Concern over the COVID-19 crisis and its effect on game sales were top of the list inUbisoft’snewest financial report, but the company may still be planning toacquire a new studio.
It’s always exciting when game developers move to a new company, but current events make coordinating business acquisitions — like buying a game developer — challenging. People around the world may be turning to games for respite, but game developers have had to shift their priorities and their business models to cope with the crisis. During the FY20 Earnings Report, CEO Yves Guillemot discussed the various stresses COVID-19 has put on companies and gamers alike, delaying things likePokemon tournaments. He indicated that despite these challenges, acquisitions are still a possibility.
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During the Q&A session at the end of the report, Equity Research Analyst of Jefferies International Ken Rumph expressed concern over game delays into 2022 and inquired aboutmobile developer acquisitions. In a followup question, he asked, “Some companies may not be finding life easy in the current environment, particularly if they don’t have a back catalog of live games. Do you feel the likelihood of [Mergers and Acquisition] has increased?”
“We are studying carefully the market these days and if there are opportunities we will take them,” Guillemot replied. “At the same time, we have also to tackle these new challenges so it’s taking a little bit of our time. For sure, we’ll look at it carefully.”
At this point, fans can only speculate, but there are gaming studios out there, both mobile and traditional, that are feeling the pressure of COVID-19 precautions. Certain game-critical activities such as motion capture are near impossible when developers are stuck at home, and programmers may find home life, particularly pets and family, distracting.
Face to face meetings have been replaced by video conferences, and scheduling can become more difficult as developers' home and work lives blur. Likely candidates for acquisition include studios that have large amounts of debt, those with declining sales, and those struggling to put out good games. 11 Bit Studios, known for the notably difficultFrostpunk, has appeared in the press about its debt, though no great concerns have risen yet. Ubisoft may even choose totake on Amazon’s delayed projects, though their size may be a limiting factor.
Ubisoft will undoubtedly look at those whose notable titles align withwhat Ubisoft’s is best known for.Assassin’s CreedandCall of Dutyare aimed at more mature audiences, so studios likeThe Behemothare unlikely to be on their radar. However, TaleWorld’sKnight and Blademight be more appetizing, as its third-person camera and use of melee weaponry align well with Assassin’s Creed. Hellfire Games got its start with Lugaru, which shows grit and interesting combat mechanics.
Some studios may be doing well, but that could change very quickly in this year’s chaotic market. At this point, Ubisoft may have to wait in the wings to see who stumbles, and who is worth approaching. Without in-person meetings as an option, negotiations will have to be approached carefully, taking into account who is sitting at the virtual table, and who can offer what.
