LogInThe studio's series of failures resulted in poor year-on-year performance.
The curse of failure that's been plaguing Ubisoft throughout 2024, starting from January's financial flop of Prince of Persia: The Lost Crown and manifesting just recently when the studio had to launch its first NFT game as sneakily as possible so as not to draw too much negative attention to it, has become more tangible than ever with Ubisoft's reveal of its financial report for the first half of the year 2024-25.
Ubisoft
According to the report, Ubisoft's sales have dropped 19.6% compared to the first half of 2023-24, totaling €671.9 million versus last year's €836.0 million. The decline was even steeper in the second quarter of 2024-25, with sales hitting €348.4 million, a 36.3% decrease from the €547.1 million earned during the same period last year.
The studio's net bookings are also down, falling 21.9% for the first half and 36.5% for the second quarter of 2024-25 compared to the previous year. Digital net bookings dropped 26.5% year-on-year, back-catalog net bookings fell by 28.9%, and PRI net bookings plunged by 39.2%.
"Our Q2 net bookings are in line with our revised guidance," commented Ubisoft CFO Frédérick Duguet. "We are reaffirming our full-year objectives, with net bookings expected to reach approximately €1.95bn as well as around break-even non-IFRS EBIT and free cash flow. This outlook reflects robust free cash flow generation in the second half of the year. In addition, we continue exploring the sale of non-core assets as part of our broader strategy to focus on our two core verticals, Open World Adventures and GAAS-native experiences, as well as enhance financial flexibility."
The report further reaffirmed that Star Wars Outlaws, Ubisoft's most high-profile game this quarter, underperformed on the market, something Ubisoft CEO Yves Guillemot had hinted at earlier by describing the game's sales as "softer than expected." This corporate-speak was later translated by IG, which disclosed that Star Wars Outlaws had sold only around one million copies within its first month since launching in late August.
Unfortunately, the report also hinted that some of Ubisoft's developers might get fired in the coming months, mentioning that the studio's cost reduction plan, which aims to protect the company's production and creative capacity, help them be more selective in investments, and simplify the organization, is "well on track".
"With the continued tight control on recruitments as well as targeted restructurings, the total number of employees worldwide stood at 18,666 at the end of September 2024, compared to 19,410 at the end of September 2023. This represents a decrease of more than 2,000 over 24 months," the report reads. "The H1 FY2024-25 fixed cost base1 stood at around €770m, down €46m and 6% year-on-year. This represents a €106m reduction versus H1 FY23 meaning that on an annualized basis, we have already achieved more than €200m savings, including a favorable foreign exchange impact. There remains work ahead of us to support robust cash-flow generation."
Finally, Guillemot himself issued a lengthy statement, once again emphasizing that the interests of the stakeholders are Ubisoft's top priority – no doubt, something regular gamers would love to hear – and showcasing his talent for masking the true meaning of his words behind a barely comprehensible word salad.
According to the CEO, the "Executive Committee review, aimed at improving our execution focused on a player-centric and gameplay-first approach, is progressing. This notably includes actions aimed at tackling the dynamics behind the polarized comments around Ubisoft so as to protect the Group's reputation and maximize our game's sales potential." What comments are being referenced, what it means for Ubisoft to tackle the dynamics behind them, and what is concealed within the studio's player-centric approach remains to be seen.
"To succeed, we must redouble our focus on execution and reinforce a player-centric mindset in everything we do," said Guillemot. "For example, we are improving the quality of Star Wars Outlaws, including actively addressing player feedback through title updates as we get ready for the Steam launch, the first story pack, and the upcoming holiday season. We are also taking the additional time to ensure that the upcoming very ambitious opus in our flagship franchise, Assassin's Creed Shadows, is a highly polished, exceptional experience on day one and that it resonates strongly with players.
Over the past semester, we also further advanced our cost reduction plan thanks to strict control on recruitments, targeted restructurings, and lower external spend. This is the fruit of a group-wide effort, and I would like to thank the teams as we are transforming the Company into a more efficient and agile organization. Over the first semester, we have already achieved more than €200m savings versus two years ago on an annualized basis. There still remains work to be done to support robust cash-flow generation in the future."
The report arrives on the heels of the company disbanding Ubisoft Montpellier, the team behind Prince of Persia: The Lost Crown, Assassin's Creed Shadows getting delayed to February 2025, Skull and Bones showing disappointing financial results, and Tencent openly considering purchasing the studio. With so many blunders behind Ubisoft's back, coupled with poor financial performance and thousands of terminated employees, the executive team's plan to continue prioritizing the whims and wishes of stakeholders instead of their own customers becomes nothing short of mind-boggling, and that's putting it mildly.
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