduct and inappropriate behaviour within our Group. I am determined to make profound changes in order to improve and strengthen our corporate culture. We already have acted swiftly and firmly, announcing and introducing large-scale initiatives intended to transform our organization.
It's impossible not to cover Ubisoft without at least touching on these recent allegations and the undeniable impact it has had on the image of the company as well as the simple fact that changes are required to prevent this from happening again. This is something we will speak of more, in a different piece. For now, I'll cover the financial results of the first quarter, ending June 30th, 2020.
Simply put, it's been a massive one for the company, their best yet. In figures, player activity and every single measurement. Ubisoft has seen record figures that were undeniably impacted by the COVID-19 pandemic and the resulting lockdowns. In the conference call, it has been said that June and July have seen activity figures similar to those of January and February, before huge boosts hit within April and May.
As for what the figures, for the three months ending June 30th, Ubisoft has brought in net bookings of €410 million, significantly surpassing the company's target of €335m. This has been driven through the back catalogue of titles and microtransactions (player recurring investment) for these titles. This has been driven by the lockdown with people being kept in-house but also through interest, driven by the recent Ubisoft Forward event which, interestingly, has seen record high-peak concurrent views, surpassing previous E3 conference that the company has created.
Primary examples of games benefitting from recent events coming from Assassin's Creed which has seen a 60% year-on-year increase in net bookings, said to have been partly driven by renewed interest thanks to the upcoming Assassin's Creed Valhalla. The biggest boost, however, has been with Just Dance, with the franchise seeing a 500% net-bookings YoY increase. One title described as the largest surprise for the quarter was Hyper Scape, releasing fully later this summer, but saw the game hit the top position on Twitch during the technical launch date.
For the future, Ubisoft is expecting net bookings of roughly €290m, approximately 16% lower than the second quarter for the previous financial year. This expectation is based primarily on the figures from last year being significantly boosted by early shipments of Tom Clancy's Ghost Recon: Breakpoint. For the current financial year, the company is expecting net bookings of between €2.35 and €2.65 billion, with operating income of between €400 and €600 million.
One thing brought up during the conference call was the recent news on certain publishers indicating their plans to increase prices for the coming generation of titles. Ubisoft answered this question by stating that any titles released this year, around Christmas time, will remain at the current RRP (£50/$60), though this leaves open the possibility of prices increasing from the calendar year 2021 onwards, likely after seeing the reception towards the forerunners of this plan.
The potential for a price increase in the future won't impact on the current financial year, if it goes ahead, though it certainly is one to look out for. What will push Ubisoft as the year moves on is the release of titles like the earlier announced Assassin's Creed Valhalla, Watch Dogs: Legion, Far Cry 6, which all have release dates. Two further 'AAA' titles are expected to release during the current financial year, with potentials like Beyond Good and Evil 2, Skull & Bones, Gods & Monsters and Tom Clancy's Rainbow Six Quarantine, with free-to-play titles like Roller Champions and Hyper Scape rounding these titles up.
The future is certainly looking positive for the publisher and while figures will undeniably decline from current highs as the world opens up following the COVID pandemic, whenever that may be, Ubisoft has a strong list of titles to take advantage of the upcoming console generation and the urge from players to play more of the series' they love.
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