Ubisoft 2001 Annual Report Download - page 39

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FINANCIAL REPORT
Financial Year 2001/2002
39
2.6.2 Investment policy
Since its early days as distributor, Ubi Soft has transformed
itself into an integrated company capable of carrying out each
stage in the production of a game, from design to distribution.
Today, its strategy centers on the production of triple-A
quality video games and “time to market” games.
The 2001/2002 financial year was marked by the consolidation
of external growth activities, the most important of which
were: Red Storm Entertainment (September 2000) and the
Entertainment Division of The Learning Company (March
2001) in the United States, and Blue Byte Software in
Germany (February 2001).
Investment in internal production:
The figures are expressed in millions €
2001/2002 2000/2001 1999/2000
77 69 55
Estimated investment in production for the 2002/2003 financial year :
between 73 and 78 million
Investment in sales distribution:
Control over distribution ensures that Ubi Soft retains local
control of its products in a highly competitive environment.
In 2001/2002, Ubi Soft incorporated distribution networks in
Finland by setting up Ubi Soft Entertainment OY, and in
Switzerland by setting up a subsidiary in Lausanne.
2.6.3 Research and development policy
In its constant efforts to develop excellent video games, Ubi
Soft has developed a policy of researching and developing
tools for each project, incorporating the latest technological
developments. The selection of tools takes place at a very
early stage in a project, because the decisions made then
directly affect the investment required in terms of time,
human resources and the overall funding of the game.
Thanks to the integration of its team of engineers, who
have a solid grasp of the best technology currently available,
Ubi Soft now has a highly pragmatic approach to its projects:
Depending on the problems involved in a game and the
expected results, the tools selected will either be tools
developed in-house specifically for the purpose, or commercial
software, or a mixture of both.
Our research efforts focus on innovation and functionality,
while our technologies are geared towards generating a top-
quality product. Development efforts concentrate on the creative
aspect of games, and aim to please gamers.
The research and development costs are the costs of creating
tools, and are therefore immobilized and amortized over
three years. No basic research is carried out.
The company has not applied for ISO certification (ISO 9000-
9001).
2.6.4 Litigation
So far as the company is aware, there are no particular
events or disputes that are likely to have or have recently
had any significant impact on the business, earnings, financial
situation, or assets of Ubi Soft Entertainment and its sub-
sidiaries.
2.6.5 Risks
Dependence on sub-contractors, suppliers and customers
The company has no significant dependence on sub-contractors,
suppliers or customers that could affect its development
plan.
Ubi Soft Entertainment has two types of distribution network:
■the centralized Anglo-American model (USA, United Kingdom,
Japan): the chain’s buyer makes centralized purchases of
the products, which the chain then distributes to its own
stores;
■the decentralized European model (Germany, France,
Switzerland, Benelux, Italy, Spain): the chain makes cen-
tralized purchases of the items, but uses a distributor to
deliver them to each of its stores
Ubi Soft’s ten largest customers account for 33.5% of the
Group’s pre-tax sales.
Dependence on manufacturers : Ubi Soft, like all publishers
of games for consoles, buys games cartridges and miscel-
laneous accessories from console manufacturers. These sup-
plies are thus dependent on the manufacturer. There is no
special dependency with regard to PC games.
Risks relating to the departure of key personnel
The company is now structured in order to minimize departure
risks or long unavailability of our personnel or key managers.
A conversion program and the share of expertise is, by exam-
ple in development in our company, for the retention and the