Ubisoft shares plunge 20% after canceling three games, announcing job cuts, and lowering revenue targets
Ubisoft is going through harsh times as it prepares for a targeted restructuring. This includes cutting costs, layoffs, the cancellation of several games, and lowering revenue targets amid weaker sales and an empty release schedule.
Skull & Bones
What happened?
- According to a new document released on January 11, Ubisoft has canceled three more unannounced games, in addition to the four canceled in July 2022.
- On top of that, Skull & Bones has been delayed once again — this time to early in the next fiscal year starting April 2023.
- A spokesperson told Axios that workers on the canceled games would be transferred to other projects.
- The company has written off €500 million of R&D costs related to both upcoming and canceled titles, citing the “current challenging videogame market and macroeconomic environment” and its focus on fewer projects as the main reasons.
- It also plans to cut over €200 million in operating costs over the next two years through “targeted restructuring, divesting some non-core assets and usual natural attrition.”
- Three current and former Ubisoft employees told Kotaku that the company has already started a new round of layoffs. But the publisher’s spokesperson clarified that only 27 jobs were cut as part of this restructuring.
Lowering financial targets
- Ubisoft has lowered its net bookings target for the third fiscal quarter to €725 million (versus the previous forecast of €830 million). This is due to lower-than-expected sales of Mario + Rabbids: Sparks of Hope and Just Dance 2023.
- The company expects its full-year net bookings to fall 10% year-over-year, compared to the prior 10% growth target.
- “We are clearly disappointed by our recent performance,” Ubisoft CEO Yves Guillemot told investors, adding that the company is “facing contrasted market dynamics as the industry continues to shift towards mega-brands and everlasting live games, in the context of worsening economic conditions affecting consumer spending.”
- Ubisoft CFO Frédéric Duguet noted that the announced cost optimization and the strong pipeline of upcoming releases such as Assassin’s Creed Mirage and Avatar: Frontiers of Pandora should help the publisher offset the downfall.
Following the news, journalist and insider Jeff Grubb wrote on Twitter that Ubisoft “definitely already did the rounds proposing acquisitions and mergers with other similar companies, and it mostly got laughed at.” The reason is the company is “too unwieldy.”
I hope it tries to ride it out because I think it might hold onto more people than if it tried to “slim down” for an M&A. Either way, though, it seems grim. Making games is a rough business.
— Grubb (@JeffGrubb) January 11, 2023
The latest financial targets update also sent Ubisoft shares down 20%, as spotted by Reuters. Market analysts think the company “needs to refocus its efforts” and start making the right products that will succeed in today’s climate.
