Digital Games Weighing Down Ubisoft’s Profits Says CEO

By Ishaan . February 14, 2011 . 2:00pm

At an investor Q&A conducted earlier today, Ubisoft CEO, Yves Guillemot, revealed that, while he believes digital content will be one of the driving forces behind the games industry in the future, at the moment, it’s weighing down Ubisoft’s profits.

 

Guillemot points to CSI: Crime City on Facebook, with 2 million average users per month, as a digital game the company is pleased with. Additionally, Ubisoft recently launched The Settlers Online in Germany, which is a free-to-play browser game where you pay for downloading additional content and perks to speed up your progress.

 

Guillemot says that, in the future, The Settlers Online will be released in Russia, Turkey, China and other regions where the free-to-play model has proven to be successful in the future. Additionally, Scott Pilgrim vs. The World was the highest-selling game on the PlayStation Network in the second half of 2010.

 

However, while these games have been of high quality, they haven’t brought in much in terms of revenue, Guillemot revealed. He believes that the digital segment of the market will require a lot of investment before it finally starts to pay off, and that, at present, the cost of investment is higher than revenue gained in return.

 

Regardless, Ubisoft plan to remain committed to investing in this segment, Guillemot stated. In their next fiscal year, Ubisoft will launch a new digital initiative that they say will build upon experiences gained in the current fiscal year. The company’s next major digital game is Beyond Good & Evil HD, scheduled for release before the end of April.



  • RupanIII

    I’m not surprised. People might play facebook/browser games to kill time, but who would pay for them?

  • xxx128

    …seriously i hate download content. I cant see me pay any money for non physical games in the future. This only benefits the publishers and not us customers. Nothx.

    • http://twitter.com/mangeezer jerry

      Touch luck, bud. Physical media is facing extinction.

    • Aara_Malik_Davoodi

      Um, not necessarily. Because they don’t have to give a cut to retailers and making the packages and everything, they could potentially pass on the savings to the consumers. I wouldn’t be surprised if they charged 49.99 for full downloadable games, plus they could do an un-fixed pricing model so lesser games are at a cheaper price

      • M’iau M’iaut

        Sadly though there isn’t much evidence such is the course of action the publishers intend to take. In fact, they will keep a title at full price or near full price on older titles you can easily track down new or used physical copies for far cheaper. Digital means no need to clear out storage space, cut back facings in a section or loss leader to get butts in a store.

        Take a look at Games on Demand, most of the titles on there are quite old, and were ‘middleware’ titles to begin with but most are still $40 and up.

        • Aara_Malik_Davoodi

          I know. They may keep prices the same so they get more money, but one can hope. That’s why I went with 49.99 because that’s a healthy medium between them getting more money and us saving money. I wonder if we’ll get our first full download-only title this year

          • M’iau M’iaut

            For the moment, side stories like the Lara Croft would be as close as I’d suspect a mainstream franchise title gets to dl only. Not counting AH3, we’ve already had the mentioned PS3 Agarest plus several PSP titles — Cladun and the Fate fighter. All of these of course are niche products.

            Industry types will point to the bigger publishers doing smaller titles in the space; Scott Pilgrim, that one with the nesting dolls, Deathspank, etc. The Section 8 sequel will be dl only for like $15, that is one to certainly keep an eye on.

        • Slashlen

          That’s what worries me about the move to digital media. I don’t buy a lot of $60 games, and if they all stayed at $60, I would buy a fraction of the games I do now.

          If digital simply becomes a way for publishers to force out the used/rental markets and retailers in order to squeeze out every dollar they can, they could force a lot of people out of gaming altogether. I don’t see that happening to me, but I could see myself changing to just buying a handful of games a year and playing them a lot longer. Considering the size of my backlog, that may actually save me money.

          It could also go the other way. Maybe going digital will let publishers get away from fixed pricing which probably hurts a lot of smaller titles. Maybe it will give them some room to cut price to get more sales. It’s hard to say. You can point at Games on Demand, but you could also point at Steam.

          It could go either way. I guess I’m just not an optimist when it comes to a lot of these companies.

          • http://twitter.com/ZonronSekai Zonron

            i would say give it time, if the digital market flares up it might make things like “Best hits” happen even on the things like psn store.

            i seen nis lower there prices on games a few times. i think the company who made the game and the market place there on should work together and make some deals out there. who knows maybe gamestop will make a good crack into the market and show some love are way ;)

          • Slashlen

            I’ve seen that too, which gives me some hope, but it can be hard when you see things like Sony planning to make people rebuy PSN games to use them on their new phone.

            Lucky for me I had no interest in the thing.

    • city_debut

      My Steam account and spending around $15 for 20 games says otherwise.

  • http://s1.zetaboards.com/Crossed_Swords_Inn/index/ konpon568

    If anything, Scott Pilgrim vs. The World was worth the purchase!

    • z_merquise

      It’s true. Being a guy who started with gaming in the 90′s, the 2D arcade beat-em ups were one of my most favorite genre and Scott Pilgrim vs. The World game brings back those memories.

    • Bakuryukun

      The game was how I got introduced to the series, and it made a gooood first impression

    • Apache_Chief

      I would have considered it more worth it if it had online multiplayer (on 360). That’s the only reason me and my friends bought it, and we felt totally ripped off when it wasn’t even an option. It’s our fault for not looking it up beforehand, but come on. When games like Bioshock and Assassin’s Creed have online multiplayer, but a beat ‘em up that’s made for multiplayer and distributed on the internet doesn’t…that’s BS.

      It has a great soundtrack though!

      • Code

        Although when your talking budget and focus, there’s a huge difference between Bioshock, Assassin’s Creed, those are some of those company’s biggest titles.

        I will agree it’s a shame it didn’t have online multiplayer, but I don’t think it’s something that is unusual. There’s lots of downloadable games without online multiplayer, that do have local multiplayer — general online multiplayer I’d associate with bigger name titles, with bigger budgets.

      • No9

        Hmm I`ve always liked getting some friends together and just playing in one room. But to each their own.

    • Testsubject909

      And remember to support the growth of movies and cinema. Buy the DVD or the Blu-Ray and prove that there’s space for more then just generic relatively mediocre execution of action movies *coughsexpendablescoughs*.

  • mirumu

    Seems a bit odd to me to include PSN titles and Facebook/browser games under the same umbrella. I wouldn’t have thought the inclination to pay for games would even exist on the browser side to any significant extent.

    • http://twitter.com/mangeezer jerry

      Don’t play any browser games but isn’t the focus more on ad revenue and microtransactions instead of charging for the game?

      • mirumu

        Yes, and that’s a completely different model. Could be Ubisoft is just throwing them in the same basket because they’re both small developing markets.

    • Code

      Agreed, it doesn’t feel quiet “right”, but I suppose from a company’s prospective it’s more alike then different. I’m surprised though Scott Pilgrim alone didn’t prove to be that much more profitable, then Facebook games, considering it was #1 selling in second half of 2010.

      • http://www.siliconera.com/ Ishaan

        I didn’t want to put this in a post, but it sounds like they don’t expect giant numbers from Beyond Good & Evil HD either. Someone asked about that game off-setting weak sales of other titles, but they said XBLA/PSN stuff doesn’t sell enough to do that.

        • Code

          Yeah, don’t get me wrong Beyond Good & Evil is an excellent game, but I don’t see it nailing big numbers either. Although regardless of sales, few moves will please fans as much as BG&EHD >w<' Still kind of surprised figured downloadables made better numbers then that but also it's probably a prospective thing, Ubisoft is use to pulling stupid large numbers, and anything less is probably going to seem pretty marginal opo;

          • Testsubject909

            Beyond Good and Evil didn’t sell too well in the first place. This will mainly be sold to the fans as well as to the more aware gamers who’ve heard of the game but couldn’t get their hands on a physical copy or the occasional pirate who got the PC version and will want to support the company by purchasing this game to see the creation of the next one.

            It most likely won’t catch the attention of the mainstream audience. Odds are, most of them don’t even know this game’s coming out in the first place and will most likely dismiss it for news of higher bigger blockbuster triple A upcoming games…

            Then again, 2011 is packed full. It’s not tough to get overshadowed this year.

          • Code

            Oh definitely, pretty much sums up what I’m getting at, fans will appreciate it, but it’s not going to be a big seller. Hopefully it’ll get a little more coverage this time since at this point the game does have a positive history behind it, but yeah really not expecting miracles, but hopefully it might net a slightly larger base then it’s original release xpx; Although yeahhh had this been a year ago it’d have been the time to do it, 2011 is going to be rough.

  • WyattEpp

    Short-sighted as usual. “We don’t have the infrastructure to make this profitable, but it costs too much to build that infra! So digital games are the future, but not from us right now, because we can’t afford to be ahead of the curve for once!” Great job, Ubisoft.

    I think it’s pretty clear at this point just how toxic current publishers are, not just to games as a whole, but even to themselves.

    • http://www.siliconera.com/ Ishaan

      No no no, I wouldn’t take it that way at all. He said they’re committed to sticking it out until digital games become more profitable. If anything, you could say they ARE trying to look to the future by investing in the digital space, even though it’s costing them money.

  • Oni123

    I don’t mind the odd DLC but i would much rather have something real on my shelf.

    • Testsubject909

      And that’s why I’m happy the NGP has cartridges.

  • http://twitter.com/ZonronSekai Zonron

    they should do what nis does, it seems to be working for them ^^

  • http://twitter.com/mangeezer jerry

    whatevs, can’t think of any DD games from Ubisoft aside from Scott Pilgrim and the upcoming Beyond Good and Evil so quit whining Ubisoft and try harder. No doubt a Rainbow Six 3 port for XBLA/PSN would push some nice numbers and cost peanuts to develop.

  • hush404

    I don’t see how a game like Scott Pilgrim is weighing them down. Sure you’re not making $60 a pop from it but I’m willing to bet that a team MUCH smaller than the 200+ rumored brought in for a game like Assassin’s Creed 2 or BH was behind it and thus your cost to produce said game was tiny.

    C’mon, there are 1-3 man teams making equal quality products for XBLA indies or the indie PC scene with little to no budget. You can’t tell me Ubisoft is banking serious cash on a small download title.

  • Draparde

    Alot of people around me who bought Scott pilgrim actually said they would have paid more for it lol. (now if they actually would or if they where just saying that is a different story…)

  • http://www.facebook.com/jstack Jon Stachewicz

    Uggghh I saw the picture for the article and got excited for the possibility of a Scott Pilgrim game sequel or more DLC. Then I read the headline :(

  • Belenger

    So… call me crazy but couldn’t this be just an underline rivalry between the Guillemot brothers since one has to making a big investments on infrastructure and development for digital games on current platforms (Ubisoft), while the other barely even needs investment on platform plus the fact he’s ripping off every idea that could make money and also is getting a helluva lot of revenues? (Gameloft)

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