Ubisoft 2003 Annual Report Download - page 34

FINANCIAL REPORT
2004
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1.3.2 Sales by activity
Ubisoft's sales are distributed over the three core activities
of the video-game industry: development, publishing and
distribution.
Development covers revenues from titles developed, produced
and marketed by Ubisoft's in-house studios. Development
also includes sales by third-party developers, for whom
Ubisoft provides supervisory and co-production services and
acts as guarantor of the final product’s quality.
Publishing covers revenues from titles designed and produced
by third-party developers, for whom Ubisoft finances and
supervises production in exchange for acquiring the license.
Ubisoft then handles localization and manufacturing, as well
as marketing and sales distribution. The company receives
revenue from product sales and pays royalties to the brand's
developers and/or owners.
Distribution sales correspond to revenue from the sale of
products from publishers with which Ubisoft has concluded
distribution agreements and for which it handles marketing
and sales. Such agreements may be local, covering a limited
geographic area, or may encompass several regions.
Breakdown of sales by activity:
The commercial success of the titles developed by Ubisoft
contributed to the 25% growth in development activities.
Development now represents 86% of sales, compared to 77%
in the previous year.
1.3.3 Change in production volumes
Number of titles produced by the company itself, co-produced
with third parties and published or distributed by the company:
The company attaches strategic importance to its in-house
development business, since this ensures:
●Better game quality and rigorous control of schedules and
budgets.
●Improved profitability, thanks to development for several
formats.
●Creation and development of tools and technology that can
be reused from one game to another.
Priority was given to major titles with high potential, such as
Prince of Persia®The Sands of Time™ (with 2.4 million units
sold during FY 2003-04), Tom Clancy’s Rainbow Six®3 for
consoles (2.2 million units), Tom Clancy’s Splinter Cell®
Pandora Tomorrow (1.7 million units) and Tom Clancy’s
Splinter Cell®(which has sold more than six million units
since its launch in late 2002).
Ubisoft has achieved its objectives through a dual strategy of
focusing on a lower number of products developed in-house
(but with high sales potential) and strengthening its selection
of publishing products.
1.3.4 Sales by platform
2003-2004 2002-2003
PC 24% 23%
PlayStation®2% 5%
PlayStation®2 36% 28%
GameBoy/GameBoy™Color 0% 1%
GameBoy®Advance™ 5% 8%
Game Cube™ 5% 7%
X-box™ 27% 27%
Autres 1% 1%
Game sales on 128-bit consoles (PlayStation®2, Nintendo
GameCube™ and Xbox™) increased from 62% to 68% of
annual sales, attesting to the very high level of activity in this
sector. PC game sales remained stable at 24% of total sales
(compared to 23% the previous year). Sales for portable
consoles (GameBoy®Advance and GameBoy™ Color), which
fell from 26% in 2001-02 to 9% in 2003-04, accounted for a
mere 5% of turnover in 2003-04 owing to a significant decline
in the number of games released for this medium. However,
the introduction of two new portable consoles, the Sony PSP
and the Nintendo DS, in late 2004 and early 2005, respectively,
is expected to breathe new life into this sector.
2003-04 2002-03 Change
Development 86% 77% +25%
Publishing 11% 18% -31%
Distribution 3% 5% -33%
Number of titles* 2003-04 2002-03
In-house production 10 20
Co-production 9 20
Publishing 16 45
Distribution 2 14
TOTAL 37 99
*A title is a single game on one or more platforms. For example, Prince of Persia The
Sands of Time™ on PlayStation®2, GameCube™, Xbox™, PC and GameBoy®Advance™
constitutes five products but just one title.