Ubisoft 2002 Annual Report Download - page 37

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2003
37
FINANCIAL
REPORT
General presentation
The intra-Group relationship is as follows:
Production companies bill their work according to how far
their projects have advanced,
Marketing companies are billed by Ubi Soft Entertainment SA
and Ubi EMEA SARL on the basis of their sales volume.
Services rendered by the production and marketing companies
are billed according to market conditions.
Ubi Soft Entertainment does not own the premises it occupies
in any country.
1.6
General Information
and Risks
1.6.1 Trademark Protection
Ubi Soft Entertainment games are covered by intellectual
property rights both in Europe and internationally (for France:
Institut National de la Propriété Industrielle [French Patent
Office], Paris; for Europe: Office for Harmonization in the
Internal Market; internationally: the World Intellectual
Property Organization; and finally, for the North American
market, the Patent and Trademark Office in Washington, D.C.).
In addition,games designed by Ubisoft Entertainment S.A.are
covered by international copyright laws.
Ubi Soft Entertainment S.A.has not filed any patents and does
not depend on any particular patent.
Ubi Soft Entertainment S.A., like all game publishers, is
confronted with the problem of piracy. It is a member of SELL
(the French trade association of entertainment software
publishers), and takes legal action in any known cases of
software infringement in France and abroad (by taking
independent action where applicable, or by any other means
available under criminal or civil law). At the same time, in the
event of Internet piracy the company systematically takes
action against hackers to force them to withdraw games that
are put online illegally.
1.6.2 Investment Policy
Two years ago, Ubisoft decided to focus its investments on its
major products developed in-house. As a result, 2002/03 was
characterized by an increase in the resources allotted to Ubisoft
studios. These investments enabled the Group to stabilize its
internal production costs at 72 million while achieving its
annual growth targets thanks to its commercial successes,
which were primarily developed at its own studios.
Investment related to production
million euros 2002/2003 2001/2002 2000/2001
72 77 61
Forecast for fiscal year 2003/04:approximately 80 million
Investment related to sales distribution
Control over distribution ensures that Ubisoft retains local
control of its products in a highly competitive environment.
In 2002/2003, Ubisoft set up a distribution channel in South
Korea with the opening of the Ubi Soft Entertainment Korea
branch office.
1.6.3 Research and Development
Policy
In its ongoing effort to develop top-quality video games,Ubisoft
has developed a policy of researching and developing tools for
each project, incorporating the latest technological develop-
ments.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 its in-house team of engineers, who have a solid
grasp of the best technology currently available, Ubisoft now
has a highly pragmatic approach to its projects. Depending on
the problems involved in a game and the desired results, the
tools selected will either be tools developed in-house specifically
for the purpose, or commercial software, or a mixture of the
two.Research is therefore focused on innovation and functionality
through the use of technologies suited to products of the highest
quality. Development is focused on creative games that offer
gamers a total entertainment experience.
Research and development costs are composed of the costs to
create tools and are therefore stated as fixed assets and amortized
over three years. No basic research is carried out.
The company has not applied for ISO certification (ISO 9000-
9001).
1.6.4 Litigation
So far as the company is aware, there are no particular events
or disputes that are likely to have or that have recently had any
significant impact on the business, earnings, financial situation or
assets of Ubisoft Entertainment and its subsidiaries.