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The Force — the unseen power central to the Star Wars universe — is fading. Following a flop for Disney’s latest spin-off TV series The Acolyte, Ubisoft will be hoping its Star Wars Outlaws game won’t go the same way.
Already, the French video game maker offered up weaker-than-expected guidance in its quarterly results, which sent shares tumbling. With them now trading close to decade lows, the company needs Friday’s launch of Outlaws to succeed to restore the balance.
First-quarter results last month repeated a game that Ubisoft shareholders have played before: delays to new releases muddied already lumpy earnings. This time, the launch of Rainbow Six Mobile and a new Division game have been pushed back to next year. That only increases the market’s focus on this year’s titles, namely Outlaws and the next instalment of the Assassin’s Creed franchise Shadows.
The omens are not entirely good. Before Outlaws had even been released, the trailer was subject to the kind of online ridicule that some blamed for The Acolyte’s poor performance and cancellation before a second series. Fans are also upset about the pre-order price tag of £60, or $70, for the base Outlaws game.
The company’s guidance for the second quarter implies Outlaws sales may disappoint. Ubisoft expects net bookings of €500mn. Before July’s update, the market had been expecting closer to €650mn. Analysts have slashed the number of copies of Outlaws they expect the company to sell. The guidance translates into 5mn copies in the quarter, thinks Nick Dempsey at Barclays, down from a prior forecast of 8mn.
With the company leaving full-year guidance unchanged at the last update, it means Shadows will have to pick up any slack when it is released in November. About 13.5mn copies will need to be sold. While true that the previous iteration of the Valhalla franchise sold 13mn copies, a repeat performance may be unlikely. Shadows, set in feudal Japan, has already caused a stir among the country’s fan base for its inclusion of a non-Japanese main character. That leaves full-year net bookings of €2.46bn vulnerable to downgrades.
At 10 times forward earnings, Ubisoft’s shares are already trading at the bottom of their 30-year historical valuation range. That does not mean earnings downgrades from disappointing sales cannot push them lower still. Nevertheless, a further downgrade would offer an opportunity to buy into some still forceful intellectual property that could recapture fans with a creative reset.
andrew.whiffin@ft.com
