Strategic Refocus, Record Net Bookings, a Thriving Back-Catalogue and 1,700 Job Cuts at Ubisoft

Ubisoft reports record net bookings of over 2.3 billion Euros last fiscal year. More than 1,700 jobs have been cut over the last 18 months. The Heartland Division has been cancelled. The company believes it is well positioned for the future and is increasing its focus on open-world adventures and games-as-a-service-native experiences.

Ubisoft has published its Annual Business Report for 2023-24, covering the period from April 2023 to the end of March 2024. Net bookings amounted to 2.3 billion Euros, an increase of 33.5 percent compared to the previous financial year. 85.6 per cent of net bookings were digital, of which 44 per cent were from the PRI segment. For Ubisoft, these are recurring payments from players for DLCs and/or microtransactions. The IFRS operating income is 313.6 million Euros and the non-IFRS operating income is 401.4 million Euros. Ubisoft said that these figures were in line with expectations. In the previous year, the IFRS operating loss was 585.8 million Euros.

The back-catalogue continues to be particularly strong, accounting for 64.5 per cent of net bookings - an increase of approximately 49.2 per cent (year-on-year). Rainbow Six Siege in particular stands out at this point. "The game boasts excellent results in terms of acquisition, activity, viewership and monetization this year, notably with session days growing significantly year-on-year, at +38%, and session days per player growing 24%," the publisher says. The game is now in its ninth year.

Ubisoft is on track to reach the annual 200 million Euros cost reduction objective by FY26. In FY24, the fixed cost base was reduced by around 150 million Euros. In line with the increased selectivity of its investments, Ubisoft has ceased development of The Division Heartland, a free-to-play survival shooter from Red Storm Entertainment. Resources have been reallocated to XDefiant and Rainbow Six. Tight hiring controls, organisational simplification and targeted restructuring resulted in a total headcount of 19,011 at the end of March 2024. This represents a reduction of more than 1,700 in 18 months. "While retention has continued to improve over the period", the publisher says. CFO Frédérick Duguet: "Once again, this fiscal year brings further evidence that our back-catalog, driven by the quality of our IPs, consistently acts as a major foundation of our business model. Great progress was also made on our cost reduction plan as we reduced our fixed cost base by €150m thanks to tight control on recruitments, targeted restructurings, and a favorable foreign exchange impact. All this led to a Cash Flow from Operations of €91m. While there remains work to be done in the coming years, we are on track to get back to free cash flow generation in FY25 and reach our €200m annual cost reduction objective by FY26."

Strategic Refocus

Ubisoft is also refocusing its strategy on two pillars. On the one hand, the publisher wants to regain leadership in Open World Adventures and, on the other hand, to expand its footprint on Games-as-a-Service-native experiences "by leveraging ongoing efforts on proprietary cutting-edge technologies as a differentiating factor." Ubisoft estimates that the open-world adventure market is currently worth 25 billion Euros and is expected to grow in the coming years. The GaaS-native segments currently represent 120 billion Euros - the largest total addressable market in terms of number of players. Both Star Wars Outlaws (30 August) and Assassin's Creed Shadows (15 November) fall into the first category, while XDefiant (21 May), The Division Resurgence and Rainbow Six Mobile fall into the second category.

CEO Yves Guillemot: "Pursuing a pragmatic and selective organic investment approach, and in line with the strategic pillars announced last year, our strategic focus is on returning to leadership in the Open World Adventure segment and expanding our footprint in GaaS-native experiences. With these core verticals, and leveraging ongoing investments in our technologies to reach and maintain a competitive advantage, we aim to drive growth and recurrence with the objective to gradually expand operating income and generate robust free cash flow."

The company has streamlined, consolidated and mutualized their tech assets to achieve economies of scale. "Notably, we have rationalized the branches of Ubisoft Anvil and Snowdrop, our proprietary game engines, converging on just two reference branches shared among our games in production, enabling our teams to focus on breakthrough innovations and facilitating sharing across studios. The impacts will notably be visible this year with the releases of Star Wars Outlaws and Assassin's Creed Shadows." Furthermore, Ubisoft continued to invest in the potential of new technologies, especially Generative AI. "Notably, at GDC 2024, Ubisoft unveiled NEO NPC, our first player-facing Generative AI prototype. It is designed to transform the way players interact with non-playable characters and create more immersive gameplay experiences. And beyond several ongoing internal projects, Ubisoft also partners with leading AI companies on joint initiatives."

Released Games

The French publisher counts 138 million unique active users on Console and PC, up four per cent and total hours played up twelve per cent year-on-year, with a higher PRI per hour. Rainbow Six and Assassin's Creed franchises achieved very strong net bookings growth, and each benefited from solid fan bases of above 30m unique active players. The Assassin's Creed brand grew net bookings by more than 30 per cent over the year, benefiting from Assassin's Creed Mirage launch and the inclusion of Assassin's Creed Valhalla in the Game Pass. Skull and Bones has "strong engagement", achieving the second-best daily playtime for a Ubisoft game, with an average of four hours in the first weeks following launch. D-28 retention (four weeks after release), driven by its end-game, was solid. "We target to further improve this retention and enlarge the player base with the upcoming launch of Season 2, Chorus of Havoc, that will continue to enrich the end-game with the addition of new bosses, world events and ship upgrades. Season 2 will also bring new PvE & Solo game modes," says Ubisoft. No information was provided on sales of Prince of Persia: The Lost Crown (18 January) and Avatar: Frontiers of Pandora (7 December 2023). The Crew Motorfest continues to outperform The Crew 2 on acquisition, activity, monetization and net bookings metrics on a comparable basis since launch. The franchise quadrupled its net bookings year-on-year.

For 2024-25, Ubisoft expects solid net bookings growth, slight increase in non-IFRS operating income and growing non-IFRS Cash Flow from Operations leading to positive Free Cash Flow. The games line-up includes, on the premium side, Assassin's Creed Shadows and Star Wars Outlaws and on the free-to-play side, Rainbow Six Mobile, The Division Resurgence and XDefiant. On 10 June, Ubisoft will present its portfolio in a dedicated showcase event (Ubisoft Forward), which will probably include the first gameplay of Assassin's Creed Shadows.

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