Ubisoft Entertainment SA

Company Overview

Ubisoft Entertainment SA

Ubisoft headquarters in France
Type	Public
Industry	Video Games
Founded	28 March 1986; 37 Years Ago
Founders	Christian Guillemot Claude Guillemot Gérard Guillemot Michel Guillemot Yves Guillemot
Headquarters	Saint-Mandé, France
Key people	Yves Guillemot (Chairman, CEO) Frédérick Duguet (CFO)
Revenue	€1,814.3 million (2023)
Operating income	€-487.4 million (2023)
Net income	€-494.2 million (2023)
Total assets	€4,959.2 million (2023)
Total equity	€1,807.1 million (2023)
Number of employees	20,665 (2022)
Website	https://www.ubisoft.com/en-us/

Ubisoft Entertainment SA was founded by the five Guillemot brothers in 1986 in Saint-Mandé, France, to create and supply video games worldwide. Ubisoft produce and publish video games for consoles, PC, smartphones, and tablets in both physical and digital formats in Europe, North America, and internationally. Notable game franchises include, Assassin's Creed, Far Cry, Tom Clancy's, Watch Dogs, Prince of Persia, For Honor, Just Dance, and Rayman.

The company also has a presence in the Movies and Entertainment industry through its Ubisoft Film & Television division, which has the mission "to bring Ubisoft’s award-winning games into new areas of entertainment and to create original stories set in the world, culture and community of gaming". The division has a pipeline of projects, including the films “Just Dance” (Screen Gems), the live-action “Assassin’s Creed” (Netflix) series, the current “Mythic Quest” (Apple TV+) series and “Rabbids Invasion” (season 4 on Netflix).

Ubisoft Entertainment SA has a strategic partnership with Tencent and Playcrab; and collaboration with Disney and Lucasfilm Games.

Operations

Business Model and Strategy

Ubisoft has a unique production organisation in the video game industry, which allows the company to produce and own all of its most significant franchises, enter new market segments organically, and release high quality new content and games on a regular basis. This has allowed the organisation to grow and benefit from recurring revenues. Therefore, Ubisoft has sought to take advantage of their position for the last decade and expand their portfolio of franchises with titles such as Just Dance, Brawlhalla, and The Crew.

However, Ubisoft has recently chosen to shift their focus onto their core franchises with emphasis on long-term player engagement through long-lasting Live games. This means the company will be focusing on franchises that have already been proven to be successful and will grant them greater control over their timing and quality of releases, reducing the perceived execution risks of their pipeline. This has been something Ubisoft has struggled with in the past and is the top concern for investors, which has resulted in Ubisoft trading at a steep discount relative to peers.

The above strategy was showcased at last year's Ubisoft Forward event, where the company announced a considerable addition of new content (e.g., quests, events etc) within its most popular franchise, Assassin's Creed. The franchise is one of Ubisoft's longest lasting and most valuable, with the last three entries being released on time and at a respectable quality. Furthermore, the last release, Assassin's Creed Valhalla (2020), has generated over $1bn in revenue for the company through successfully implementing and monetising a live-service model, which adds post-launch content. This is a key point for Ubisoft, as the company's new IPs, (e.g., Skull & Bones) and non-core IPs (e.g., Prince of Persia), have been delayed numerous times and have longer development timelines, which burdens cash flows and increases execution risks. Therefore, as Ubisoft shift their focus onto core IPs (Assassin's Creed, Far Cry, Tom Clancy's, etc) , perceived execution risks and cost inefficiencies should reduce over time. While it may take significant time for Ubisoft to successfully implement this strategy, Ubisoft has one of the largest development capabilities in the world and a strong track record with their core IPs.

Upcoming Titles

	Title	Platform(s)
F1Q	For Honor: Year 7 - Season 2	PC, Console
	Mighty Quest Rogue Palace	Mobile (Netflix)
	Riders Republic: Season 7	PC/Console/Cloud
	Rocksmith+	Mobile
	Tom Clancy's Rainbow Six Siege: Year 8 - Season 2	PC/Console/Cloud
	The Crew 2: Season 8 - Episode 2	PC/Console/Cloud
	Tom Clancy's The Division 2: Year 5 - Season 1	PC/Console/Cloud
	Trackmania Next	Console
FY24	Assassin's Creed: Mirage	PC/Console/Cloud
	Avatar: Frontiers of Pandora	PC/Console/Cloud
	Tom Clancy's Rainbow Six Mobile	Mobile
	Tom Clancy's The Division Resurgence	Mobile
	The Crew Motorfest	PC/Console/Cloud
	Skull and Bones	PC/Console/Cloud
	XDefiant	PC/Console/Cloud
	"Another large game"	TBA

Emphasised (bold) is what is viewed as the 5 most highly-anticipated titles on Ubisoft's FY24 release slate.

Overall, for the FY24 slate Ubisoft have Assassin’s Creed Mirage (AAA but smaller than usual), Avatar: Frontiers of Pandora (AAA), Skull and Bones (AAA), The Crew Motorfest (AAA), Prince of Persia The Lost Crown, Just Dance 24, Rainbow Six Mobile, The Division Resurgence (mobile) and XDefiant (mobile). Star Wars Outlaws (AAA) is expected to release in FY25 and there remains “another large game” as well that has yet to be announced.

Reactions to the Trailers of Ubisoft's Key Releases

Gamer and critic commentary (from Reddit, Twitter, Youtube, IGN, and other sites)

Assassin’s Creed Mirage

Pros:

• High praise for the return to the original style of the Assassin’s Creed games, applauding the increased emphasis on stealth elements in the gameplay.

• The story has garnered lots of enthusiasm - almost no negative feedback.

• The game is considered visually impressive.

Cons:

• Many gamers pointed to the character models not looking very up-to-date, as though they come from an earlier generation of games.

• Negative feedback around the parkour system and seems to be taken directly from Assassin’s Creed Valhalla - fans hoped for a parkour system similar to that of Assassin's Creed Unity

• Some general sentiment that not enough was shown in the trailers in terms of world size, combat, and game style.

Overall:

There is a fair bit of excitement about this game and no real red flags in the commentary seen.

Avatar: Frontiers of Pandora

Pros:

• Comments on the gameplay were mostly positive.

• Gamers and critics view the world as beautiful and well-realised.

• Gamers like the fact that there is an option for two-player co-op.

Cons:

• Gamers and critics believe the game will be too similar to the Far Cry series. This has raised lots of familiar commentary about Ubisoft’s games all being too similar to each other and not innovative enough.

• Some negative feedback around the quality of how the characters look - although these comments also pointed to the fact that there is still time before the December release date for more polish.

Overall:

It was much harder to find commentary from gamers on this gameplay trailer than for Mirage or Star Wars Outlaws - this is a movie not a video game franchise for now. But from what commentary there was, it was a mixture of praise for the world created and complaints that it is a “reskinned Far Cry”

Star Wars Outlaws

Pros:

• Positive feedback around the world shown, story, characters and gameplay elements.

Cons:

• General negative feedback around the potential lack of character customisation available, so gamers will all have to play as the same character with no variation. It is not totally clear that this is the case.

Overall:

• Gamers are very excited for an open-world Star Wars game. There was enthusiasm for the elements of Grand Theft Auto and also Uncharted in the gameplay - but set in the Star Wars universe. There are no real red flags in the commentary, with the lack of customisation the one commonly-appearing gripe. Some commented that the game did not feel like a reskin of other Ubisoft games (unlike Avatar).

Overall

Overall, the reaction to these three games is positive, with Star Wars Outlaws especially capturing the imagination of gamers. Delivery is going to be challenging with so many projects coming quite close to each other. But it is hard to dwell on negatives when the community has reacted pretty well to the major games on show at Ubisoft Forward.

Financials

Forecast

Investment Thesis - many new AAA games (strong lineup 2024), potential start of new lucrative franchises / IPs, appointed new independent board members with large successful track records to strengthen their corporate governance, risks around execution, which may significantly dampen upside potential of new franchises, which has been seen with e.g., Redfall, which was released by Bethesda earlier this year.