Ubisoft invests in free-to-play games, signals profits might fall

(Reuters) - French video games company Ubisoft warned operating profit might fall this financial year as the maker of “Assassin’s Creed” invests in new titles and laps a surge in gaming at the start of coronavirus lockdowns.

FILE PHOTO: The UbiSoft Entertainment logo is seen at the Paris Games Week (PGW), a trade fair for video games in Paris, France, October 29, 2019. REUTERS/Benoit Tessier/File Photo

However, the company said on Tuesday a strong back catalogue and new releases should help net bookings grow by a “single digit” percentage, after a 46% leap in the year ended March 31.

The new releases will include some free-to-play games, the maker of “Prince of Persia” and “Rainbow Six” said.

“It is now time to come up with high quality free-to-play games across all our biggest franchises, across all platforms but of course it will take time,” Chief Executive Yves Guillemot said on a call with analysts.

Gaming companies saw a jump in demand last year as people were restricted to their homes to tackle the pandemic. Some are now suffering a pandemic hit as new titles are delayed.

Ubisoft said its releases this fiscal year would include “Far Cry 6”, “Rainbow Six Quarantine” and “Riders Republic”, while “Skull and Bones” would now be released in 2022-23.

It anticipates full-year operating income of 420-500 million euros ($511-$608 million), compared with 473.3 million euros in fiscal 2020-21.

Jefferies said the mid-point of the guidance was about 6% below analysts’ consensus forecast, and first-quarter bookings guidance suggested no major releases then.

Ubisoft forecast first-quarter net bookings of around 320 million euros, versus of 410 million a year earlier.

Net bookings for fiscal 2020-21 totalled 2.2 billion euros, in line with the company’s target of 2.22-2.28 billion euros.

($1 = 0.8217 euros)

Reporting by Kate Entringer and Enrico Sciacovelli in Gdansk. Editing by Mark Potter