Ubisoft plummets after slashing its earnings forecast and delaying the release of 3 games

Actor Jon Bernthal voices the antagonist in Tom Clancy’s Ghost Recon Breakpoint. ‘Ghost Recon: Breakpoint’/Ubisoft

Ubisoft shares plunged 16% on Friday after it released a profit warning, delayed a trio of video games, and announced an overhaul of its development process.

The gaming giant behind the “Assassin’s Creed,” “Watch Dogs,” and “Far Cry” franchises cut its projected net bookings for the year to March 2020 by more than a third to 1.45 billion euros ($US1.61 billion), and slashed its operating profit forecast from 480 million euros to between 20 million and 50 million euros.

Ubisoft blamed the downgrades on lower sales expectations for two Tom Clancy games, “Ghost Recon Breakpoint” and, to a lesser extent, “The Division 2.” Their underperformance led it to push back the release dates of “Gods & Monsters,” “Rainbow Six Quarantine,” and “Watch Dogs: Legion” into its next financial year.

“Critical reception and sales during the game’s first weeks were very disappointing,” CEO and cofounder Yves Guillemot said in a press release, referring to Breakpoint. Ubisoft underestimated the difficulty of drumming up interest in a sequel to a live multiplayer game, especially after updating and improving the original game, he said.

The company also realised gameplay innovations “need to be perfectly implemented” after Breakpoint’s changes “generated very negative reaction” and were “strongly rejected by a significant portion of the community,” Guillemot said. A third problem was Breakpoint’s failure to stand out, he added.

“We’re not happy with the fact that our decision here impacts significantly the short term of our financials, but we believe that we’re taking then this opportunity to definitely further elevate the quality of all of our games by coming with stronger identity features, differentiation,” Guillemot said. Future games will also feature “original new formulas” and “highly optimised experiences,” he added.

Guillemot shared more details about Breakpoint’s issues during a call with analysts. “There were more bugs than expected at the launch,” he said, and players viewed its large online store as a cash grab and it was “really not appreciated at all.”

Ubisoft assumed a gap of 30 to 36 months would be long enough for a sequel, but that timeframe was too short to optimise gameplay and build enough anticipation and momentum, Guillemot said. Changes to gameplay can be “unsettling” so they have to be seamlessly introduced to win over players, he added. Ubisoft also recognises all its games need to be “strongly differentiated,” he said.

The group tried to take the sting out of its profit warning by announcing bullish forecasts for the year to March 2021. It expects 2.6 billion euros in net bookings and 600 million euros of adjusted operating income, although those figures are flattered by anticipated revenues from the delayed games.