Ubisoft Strategic Update Call Summary Company Overview - **Company**: Ubisoft - **Industry**: Video Game Development Key Points Organizational and Operational Reset - Ubisoft announced a major organizational, operational, and portfolio reset aimed at reclaiming creative leadership and restoring sustainable growth and cash generation [2][5] - The reset is structured around three core pillars: 1. A new operating model with five specialized creative houses 2. A refocused portfolio with a revised three-year roadmap 3. Accelerated cost reduction initiatives to improve structural efficiency [2][4] New Operating Model - The new model will consist of five creative houses, each responsible for specific game genres and brands, enhancing accountability and decision-making speed [6][8] - Each creative house will have full financial ownership and accountability for its economic performance, focusing on long-term value creation [10][8] - The first creative house, Vantage Studios, aims to scale established franchises like Assassin's Creed and Far Cry into annual billion-dollar brands [9] - Other creative houses will focus on competitive shooters, live experiences, immersive fantasy worlds, and casual games [9] Portfolio Refocus - Ubisoft will discontinue six games that do not meet new quality expectations, including the Prince of Persia: The Sands of Time Remake and four unannounced titles [15] - Additional development time will be allocated to seven games to ensure quality benchmarks are met, delaying one unannounced title from fiscal year 2026 to 2027 [15] Cost Reduction Initiatives - The current cost reduction program aims for at least €100 million in fixed cost savings by March 2026, with a new target to reduce fixed costs by an additional €200 million over the next two years [17] - Total fixed cost reductions are expected to reach around €500 million by fiscal year 2023, bringing fixed costs to approximately €1.25 billion by March 2028 [17] Financial Guidance - Net bookings for fiscal year 2026 are expected to be around €1.5 billion, reflecting a €330 million gross margin reduction due to changes in the release pipeline [18] - Non-IFRS EBIT is projected at around €1 billion, influenced by transformation-related decisions leading to a one-off accelerated depreciation of approximately €650 million [18] - Free cash flow is anticipated to be between €400 million and €500 million, with non-IFRS net debt expected to be between €150 million and €250 million by year-end fiscal year 2026 [19] Market Position and Future Outlook - The reset is expected to have significant short-term financial impacts, particularly in fiscal years 2026 and 2027, but aims to position Ubisoft for sustainable growth and robust cash generation in the long term [20][21] - The company is committed to returning to positive free cash flow within the next three years, with a focus on exceptional content quality [27][24] Additional Insights - The competitive landscape in the AAA gaming market is becoming increasingly selective, with rising development costs and challenges in creating new brands [2][4] - Ubisoft's strategy includes a focus on partnerships, with no fundamental changes in approach, but rather a realignment with the new organizational structure [31] This summary encapsulates the key points from Ubisoft's strategic update call, highlighting the company's efforts to adapt to market challenges and position itself for future growth.

Core Insights - Ubisoft is acquiring the rights to "March of Giants" from Amazon, aiming to strengthen its position in the rapidly growing MOBA market [1][3] - The game has received positive feedback from closed alpha testing, with 98% of participants indicating it brings something new to the genre [3] - The acquisition will bring an experienced development team to Ubisoft, enhancing its capabilities in creating competitive and live games [4][5] Company Summary - Ubisoft is committed to enriching players' lives with original entertainment experiences and has a diverse portfolio of successful game franchises [8] - The acquisition of "March of Giants" aligns with Ubisoft's strategy to innovate within the MOBA segment, which is expected to see significant revenue growth in the coming years [3][5] - The deal is anticipated to close by December 16, 2025, although specific financial terms have not been disclosed [5] Industry Summary - The global MOBA market is one of the largest segments in gaming, with hundreds of millions of active players and a forecasted revenue doubling by 2030 [3] - "March of Giants" is positioned to attract both existing MOBA fans and new audiences, contributing to the growth of competitive gaming communities [3][5] - The game's development team, including veterans from Ubisoft, is expected to leverage their expertise to create a successful live competitive game [4][5]