V1.0 of the analysis of Ubisoft by VGB. This company developed Assassin's Creed, Rayman, Splinter Cell, Prince of Persia. First topics adressed: - business segments - segments as % of sales - history of the company To come: - in-depth analysis of annual report - management vs stock price - key brands - studio locations + what they have done under Ubisoft

2. THE VIDEO GAME BUSINESS
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@videogamebiz
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3. The Video Game Business
Group Activities
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4. Group Activities
 Development
– Sales of titles developed, produced and marketed by Ubisoft’s internal studios
– Revenues from 3rd party developers supervised and co-produced by Ubisoft
 Publishing
– Sales of titles produced by 3rd parties but financed and supervised by Ubisoft
in exchange for acquiring the licenses
– Costs: localization, manufacturing, sales and marketing, payment of royalties
to developers and/or brand owners
 Distribution
– Sales on products from publishers with which Ubisoft has signed distribution
agreements and handles sales and marketing
– Can be limited to specific geographic areas
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5. Group Activities as % of Total Sales
Sales in 08/09
Sales in 09/10
4%
8%
7%
11% Development
Publishing
Distribution
81% 89%
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6. Increase of Development as % of Sales
(see previous graph)
Pros Cons
Stronger brand: Ubisoft will have a greater focus on generating new Higher risk: investment of capital in new IPs + cost of development
IPs which can turn into multi-million dollar franchises has been increasing increased = higher exposure
Royalties as % of sales ↓ Greater fixed costs (salaries, lease/depreciation) as a proportion of
total sales  if sales decrease, costs will not down as quickly
Loss of market share less likely as product offered is different from
the competition (publishing/distribution: hard to stand out from the
crowd by ways other than lower offering lower prices)
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7. Change in Number of Titles Developed
45
40
35
30
25
06/07
20
07/08
15
08/09
10
09/10
5
0
Internal Co-production Publishing Distribution
production (dvmpt)
(dvpmt)
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8. The Video Game Business
History
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9. History
 1986: Creation of Ubisoft
 1989-1995: International expansion
– Distribution subs: USA, Germany and UK
– Studio creation: France & Romania
 1996
– Flotation on EPA (Paris Stock Exchange)
– Studio creation: Shanghai (China)
 1997
– Studio creation: Montreal (Canada)
 1998
– Studio creation: Morocco, Spain and Italy studios
 1999
– Studio creation: Annecy (France) and Montpellier (France)
– Distribution subs: Honk Kong, Netherlands, Denmark, etc
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10. History (continued)
 2000
– Acquisition: Red Storm Entertainment (Tom Clancy games)
 2001
– Acquisition: Blue Byte Software (Games: Settlers) and game division of
The Learning Company (Games: Myst and Prince of Persia)
 2003
– Acquisitions: Tiwak studio (Game: Tork)
 2005
– Acquisition:MC2-Microids in Canada  merged w/ Montreal studio
 2006
– Acquisition: Driver and Far Cry franchises
– New licence: CryEngine
– Sales offices: Mexico
– Studio creation: Bulgaria
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11. History (continued)
 2007
– Studio creation: Chengdu (China)
– Acquisition: Digital Kids (Japanese studio specialized in DS games),
Action Pants (Canada), Southlogic (Brazil), Massive Entertainment
(Sweden) and an unnamed studio in Pune (India)
– Brands purchased: Anno and Tom Clancy name
– Digital image production studio (Canada)
 2008
– Acquisition: Hybride (special effects in films)
 2009
– Studio creation: Toronto (Canada)
– Acquisition: Nadéo (Trackmania)
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12. References
 Business Week:
– Management: http://investing.businessweek.com/research/stocks/people/people.asp?ticker=UBI:FP
 Ubisoft:
– Annual reports: http://www.ubisoftgroup.com/index.php?p=195
– Ubisoft Group: http://www.ubisoftgroup.com/
 Wikipedia:
– Yves Guillemot: http://fr.wikipedia.org/wiki/Yves_Guillemot
– MC2-Microids: http://fr.wikipedia.org/wiki/Micro%C3%AFds
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