Deadly diversification

A term that is very much aligned with finances, perhaps to some degree this is about that, but it is even more about the diversification of business. The path we see did not start today or yesterday, yet as the news releases pile up, we need to consider the impact some are creating, mostly by not making any level of an impression. The final straw became clear and visible as Eurogamer (at http://www.eurogamer.net/articles/2016-12-20-crytek-breaks-silence-lets-go-of-multiple-studios) gave us the news on Crytek. The quote “Crytek had struggled to pay staff since May 2016, but a source within Crytek’s main office in Frankfurt, Germany, told Eurogamer last week that October salaries had arrived, with November salaries set to be paid this week” is at the heart of the matter and as we realise that it is end December, we feel for those people who have been without pay for the longest of times. Now I am not going to kick a person who is down, that just ain’t cricket. Yet what does matter is that if we were to believe Ubisoft, that this house, the makers of Far Cry, Ryse and Crysis is in a mess that is deeper than a mere slump.

So Ubisoft? Were they not evangelising how great a game Far Cry was and how well Far Cry had been doing? If that is so, how come that Crytek is in such a mess? From what was initially a game I did not like (far Cry 1 on xbox360 is the only game I literally threw out of the window, the disc that is) was a game that I ignored, until I got the free edition on the PS3 as part of my PlayStation Plus, so as one does not look a gift horse (you know what I mean), I had a go at it and I was amazed on how a failure had become such a good game. I even bought the 360 edition later. Yet I kept my distance with Far Cry 4 as things were a little weird and the least said about Far Cry Primal the better, although it was not a bad game (at $20 I was willing to chance the burn of a lost $20 bill).

Yet here I myself was making the initial error. You see Crytek was the initial developer of Far Cry, the rest came from Ubisoft Montreal. Far Cry 3 was awesome and what followed was basically more of the same with a few nagging issues, not bad games mind you, but continuation of the same is what was the matter with the Far Cry series, a lesson Ubisoft has been unwilling to learn. I loved Far Cry 3 because of the stealth part, there is a lack of stealth games and Far Cry 3 filled that need. Yet repetition will never be a good taskmaster so as we saw more focus on large explosions and big guns, I personally saw a decline in the Far Cry series. Everyone said I was wrong and the fact that the ratings have been in decline is to some extent evidence that I was not.

Now we know that Ubisoft sees itself as the multibillion dollar revenue titan, yet we can agree that it only remains to be a titan for as long as the games are really good and it has been lacking in that department. If Ubisoft is still breathing it is mainly due to the impressive improvement that Watch Dogs 2 is turning out to be (by Ubisoft Montreal) and the anticipated success that For Honor is showing to become (also Ubisoft Montreal). So is that all?

Nope, the other side of their gaming franchises are taking another hit when we consider the Guardian (at https://www.theguardian.com/film/2016/dec/19/assassins-creed-film-review-michael-fassbender-videogame-marion-cotillard), when we see ‘achieves transcendental boredom‘ gets a rating of one star and scores a lot lower than last year’s remake of Point Break, we know that the bottom of the barrel had been reached. Ubisoft might not mind losing $120 million as they are approaching 3 billion in value, yet that value becomes debatable and questions whether the value of Ubisoft has been inflated when we look at the non-successes from the last few years. As for the movie? Well I personally think that other questions come to mind when IMDB gives it 8.2 out of 10, yet Rotten Tomatoes sees it as 26% fresh, making it basically 74% rotten. Where the tomato dudes and dudettes state “the CGI-fuelled end result still is still a joylessly over-plotted slog“, with a stellar cast that includes Michael Fassbender (12 years an entrepreneur), Jeremy Irons (from Brideshead Revisited to Justice League a hit) and not to forget the utterly lovely fashionista  Marion Cotillard from Orleans (which is cool as this is one of the few French cities I actually visited in the past), who some saw first in Taxi (by Luc Besson) and most remember for being the person who drive the dagger home into Christian Bale in The Dark Knight Rises, with dozens of additional awesome gigs in between. So the cast was already top notch. So as I see the ratings and critics we can set the issue with the director and script that both might be regarded as below basement levels. In all this Ubisoft needs to be pointed at as the cause for the mere reason that you do not sit idly by as what should have been regarded as the most important franchise of Ubisoft to take a hit like that. A mistake that is not the first one (remember Unity). In this, the review Forbes is giving, as diplomatic as they could be, gives way that several high placed Ubisoft meetings are due and these board members better get a really good grasp of the risks they are now running. Although, I thought they would not last this long, the fact that they are still around can only be attributed to the hit ‘the Division’ became (it really is), the improvements Watch Dogs 2 proved to contain and the informing approach that Jason VandenBerghe has done through quality gameplay videos on YouTube showing the people that For Honor is indeed the awesome journey gamers hoped it to be. We could speculate that the life of Ubisoft would be depending to promote several people from Ubisoft Montreal to get promoted to the board of directors whilst we trim the fat with a sharp blade from the current collection of board members, whether Yves Guillemot would like to call it trimming fat or slicing off surplus weight is up to him, but he needs to do something to get Ubisoft to stand out in a few ways, standing out in one way will no longer be enough, the movie is making sure of that. Regarding For Honor, we have a small addition (at https://www.youtube.com/watch?v=B1LF52R8U_0) where the gamer himself is really not that good, yet we still get to see some awesome gameplay, making us all wonder, what damage can we, as overall better gamers do? The fact that I had this question in mind in a multiplayer setting is something I rarely have, mainly because I am not that much of a multiplayer person.

Yet let’s get back to bleeding and sickly Ubisoft. We will see how they will do and how desperate the fans will be to see the movie, yet the reviews are not great and as the AC fans have Rogue One, Moana and Office Christmas Party to see the options for the AC movie are not that great, yet we should consider that any large issues we will possibly see in the new releases could be countered by Ubisoft giving us a free download of the movie, which they can then book as sales and as negative sales (loss) keeping their tax deductibility high as well as their ‘revenue’.

We could attribute that approach to optional good CFO management, yet in that regard, the games that are lacking the high reviews they could have had, as seen by Assassin’s Creed Unity, Assassin’s Creed Syndicate, Far Cry Primal and the Crew. We need to wonder what else gamers are missing out on and the issue with the movie should not be linked, yet the gamers are unlikely to see it that way. With two non-hits, the movie now expected to be a flop and the AC franchise a year away from the next one, you should see this as an alarm issue for Ubisoft; in addition it is not impossible that Ubisoft could decide down the track (next quarter) to push forward the time line of the next AC game, with additional risks that the next one is another version of Unity.

In all this I am intentionally ignoring Steep. Even though the ratings are not great, I think it is a great achievement in its unique kind. Extreme snow sports are very niche, just like some sport games. The open world approach is truly cool and the fact that there is a tongue in cheek developer amongst that team and added the achievement ‘Shaked by the bell‘ is just awesome, just remember to go head firsts! I will accept that niche games like this score lower because of the niche character, but the fact that it shows something not seen before needs to be heralded, especially as I have been roasting Yves his chestnuts for not doing so in a few franchises.

Crytek might not be linked to Ubisoft, the issues they face are hopefully a loud wakeup call towards Ubisoft. Diversification in gaming is a good thing, as far as I can see, Jason VandenBerghe is excellent evidence of that, yet the wrong direction and distance could hamper growth and divert attention in another direction. Any firm that has €2.98 billion in revenue, whilst ending up with a remaining €561 million in net income should realise that the cost of 10,000 employees is quite the anchor. It is hard to state whether a remaining 18% of the revenue is a good result. I might have a good grasp on games and gaming, yet the CFO side of such a firm is a close an equal to reading tea leaves. Consider that next year, the AC movie results will be in. Not sure on the producers and where the funding came from, because Ubisoft Motion Pictures is only one of the three producers, so the damage would be limited, but with the additional releases in 2017, Ubisoft needs to make very sure that they have at least 2 really good hits in 2017. For Honor seems to be a definite one, yet the other two at present announced is the South Park game and Ghost Recon: Wildlands. Ghost Recon has a good track record, sales will have to show how good a game it is, of course until the final version is ready, we just cannot tell. Of course in addition there will be the games that remain unknown for now, games that will see the first light of day on June 13-15 2017 at the E3, unable to tell whether it will include additional 2017 releases, yet from my point of view, if the list does not change, there will be slimming required for Ubisoft. It would be great to see Ubisoft escape the abyss, especially as the push at present might not be entirely their fault, yet they were partly producers, giving them a slice of that expected flop too.

In the end, these are only a few parts, as stated, Ubisoft has had its shares of successes and the Division is one, with a new DLC available, those who did not take the road of the season pass will have to shell out $15 to get this DLC, giving Ubisoft another boost in revenue. In the end, do these actions matter to anyone but Ubisoft? I am going with yes! You see, we might be positive or slightly negative for the first Assassins Creed, yet there is no doubt that 100% of the fans have been 100% positive regarding Assassins Creed 2 and Brotherhood. This is the reality and we gamers, we want more of that amazement offered in November 2009 and 2010. I reckon it is that part that has driven fans (me included) to such anger as the franchise started to slide and the movie reviews so far aren’t helping either.

Yet, there is a clarity in the success that Watch Dogs 2 brought, which is a forward momentum, baby steps, baby steps.

From my point of view, Ubisoft needs to diversify as stated, yet I reckon it should be in another direction of gaming. I think that the salvation (read: stronger growth) of Ubisoft lies in new IP, in light of Watch Dogs 2 we know that the right team can salvage broken IP, we also know that the right person can create awesome IP (read: Jason VandenBerghe), so if Ubisoft can pull this off twice more, it could return back to the top it once clearly held, even more interesting for the big dude at the top of that hill (read: listens to the name Yves), possibly with a margin decently better than 18%. In that regard 2017 will be an interesting year.

 

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