Ubisoft 2005 Annual Report Download - page 54

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Recent events, outlook and strategies
1.11
Ubisoft has signed a personal services contract for employees on professional assignment both in France and abroad. This
contract covers all employees at French sites who require assistance and foreign repatriation.
The Group’s business operations do not in themselves pose an exceptional risk with regard to workplace accidents.
Certain companies, notably those in the United States, United Kingdom, Italy and Denmark are insured against operating loss.
Recent developments/
significant changes in
the financial and trade
position
April 2006
- Announcement of the upcoming release Rayman Raven
RabbidsTM at the end of the year.
- Exclusive licensing agreement for Red SteelTM, which
will be released on Nintendo WiiTM.
- Publishing contract with Bethesda Softworks for the
launch of Pirates of the Caribbean: the Legend of Jack
Sparrow, which will be released on Playstation®2 and PC
in July 2006.
- Acquisition of the worldwide license for Naruto.
May 2006
- €24 million increase in the company’s equity through the
conversion of share subscription warrants issued in 2003.
In total, 97% of the share subscription warrants were
converted between 2003 and 2006.
- Licensing agreement with Touchstone Television to deve-
lop and publish a video game adaptation of the Emmy
Award-winning TV series “Lost”. Developed by the stu-
dio in Montreal, this game will be available on portable
and home consoles and on PC in 2007.
July 2006
- Acquisition of the intellectual property and technology
rights to Driver®, as well as all of the personnel of
Reflections Interactive Limited. Driver®is a mythic brand
which has already sold more than 14 million units around
the globe. This major acquisition allows Ubisoft to enter
the driving game segment, one of the most important
segments in the video game industry.
On July 18, 2006, Ubisoft has announced Marc
Fiorentino has been elected to serve as independent
director. His appointment will be submitted for ratification
at the next Ordinary General Meeting, scheduled for
September 25, 2006.
Information
on market trends
Market outlook
In 2005, the video game market declined by 3% in Europe,
North America, Australia and New Zealand. This trend is
expected to worsen in 2006 with an overall drop of
approximately 7% before the recurrence of a strong
growth cycle in 2007 and 2008, when the growth rate is
expected to be 17% and 15%, respectively.
These trends are tied to the speedy launch of several new
home consoles (Xbox 360TM, Playstation®3 and Nintendo
WiiTM), whose installed base should exceed 11 million units
in 2006 and 36 million in 2007. At present, the company
expects sales of games on these platforms to exceed USD
7 billion versus roughly USD 200 million in 2005.
2005 was also the year of the World of Warcraft phenome-
non, which, with 6 million subscribers, attests to the
growing success of MMOs in the United States as well as
Europe and China. This sector has the potential to grow
rapidly even if it remains a niche that mainly attracts
regular gamers.
In terms of mobile phone games, the acquisition of Jamdat
by Electronic Arts demonstrates the growing interest of
video game firms in this sector as well as the need to
acquire companies in order to overcome difficulties in
successfully penetrating this market.
With regard to industry players, as in previous years FY
2006 saw a number of acquisitions of independent studios
by major publishers. Some examples include the purchase
of Digital Illusions by Electronic Arts, the Red Octane stu-
dio by Activision, the Irrational Games and Firaxis Games
studios by Take 2 and the Lionhead studio by Microsoft.
The trend in 2005 toward the signing of multi-year
licensing agreements in both the sports and movie
industries continued with the James Bond, Spiderman and
Dreamworks contracts.
Finally, the acquisition of Pixar by Disney Corporation
could eventually cause this company’s presence in the
video game sector to increase following the launch of the
Chronicles of Narnia in late 2005.
1.11.1 1.11.2