Even as Ubisoft released several well-received, blockbuster games in the last few years, the French-Canadian company has nonetheless been having a time of it.
First, and most importantly, there have been ongoing allegations of toxic work culture, leadership, and sexual harassment at the studio first publicized last year. This was reinvigorated in light of similar allegations at Activision Blizzard and accusations that Ubisoft hadn't done enough in the past year to fix the company's culture.
Then there are all the delays. Ubisoft has been delaying multiple games, repeatedly, on an annual basis, for some time now. There was Rainbow Six Extraction, Immortals: Fenyx Rising, and Watch Dogs: Legion delayed back in 2019, and then Extraction delayed again after that. There's Riders Republic's many delays, Far Cry 6 that got pushed an entire fiscal year, Avatar, the endless treadmill of Skull & Bones delays, and the Prince of Persia remake, multiple times. Ghost Recon Frontline got announced earlier this month, but its beta was delayed not a week after that announcement.
For the most part, we're not clear exactly why all these delays are happening, though a Kotaku report from July looked into what's going on with Skull & Bones specifically: reportedly a development mess where no one seemed to know what kind of game they were making and the team was burning out.
Then there's the more minor matter of the free-to-play question, which seems to have ruffled public and investor feathers. Over the last few earnings calls, Ubisoft has expressed a desire to move away from its commitment to release between three and four AAA titles each fiscal year and stated a strong interest in more free-to-play games.
That's a lot! Anyway, that's the atmosphere going into Ubisoft's Q2 earnings report today, and it certainly felt like the company was playing defense. Sure, numbers-wise, things look fine enough, even if Ubisoft gave a few interesting specifics. Net bookings were up 14% from last year to €392.1 million ($458.1 million) and sales were up 21% to €398.5 million ($465.6 million). We got some vague metrics on recent games, such as Assassin's Creed Valhalla touted as the "second-largest profit-generating game in Ubisoft history, in less than 12 months" and Far Cry 6's early sales reportedly in line with Assassin's Creed Odyssey's around the same time — a number we don't have (it had sold 10 million copies between October 2018 and March 2020).
There were other bits. The Crew 2's engagement is doing well, rising 70% from what it was two years ago (it launched in 2018) and its revenue up 53% from then. The Just Dance franchise has now sold 80 million lifetime units. And apparently, people are picking up Far Cry 3 and 5 in part due to interest around Far Cry 6, though exactly how many people are unclear.
But beyond that, Ubisoft's presentation largely felt like an attempt at reassurance amid a pile of negative headlines. For one, its earnings release included a lengthy quote about the "evolution of the HR organization" and its attempts to make "incremental and meaningful progress" on improving company culture, especially through Ubisoft's Employee Resource Groups and a closer look at creative content:
"The strengthening of support for ERGs is just one example of how Ubisoft is acting on its commitment to become a more diverse and inclusive organization," read the release. "Another meaningful example is that an internal content review committee now examines the game and marketing content to provide additional perspectives on its content, and a global Inclusive Games and Content team is being created to ensure that diversity and inclusion are embedded into the production processes."
Notably, none of the investors on the call asked about this issue.
CEO Yves Guillemot also felt the need to reassure everyone once again that yes, Ubisoft is in the business of premium AAA games despite its sudden surge of free-to-play interest. Its earnings release pointed out that 80% of Ubisoft's investments are focused on expanding premium offerings, and during the call, at one point an investor was reassured that Assassin's Creed Infinity was not going to be free-to-play, but would have significant story-focused content — though the game is still a ways off.
But while the public might have balked at a perceived increase in free-to-play, this wasn't what was bothering investors. What came up again and again on the call was the issue of free-to-play games getting delayed, or releasing and not doing as well as Ubisoft hyped them up to be. Guillemot seemed comfortable enough with the trial and error model, as he said in his opening remarks:
"Looking at our free-to-play operations, let me be clear. Our organic value-creation model implies that we may go through phases of trial and error where we sometimes fail, but always learn, grow, and become better positioned for success on subsequent attempts. While we are never satisfied with our pace of progress, we have a proven track record in building new skills, technologies, and capabilities through our initiative process. Recently we have reviewed our different initiatives and taken the necessary decisions. We are confident applying our iterative process to free-to-play will ultimately create great value, expand our brand's reach, and [inaudible] our recurring revenue."
But on the call, the issue was brought up multiple times, at one point specifically in regards to Roller Champions, which is no longer being factored into the company's guidance. It's still planned for this fiscal year (most recently slated for 2021 but it still doesn't have a firm date), but the game has received little in the way of marketing lately and it feels as though Ubisoft isn't expecting much from the free-to-play competitive roller derby.
When questioned by an investor on what was going wrong with free-to-play games — Roller Champions specifically — and what happened to this content (and thus the investment) if it launches to no interest (remember Hyperscape?), Guillemot gave a fairly boilerplate answer about it being difficult to discern what players want from free-to-play and sometimes needing to take more time to figure that out.
"But what we see is that the reaction from players on many of our free-to-play is actually a good reaction. We have some pushback sometimes on some elements, but that helps us to actually adapt. We feel the investment on the free-to-play is really a very good investment for the company and that will result in lots of profit in the future. That's why we take the time needed to actually really generate good revenue and profit in the future."
A bit later, CFO Frédérick Duguet circled back and reiterated the importance of the "iterative" process in free-to-play that Guillemot had mentioned earlier, reassuring that free-to-play was a growing, profitable sector and asking investors to trust the process. When the questioner then suggested that Ghost Recon Frontlines had been shelved due to negative feedback, Guillemot quickly disabused them of the notion — it's just delayed.