Company CEO believes being independent is crucial to respond to rapid industry changes
Among hardcore gamers, Ubisoft is associated with AAA games, a mark of quality that requires the highest development and marketing promotion budgets, as highly popular video games such as Assassin’s Creed, Far Cry and The Crew provide players with an immersive experience.
Yves Guillemot and his four brothers founded the company in 1986. Since then, Ubisoft has grown from a dream into a gaming empire with more than 40 development studios on five continents.
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A gamer plays a video game developed and published by Ubisoft on a Nintendo Switch games console during Paris Games Week, an international trade fair for video games, in November last year in Paris. (Photo by Chesnot/Getty Images) Getty Images |
It has the biggest in-house creative force in the industry, with more than 80 percent of its 13,000 employees dedicated to creation.
Although its market value is much smaller than industry mammoths such as China’s Tencent, Ubisoft outperformed all other gaming companies globally in terms of share price during the first half of this year.
Its turnover for the first quarter of its fiscal year 2018-19, which ends on June 30, 2019, came in at a record high of 400 million euros ($458 million; ￡356 million).
Guillemot says performance confirms the growing profile of the business and the ever-greater success of the company’s digital transformation.
For more than three decades, Ubisoft has remained a relatively independent gaming company, which Guillemot says is crucial to responding instantly to changes in the rapidly evolving gaming industry.
Its struggle to fight off French media conglomerate Vivendi’s hostile takeover bid starting in 2015 is testament to this. The takeover attempt finally concluded in March this year, with Vivendi selling all of its shares in Ubisoft. Vivendi sold 5 percent to Tencent.
China has been an important part of Ubisoft’s global production line. The company set up a studio in Shanghai in 1996, opened its Beijing branch two years later and established a Chengdu studio in 2007.
The annual Chinese gaming industry pageant – the China Digital Entertainment Expo and Conference, better known as China Joy – is a key event for the company.
During this year’s China Joy, China Daily talked with Guillemot, the co-founder and CEO of Ubisoft, about the rise of female players worldwide, the proliferation of mobile games and the importance of independence in the fast-moving gaming industry.
What are the newest products featured at your booth at this year’s China Joy?
We are able to show some virtual reality games, which is a huge step forward. We demonstrated the racing game The Crew 2 and Rainbow Six: Siege. We could also show a certain number of products like Just Dance, as well as some other titles more popular among female gamers.
I have been to China Joy several times. I can see who is playing and what is happening, and feel the energy here. All the Chinese publishers I meet here are very quick when creating new products.
Have you noticed the rise of Chinese female players?
Yes, especially on mobile. I was amazed at the exhibition to see a lot of women looking at games. It is a big change and also a good evolution. The better balanced it is, the more publishers are creating products for all the different people playing.
The trend is global. But because mobile is stronger here in China, it is actually more important.
Ubisoft’s sales revenue hit a record high during the first fiscal quarter of this year. What are the reasons for that?
First, games stay in the market for a longer time now. The games that we launched previously would stay in the market for only 18 months. But now, we continue to give support to those games and content on a more regular basis, so they sell for five to 10 years.
Second, players are increasingly more digital. We can sell games at different prices. Before, they were distributed for under 20 or 30 euros. They disappeared from stores because they could not make money and we could not make money at that price. Now that the industry is moving toward digital, we can sell at even $2 or $3.
The most important reason is that we constantly improve the quality of our games, which is about increasing sales each time we launch a new game.
What about the performance of the Chinese market?
We had 90 percent year-on-year growth in China last year. More and more Chinese consumers are interested in our games. They know the brand perfectly.
Globally, the PlayStation 4 is the largest income earner for you. But is the story different in China?
At present, PC and mobile are the two major growth drivers for us in China. In Europe and the United States, it is really about the PS4. But we think that if Nintendo is also coming to China, console games could sell a bit more, because it is a different approach.
Console games require 20, 30 or even 50 hours of gameplay. You have to pay at first, but then you can play whenever you want without paying. But PC and mobile are really free to play. So it will be a good complement.
Do you think that console games will see more opportunities in China with the rise of virtual reality technology?
Yes, I think so. What I see first is streaming, which is on the rise in China. The possibility of playing games on big servers and gaining the advantage of that experience on devices is taking shape quickly in China. It is about players all over the world building something together.
Virtual reality will take the business to a different level and take in more players because it will be a different approach to playing video games. With streaming and the development of 5G, we will be able to stream AAA games on mobile devices.
What is your plan in the Chinese market over the next few years?
The goal is to maintain growth here. We would like to establish more links between China and the rest of the world, to make sure that China has more influence on the global games that are to be created.
What do you think of the production capability of Chinese studio staff?
They are already creating games in China which are published worldwide. The Shanghai studio is working on content for the game Far Cry 5. Recently, they did part of The Crew 2. The Chinese creators will move further and exert more of their influence on the global gaming industry.
Apart from running big projects, Ubisoft also allows designers to develop independent games. What are the reasons of running such a model? How can Ubisoft benefit from these independent games?
It is very important to create games for all players. Some of our players want AAA games, while others are very interested in shorter sessions with a different experience. That is why indie and AAA can live together.
The creators at Ubisoft want to create different types of games. They don’t want to always be in long-term production. It is a way to have more time to breathe a little bit and create something that can happen quickly in one year rather than in two or three years.
Are there any examples of such indie games growing into larger projects?
The Crew was smaller at first. We saw the potential while we were producing it. So we took it to a different level.
Just Dance was also a minigame launched within Rayman. But we took it to another level after all.
Ubisoft has remained independent for nearly three decades. How did you achieve that in this industry, which sees frequent mergers and acquisitions? What are the advantages of being relatively independent and what are the challenges?
We are in the creation business. It is very important to be able to take risk. For that, agility is crucial. If you are part of a huge group, you have to ask many people if you can do certain things. You cannot move fast enough to react to the changes in the industry.
Therefore, it is crucial to be in the form of a smaller group that can act fast. Also, we need to have lots of fun to be more creative. It helps the company to be more efficient.
What are your suggestions for independent studios in China, since local players are actively acquiring smaller players that have put out blockbuster games?
It is very important that the Chinese gaming industry has middle-sized companies. Having different visions of what the industry can be will bring more diversity for players. If it is always the same because there are too few companies, the games will be less interesting and thus played less.
So it is very important to have different groups with different approaches. I am not too worried about China. There are so many new companies coming up. Given the abundant cash in the market, companies can develop fast.
For the past few years, I have seen quite a lot of good Chinese companies with good new ideas. I am always surprised when I come here to see the energy and companies’ appetite for going worldwide and creating new types of experiences.
Ubisoft announced the partnership with Tencent earlier this year. How will you leverage Tencent’s resources for your development in the Chinese market? Do you think the cooperation with a local industry leader is crucial in China?
With local partners, we can understand the market better and more precisely, and judge whether we should adapt our games. That is especially true with mobile games, which is a more diverse and broad market.
(China Daily European Weekly 11/23/2018 page31)