4-Traders is reporting that Ubisoft recently released their financial results for the first half of 2011-2012. Ubisoft’s gross profit was dramatically higher this year at 63.7% compared to the same period of 2010-2011 at only 56.1%. Despite the increase in profits, Ubisoft still ran into an operating loss of $49.3 million.
Ubisoft’s Chief Executive Officer Yves Guillemot gave this statement about where they saw the strongest growth:
“First-half sales have come in around 30% higher than our initial targets. This performance reflects: a 85% growth in our Online segment; a solid showing by our back catalog, driven by Just Dance, Michael Jackson The Experience and Assassin’s Creed Brotherhood, which confirms players’ enthusiasm for these flagship brands; and better-than-expected sales for Driver San Francisco, boosted by very good reviews. Our strong sales figure drove another sharp increase in gross profit and enhanced our earnings performance.”
Yves went on to describe how Ubisoft expects to start generating a postive cash flow in 2012-2013:
“We are now starting to reap the benefits from the work we have undertaken to ensure more frequent releases of our High Definition franchises with very high quality levels, as well as from the immense opportunities offered by the Casual segment and our continued strong growth in the Online segment. All of these factors will be key to Ubisoft’s expected financial performance improvement and return to positive cash flow generation in full-year 2012-13.”
Analysis: Ubisoft’s has been struggling for quite some time to operate in the positive, but this is the case for many game developers as of late. I recently talked about Ubisoft’s persistent DRM for the PC in a blog post here at Gaming Bus, where they have seen a dramatic drop in sales by 90% since they went to this. This certainly has not helped them gain a positive profit for the 2011-2012 report.
The company is obviously making slow progress to make a positive profit despite the drop in sales on the PC. However, I think Ubisoft can make better profits by seeing positive growth on all platforms, including the PC. This is where I think Ubisoft needs to reevaluate their PC DRM despite their optimism for the coming year. I do think that the PC should have DRM, but if they would just loosen their grip, they would see increased sales on the PC to help back up that positive profit outlook.
In all, Ubisoft is showing they’re making head way, but so far, they haven’t announced many titles for the coming year. Given that, I don’t think they’ll make it to positive profits even if the PC sales picked up. I look forward to seeing how Ubisoft fares. They have solid franchises, but it’s too early to tell if they will come out on top, stay stagnant, or sink further into debt.