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Ubisoft cancels three games, lowers targets as conditions worsen

Ubisoft cancels three games, lowers targets as conditions worsen

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

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

The French game publisher said it expects net bookings to reach 725 million euros ($779.4 million) in 2022, down from an earlier target of 830 million euros.

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Ubisoft cancels three games, lowers targets as conditions worsen

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

For the full year, Ubisoft said it expects its 2022 net bookings to fall 10%. The company previously forecast net bookings growth of 10%.

“We are obviously disappointed with our recent performance,” Ubisoft CEO Yves Guillaume said in a statement. “We face contrasting market dynamics as the industry continues to shift towards mega-brands and perennial live games, in the context of deteriorating economic conditions affecting consumer spending.”

Faced with higher prices and borrowing costs, consumers cut back on discretionary purchases. Games are especially pressured.

Global sales of games and services, including console and PC games, were is expected to contract by 1.2% year-on-year to $188 billion in 2022, according to a July study by market data firm Ampere Analysis.

With the view of the industry increased consolidationUbisoft is viewed by analysts as potential takeover target. Its share price sank more than 38% in 2022, wiping €3 billion from the company’s market value.

Meanwhile, internal scandals also dogged the company. Ubisoft suffered executive changes in 2020 following reports of sexual harassment and abuse. Many leaders have stepped down, including former chief creative officer Serge Hascote.

Michael Pachter of Wedbush Securities said that Ubisoft’s lineup of games over the holidays was “simply not good enough to command attention.” He said he expected improvement with upcoming games like Avatar, Assassin’s Creed and Skull & Bones, “but they couldn’t get it with Mario + Rabbids this year,” he told CNBC via email.

In September, the Chinese tech giant Tencent increased his stake in the company. Tencent invested €300 million in Guillemot Brothers Limited, taking a 49.9% stake in the family-owned investment firm, which owns 15% of Ubisoft.

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