Video games maker Ubisoft Reflections says a drop in revenue and profits is the result of no new releases in its Tom Clancy franchise.
The Newcastle-based studio, which is part of the wider Ubisoft business, generates income from its ownership of the tactical shooter games brand which boasts titles such as The Division and Ghost Recon. But in fresh accounts for the year to the end of March 2023, the Gosforth firm said there had been a £6.2m drop in sales meaning revenue was £50.3m. Operating profits fell from £27.6m to £21.4m in the same period.
Bosses said the 416-strong Tyneside team had worked on a number of new games, including some unannounced titles, in collaboration with other Ubisoft studios. The accounts cover a period in which the wider business cancelled several unrevealed games it was working on, on top of four previously ditched in 2022.
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At the time, Yves Guillemot, co-founder and chief executive officer of the French parent company, pointed to big shifts in the games market with a move towards "mega brands" and everlasting live games, set against a backdrop of worsening consumer spending power. The French parent admitted to the surprising underperformance of several key titles launched during the year including Mario + Rabbids: Sparks of Hope and Just Dance 2023.
In January Ubisoft said it was taking a more cautious approach in response and announced it would depreciate around £430.1m (€500m) of capitalised research and development work on premium and free-to-play games, and the cancelled titles. It also made plans to make about £172m (€200m) cost savings via restructuring and divesting some non-core assets.
But Mr Guillemot said he was confident the industry's long-term prospects remained promising and that Ubisoft's well established back catalogued remained healthy, particularly its Rainbow Six Siege title and its flagship Assassin's Creed games - some of which have been produced by the Newcastle Reflections studio.
Separate accounts for Ubisoft Limited, the º£½ÇÊÓƵ distribution arm for the group, show an operating loss of £745,000 in the same 12 month period to the end of March. Within those documents, Mr Guillemot points to the lingering impact of Covid lockdowns on the º£½ÇÊÓƵ market as stalled and disrupted production schedules meant fewer products hitting the shelves.
He also highlighted a continued shift towards digital distribution of games as sales of physical games fell 10% in units and 9% in value to £458m - around 37% of the market, versus 40% the year before. There was also a 17% drop in sales of hardware during the year to £837m.
Writing in the accounts, Mr Guillemot said: "The software market for fiscal year 2024 is looking stronger as many previously delayed games are reaching the market and it is expected that the market will once again grow in both units and value. The overall hardware install bases and activity levels are also likely to be healthy, as more accessible price points are being used by manufacturers promote sales.
"It is expected that First Party partners (Microsoft, Sony, Nintendo) will continue to develop new hardware models and expand the overall market. The traditional 'full game' model of selling a single £50-£60 game to a consumer as a one-time purchase is becoming less ubiquitous, with multi game subscription services, long running games-as-a-service games, free-to-play games and cloud streaming offerings all providing new and attractive ways for consumers to access gaming content.
"As a result, outside of the biggest titles, some games are struggling to stand out and achieve the sales they may once have had. Ubisoft expects to launch five titles during the year ahead: Assassins Creed Mirage, The Crew Motorfest, Just Dance, Avatar, Skull and Bones."
