Ubisoft cancels three games, slashes targets on worsening conditions

Tencent has increased its stake in French game maker Ubisoft, the company behind popular franchises like Assassin’s Creed. But analysts say this effectively shuts down a complete takeover of the company.

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Ubisoft canceled three unannounced games and cut its full-year financial targets on Wednesday, blaming “worsening macroeconomic conditions” for the video game industry’s troubles. .

The French game publisher said it expects net pre-orders in 2022 to reach 725 million euros ($779.4 million), down from its previous target of 830 million euros.

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The company cited the poor performance of the Mario + Rabbids titles Sparks of Hope and Just Dance 2023, as well as a challenging economic environment.

For the full year, Ubisoft said it expects 2022 net pre-orders to drop by 10%. The company had previously forecasted net booking growth of 10%.

“We are clearly disappointed with our recent performance,” Ubisoft CEO Yves Guillemot said in a statement. continues to move into major brands and live games permanently, amid worsening economic conditions affecting consumer spending.”

Faced with higher prices and borrowing costs, consumers are cutting back on discretionary purchases. Gaming in particular has been under pressure.

Global sales of games and services, including console and PC games, are is expected to decrease by 1.2% year-on-year to $188 billion by 2022, according to a July research note from market data firm Ampere Analysis.

With the industry seen strengthen consolidationUbisoft is seen by analysts as a potential takeover target. Its share price has fallen by more than 38% by 2022, costing the company’s market value 3 billion euros.

Meanwhile, internal scandals have also haunted the company. Ubisoft went through a Executive reform in 2020 following reports of sexual harassment and abuse. Many leaders have resigned, including former Creative Director Serge Hascoet.

Wedbush Securities’ Michael Pachter said Ubisoft’s line of games over the holidays “hasn’t been good enough to attract attention.” He said he expects improvement with upcoming games like Avatar, Assassin’s Creed and Skull & Bones, “but they can’t make it with Mario + Rabbids this year,” he told CNBC. by email.

In September, the Chinese tech giant Tencent increase his stake in the company. Tencent has invested 300 million euros in Guillemot Brothers Limited, a 49.9% stake in the family investment company that owns 15% of Ubisoft’s shares.

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