Ubisoft 2012 Annual Report Download - page 38

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Management Report
2012
33
In Canada and in Singapore, Ubisoft depends on substantial grants and any change in government
policy could have a significant impact on production costs and the Company’s profitability. Ubisoft
ensures that it renegotiates these agreements on a regular basis and does not foresee any risk over
the next few years.
The current operating income showed an improvement for the financial year 2012 thanks to the
success of Assassin’s Creed® Revelation, Just Dance® 3, The Settlers® Online and Howrse®.
Nevertheless, the uncertain economic situation and the technological changes that are taking place
may continue to impact the Company’s performance.
Size of the video games market in 20111
Physical game sales: $14.4 billion
Digital and online sales: $24 billion (including China)
Main competitors in the physical game sector: Electronic Arts, Activision, Take-Two, Nintendo
Main competitors in the online game sector: Electronic Arts, Activision, Tencent, Zynga, NetEase
Market share in 2011* in terms of physical sales (GFK, Chart-Track, NPD)
US: Third-largest independent publisher with an 8.4% share of the market (compared with a third-
place ranking and a 7.3% share in 2010)
EMEA: Third-largest independent publisher with an 8.7% share of the market (compared with a third-
place ranking and a 9.0% share in 2010)
1.7.1.3 RISKS OF A DELAY OR POOR START TO THE RELEASE OF A FLAGSHIP
GAME
Seasonal trends in the video games business:
Sales/quarter in
millions of euros
2011/2012
Breakdown
2010/2011
Breakdown
2009/2010
Breakdown
1st quarter
103
9%
161
15%
83
10%
2nd quarter
146
14%
99
10%
83
10%
3rd quarter
652
62%
600
58%
495
56%
4th quarter
161
15%
178
17%
210
24%
Consolidated annual
sales
1,061
100%
1,039
100%
871
100%
The third quarter of the financial year represents, on average, 59% of annual sales over the last three
financial years.
In a very competitive and above all seasonal market, increasingly characterized by the need to release
big hits, the announcement of a delay in releasing an expected game may have a negative impact on
the Group’s income and future results and thus cause a drop in its share price.
A game’s launch may be delayed by the difficulty in accurately predicting the time required to develop
or test it. For example, in 2011/2012, Ubisoft (like other players in the sector) was obliged to postpone
Tom Clancy’s Ghost Recon® Future Soldier.
The launch of a game below the standard required for it to fully realize its potential can negatively
impact the Company’s results.
1 Source: NPD, Chart Track, GFK, Nielsen, PriceWaterhouseCoopers