Pixel P&L (3 October, 2024): Ubisoft at a Crossroads

Good morning. It’s Thursday, 3rd October. After disappointing sales and delays, Ubisoft’s shares have hit a decade low, prompting a review by its Executive Committee. With mounting investor pressure and calls for leadership change, today’s feature examines whether the gaming giant can turn the tide or risk falling behind its rivals.

We also report on Epic Games’ CEO Tim Sweeney’s bold statement about the company’s financial health, Krafton’s partnership with Palworld, and more.

Ubisoft’s Tumultuous Year: Can the French Publisher Regain Its Footing?

As one of the world's largest game publishers, Ubisoft has long been synonymous with blockbuster franchises like Assassin’s Creed, Far Cry, and Rainbow Six. Yet, despite a vast portfolio and a global presence across 30 countries, the French video game giant has found itself on the defensive, grappling with mounting setbacks and plummeting investor confidence.

After disappointing sales for Star Wars Outlaws and a delay for Assassin’s Creed Shadows, Ubisoft’s shares hit a decade low of €9.25, underscoring concerns about its long-term viability. The company’s financial woes prompted a review by its Executive Committee and Board of Directors, aimed at reversing the downward spiral and restoring stability.

The company’s struggles were compounded by tepid reception for other recent releases like XDefiant. CEO Yves Guillemot’s announcement of revised fiscal forecasts and plans for tighter strategic execution has done little to quell investor anxiety. Activist investor AJ Investments is now calling for a change in leadership and a potential sale of the company.

Can Ubisoft overcome these challenges and mount a comeback, or is it destined to be eclipsed by competitors like Electronic Arts and Activision Blizzard? Sadakshi’s feature dives deep into Ubisoft’s current state, its path forward, and what it will take to regain its once-formidable standing in the gaming industry.

Epic Games Rebounds: CEO Tim Sweeney Declares Company “Financially Sound” After Layoffs and Divestitures

Epic Games CEO Tim Sweeney expressed confidence in the company’s financial health after a challenging year that saw significant restructuring and workforce reductions. Speaking at Unreal Fest 2024, Sweeney announced that the company is now “financially sound” following layoffs and divestitures that were necessary to stabilize its operations.

In September 2023, Epic Games, the developer behind Fortnite and Unreal Engine, laid off 830 employees—about 16% of its workforce—as part of a broader cost-cutting effort. The company also divested music platform Bandcamp and spun off most of SuperAwesome, a kid-safe technology firm, shedding approximately 250 additional employees in the process.

“We had been spending way more money than we earned, investing in the next evolution of Epic and growing Fortnite as a metaverse-inspired ecosystem for creators,” Sweeney said at the time of the layoffs.

Now, Sweeney has a more optimistic outlook. “We spent the last year rebuilding and really executing solidly on all fronts,” he said, noting that Fortnite reached a record 110 million monthly active users last holiday season, while the Epic Games Store achieved new highs in user activity.

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?Quick Bytes

? Krafton Partners with Pocketpair to Bring Palworld to Mobile

Krafton, the publisher best known for PUBG, has partnered with developer Pocketpair to bring its popular monster-catching survival game Palworld to mobile platforms. Under the agreement, Krafton’s subsidiary, PUBG Studios, will lead development and aims to “faithfully reinterpret and implement the main fun elements of the original for the mobile environment.” The collaboration is part of Krafton’s broader strategy to diversify its mobile game portfolio, leveraging Palworld’s unique gameplay to reach a wider audience beyond its traditional battle royale offerings.

? Hi-Rez Studios Announces Layoffs Amid Reorganization and Focus on Smite 2

Hi-Rez Studios, the developer of Smite 2 and Paladins, has announced layoffs as part of an internal reorganization aimed at ensuring the company’s long-term success. CEO Stewart Chisam confirmed that the job cuts, which will disproportionately affect marketing, publishing, and cosmetic content teams, come as the studio refocuses its efforts entirely on Smite 2. The layoffs follow a comprehensive review of Hi-Rez’s strategy, which will prioritize gameplay development over monetization features. Chisam acknowledged the “real human impact” of the decision and took personal responsibility, calling it a “heartbreaking” but necessary move for the company’s future.

? Ubisoft Delayed Assassin’s Creed Shadows Only After Months of Internal Pressure From Developers

Ubisoft’s decision to delay Assassin’s Creed Shadows to February 2025 reportedly came after months of internal pressure from its development team, who had been advocating for more time to refine the game’s quality and address cultural accuracy concerns raised by the Japanese community. While management initially resisted extending the timeline, the push gained urgency following the disappointing launch of Star Wars Outlaws, which exposed the risks of rushing major releases. Developers cited the need to fix bugs, improve gameplay mechanics, and ensure historical authenticity.?

? Nintendo Targets YouTube Channels Over Emulated Content Amid Crackdown on IP Violations

Nintendo has issued a copyright strike against popular YouTube channel Retro Game Corps, which reviews handheld devices capable of emulating classic Nintendo games. The channel, with over half a million subscribers, had showcased emulated titles from discontinued consoles like the NES, SNES, and Wii U, prompting Nintendo’s action as part of its ongoing effort to protect its intellectual property. In response, channel owner Russ announced he will no longer feature Nintendo games in his reviews, citing concerns over potential legal repercussions and acknowledging that he must “adjust accordingly” to avoid further strikes or legal action.

?? Did You Know?

In a surprising move back in 2011, Valve co-founder and CEO Gabe Newell publicly revealed his Steam username and password at an Intel press event in Germany to demonstrate the robustness of the newly launched Steam Guard two-factor authentication system. “My username is [email protected], and my password is MoolyFTW, so you can try to log in and steal my account if you can, but you can’t!” he confidently declared to the audience at CeBIT on March 5th.

At the time, this kind of stunt seemed risky, especially for a high-profile figure like Newell, who was the 721st wealthiest individual in the world. But Newell wasn’t just showing off; he was demonstrating Steam Guard’s reliance on Intel’s Identity Protection Technology (IPT). Steam Guard, still in beta, required users to verify each new device using a unique code sent to their email, effectively preventing unauthorized access, even if someone had the password.

The bold demonstration underscored Valve’s commitment to account security, as 60% of Steam’s support tickets then were related to account theft. Although Steam later transitioned away from Intel-based security, the event remains a memorable moment in the evolution of digital gaming security and Valve’s audacious approach to marketing.

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