French Gaming Giant Faces Uncertain Future Amidst Slumping Sales and Investor Pressure
Ubisoft, the renowned French video game publisher behind the iconic “Assassin’s Creed” franchise, is grappling with a lackluster games pipeline, disappointing sales performance, and mounting pressure from investors to explore a potential sale. The company recently announced a three-month delay in the release of its highly anticipated “Assassin’s Creed Shadows” title, pushing its launch to February 14, 2025.
This setback, coupled with the underwhelming reception of its “Star Wars Outlaws” game, has led Ubisoft to revise its guidance for the 2024-2025 fiscal year, expecting net bookings to plummet to around 1.95 billion euros. The company’s shares have subsequently slumped to decade-lows, reflecting investor concerns about its triple-A games pipeline and financial prospects.
To make matters worse, Ubisoft is facing potential strike action in France, with the country’s STJV video game workers’ union calling for industrial action over the company’s bid to require workers to return to the office three days a week. Activist investor AJ Investments, which holds a less than 1% stake in Ubisoft, is leading a push for the company to sell itself to private equity firms or Chinese gaming giant Tencent, citing the need for greater efficiency and a revamped management structure.
Several bank analysts have slashed their price targets for Ubisoft, citing the delayed release of “Assassin’s Creed Shadows” and the company’s reduced guidance. Deutsche Bank downgraded the stock to “hold” from “buy,” while JPMorgan cut its price target to 11 euros from 21 euros, citing lower unit sales expectations for Ubisoft’s triple-A game releases.
However, not all analysts are pessimistic about Ubisoft’s prospects. Wedbush Securities suggests that the company’s “Star Wars Outlaws” game was unfairly targeted by coordinated “trolling” efforts, which artificially depressed user review scores. The firm expects “Assassin’s Creed Shadows” to sell 7 million units in its launch quarter, potentially becoming one of Ubisoft’s best-selling titles.
The broader video games industry is also facing challenges, with the global market expected to grow only 2.1% year-over-year in 2024, according to research firm Newzoo. Industry experts point to the proliferation of new game releases, which has led to consumer fatigue and a decline in revenue and return on investment for many titles. As the gaming landscape continues to evolve, Ubisoft’s ability to adapt and revitalize its pipeline will be crucial to its survival and success.
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