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Ubisoft cancels three games, lowers targets in worsening circumstances

Ubisoft cancels three games, lowers targets in worsening circumstances

Tencent has increased its stake in French game maker Ubisoft, the company behind popular franchises like Assassin’s Creed. But analysts said that effectively closed the door to a full takeover of the company.

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Ubisoft It canceled three unannounced games and lowered its full-year financial goals Wednesday, blaming “deteriorating macroeconomic conditions” plaguing the video game industry.

The French game publisher said it expects net bookings for 2022 to reach 725 million euros ($779.4 million), below the previous target of 830 million euros.

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The company cited the poor performance of its titles Mario + Rabbids Sparks of Hope and Just Dance 2023, as well as the difficult economic environment.

For the full year, Ubisoft said it expects 2022 net bookings to drop 10%. The company earlier expected net bookings to grow by 10%.

“We are clearly disappointed with our recent performance,” Ubisoft CEO Yves Guillemot said in a statement. “We face contradictory market dynamics as the industry continues to shift toward mega brands and permanent live gaming, in the context of deteriorating economic conditions impacting consumer spending.”

Faced with higher prices and borrowing costs, consumers are cutting back on discretionary purchases. Games in particular have been under pressure.

Worldwide sales of games and services, including PC and console games It is expected to contract 1.2% on an annual basis to $188 billion in 2022, according to a July research note from market data firm Ampere Analysis.

With an industry vision Increase uniformityAnalysts view Ubisoft as a potential acquisition target. Its share price fell more than 38% in 2022, wiping €3 billion off the company’s market value.

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Meanwhile, internal scandals also haunted the company. Ubisoft underwent a program Executive change in 2020 The following reports of sexual harassment and assault. Several leaders have resigned, including former creative director Serge Hascot.

Michael Pachter of Wedbush Securities said Ubisoft’s holiday game collection “isn’t good enough to grab attention”. He said he expects improvement with upcoming games like Avatar, Assassin’s Creed, and Skull & Bones, “but they just couldn’t deliver that with Mario + Rabbids this year,” he told CNBC via email.

In September, the Chinese tech giant Tencent increased its stake in the company. Tencent has invested 300 million euros in Guillemot Brothers Limited, taking a 49.9% stake in the family investment company that owns 15% of Ubisoft.

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