Ubisoft slashes forecasts, shares tumble

Shares in French games developer Ubisoft Entertainment tumbled on Thursday, after poor festive sales caused it to cut forecasts.

By 1130 GMT, the Paris-listed stock was down 16%, having earlier lost as much as 20%.

In a statement issued after trading closed on Wednesday evening, Ubisoft - which is behind the Assassin’s Creed and Just Dance franchises, among others - said it was facing "major challenges" as the industry shifted towards mega brands and long-lasting titles.

It continued: "Our strategy over the past four years has been building long-lasting live games and adapting our strongest franchises.

"However, the games from this investment phase have yet to be released, while our recent launches have not performed as well as expected."

Two key releases in particular, Mario + Rabbids: Sparks of Hope and Just Dance 2023, had both underperformed, the company noted.

In addition, Ubisoft said the last weeks of December and beginning of January, had been "markedly and surprisingly slower than expected".

As a result, Ubisoft now expects third-quarter net bookings to come in around €725m, compared to previous forecasts for €830m. It also cut full-year forecasts, with net bookings now set to fall 10% year-on-year. It had previously forecast net bookings to grow by more than 10%.

The operating loss is expected to be €500m, against a previous forecast for operating income of €400m, hit by the lower net bookings, depreciation of capitalised research and development and the latest delay to Skull & Bones. The much-anticipated game is now not expected to be released until early 2023-24.

Yves Guillemot, co-founder and chief executive, said: "We are clearly disappointed by our recent performance. We are 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."

However, he added: "The industry’s long-term prospects remain promising and I am convinced Ubisoft is well positioned to benefit from this momentum."