Volkswacht Bodensee - 'Assassin's Creed' no saviour for struggling Ubisoft

The company had won through to profitability in 2023-24 after a near half-billion-euro loss in the previous period.

But a string of disappointing releases undermined this year's performance, with a net loss of 159 million euros ($178 million) on revenues of 1.9 billion -- down 17.5 percent year-on-year.

Over the past 12 months, Ubisoft's would-be blockbuster "Star Wars Outlaws" fell short of sales expectations on release, while it cancelled multiplayer first-person shooter "XDefiant" for lack of players.

"This year has been a challenging one for Ubisoft, with mixed dynamics across our portfolio, amid intense industry competition," chief executive Yves Guillemot said in a statement.

Ubisoft's preferred performance indicator, so-called "net bookings" -- which excludes some deferred revenues -- also fell by more than 20 percent year-on-year, to 1.8 billion euros.

The group expects the measure to hold steady in the coming 2025-26 financial year, during which it will release a new "Prince of Persia" game, strategy title "Anno 117: Pax Romana" and mobile versions of shooters "Rainbow Six" and "The Division".

Disappointing shipments have been matched by a tumbling stock price.

But in recent weeks the publisher's biggest money-spinner has been as dependable as ever, with "Assassin's Creed Shadows" winning over more than three million players with its story of medieval Japanese intrigue since its March 20 release.

"Shadows" swiftly rose to become the second-best-selling game of the year so far in the United States, according to data from consultancy Circana.

- Spin-off -

Moving to address its business woes, Ubisoft said in late March that it would create a new subsidiary to manage its three top franchises: "Assassin's Creed", "Far Cry" and "Rainbow Six".

Around 3,000 of the group's 17,000 employees worldwide will work in the new unit, Guillemot has said.

It will not own the games' brands, instead paying royalties to the parent company to use them.

The subsidiary has been valued at more than four billion euros, or twice Ubisoft's current market capitalisation, after Chinese tech giant Tencent agreed to invest 1.16 billion in exchange for a stake of around 25 percent.

Spinning off the biggest-selling games "was the least committal of the available options without simply returning to shareholders empty-handed," said Martin Szumski, an analyst at Morningstar, ahead of the earnings report.

One activist fund with a minority stake in Ubisoft had tried to rally other investors to demand a change of course.

Leaving investors "underwhelmed", according to Szumski, the subsidiary plan has not kept the mothership's stock from eroding further in value, hit in part by fears over US tariffs.

Since January, the shares have lost more than 12 percent, touching their lowest price in over a decade in April.

Ubisoft has promised details of more restructuring moves by the end of 2025 and aims to save a further 100 million euros over the coming two years as part of a cost-cutting drive launched in 2023.

The company on Wednesday also reported net debt of 885 million euros, down from 1.4 billion in September.

- Lurking tensions -

Ubisoft's restructuring means Tencent, which climbed aboard as an investor in 2018, will have a bigger say in the French firm -- although Guillemot insisted to French senators at a hearing last week that he will "retain control" over the new subsidiary.

Looking ahead, "if Ubisoft is unable to use the money Tencent invested in a meaningful way, it is certainly possible that Tencent pursues buying the firm outright" even in the face of fierce resistance from the founding Guillemot brothers, Szumski suggested.

Ubisoft's belt-tightening programme has brought closures of several foreign studios and thousands of job cuts.

Worldwide, the company is replacing only one in three departing workers, Guillemot told the Senate.

M.Betschart--VB