Ubisoft 2013 Annual Report Download - page 50

Management Report
2013
45
The potential interruption of certain partnerships, for whatever reason, at the behest of Ubisoft or its
partners, is likely to have a negative impact on the income and future performance of the Company as
it would not be offset by other new licenses.
OPERATIONAL RISKS 1.7.3
RISK OF DEPENDENCY ON CUSTOMERS 1.7.3.1
Because it has many large retailer customers in numerous countries, the Company believes it has no
significant dependency on any customer that could affect its growth plan.
Share of the main customers in the Group's revenue ex-VAT:
Share in %
2012/2013
2011/2012
2010/2011
Top customer
13%
10%
12%
Top 5 customers
35%
39%
41%
Top 10 customers
47%
50%
54%
Moreover, in order to protect themselves against the risk of default, the Group's main subsidiaries,
which account for approximately 68% of consolidated revenue, are all covered by credit insurance.
RISK OF DEPENDENCY ON SUPPLIERS AND SUBCONTRACTORS 1.7.3.2
The Company has no significant financial dependency on subcontractors or suppliers likely to affect its
growth plan.
Ubisoft and its subsidiaries mainly use services or products from suppliers such as systems
integrators (printers to produce manuals and product packaging, disk suppliers to subcontract the
supply and duplication of DVD-ROMs and Blu-ray Discs, other systems integrators), technology
providers and suppliers of licenses and maintenance in connection with the Company’s operations.
However, there is a dependency on manufacturers. Ubisoft, like all console-game publishers,
purchases CDs and gaming media from console manufacturers (Sony, Nintendo and Microsoft-
approved duplication factories). Supply is thus subject to prior approval of the manufacturers, the
production of these media in sufficient quantities and the establishment of royalty rates. Any change in
the terms of sale by manufacturers could have a material impact on the Company's results. For PC
games, there is no specific dependency.
Despite the priority given to games developed internally, which account for 90% of revenue, the
Company may call on outside studios in the context of its development activities in order to work on
traditional subcontracting projects by supplying additional and/or specialized production capacity or to
take on original projects in which they have specific expertise. These independent development
studios may sometimes have a limited capital base that may put the completion of a project at risk.
To limit such risks, Ubisoft has introduced internal monitoring procedures, limited the number of
games entrusted to a single studio, and ensured that it assimilates all or a portion of the technology
that these studios use.