Ubisoft Shares Plummet Amid Profit Warning and "Assassin’s Creed" Delay
French video game powerhouse Ubisoft experienced a significant setback as its shares plummeted nearly 20 percent following a profit warning and a delay in the release of its highly anticipated "Assassin’s Creed" title. Let’s delve into the details and implications of this development.
Profit Targets Revised Downward
- Ubisoft announced that its latest installment of "Assassin’s Creed" would be delayed until February 14, missing the crucial holiday season release window.
- As a result, the company revised its profit targets, citing the need to update its "Star Wars Outlaws" game in response to player feedback.
Investor Concerns and Analyst Reactions
- Ubisoft shares fell by 18 percent to 9.41 euros ($10.50), marking a 60 percent decline since the beginning of the year.
- Analysts at Deutsche Bank expressed disappointment over the delay and lowered their unit estimates for "Assassin’s Creed Shadows" from 8 million to 7 million over a 12-month period following release.
- Competition in the gaming industry intensified as US rival Sucker Punch Productions announced the release of "Ghost of Yotei," posing additional challenges for Ubisoft.
Financial Impact and Future Outlook
- Ubisoft now expects net bookings of 350-370 million euros ($390-$410 million) in the second quarter, down from the previous estimate of 500 million euros.
- The company’s financial struggles come amid industry-wide challenges, leading to layoffs and a recent return-to-office mandate that sparked employee unrest.
Labour Unions Call for Strike
- In response to the return-to-office policy, several Ubisoft labour unions in France have called for a three-day strike starting on October 15.
- The unions argue that many employees have built their lives around remote work during the pandemic and cannot easily transition back to in-person work.
Company Response and Industry Outlook
- Ubisoft emphasized the importance of personal interactions and collaboration in fostering creativity but declined to comment on the strike action.
- The video game industry faces ongoing challenges and competition, requiring companies like Ubisoft to adapt to changing consumer preferences and market dynamics.
In conclusion, Ubisoft’s recent challenges underscore the volatile nature of the gaming industry and the need for companies to innovate and respond swiftly to market developments. The impact of delays and profit warnings on shareholders, employees, and industry stakeholders highlights the interconnectedness of financial performance, product launches, and workforce dynamics in the digital entertainment sector.