First of all, it will be necessary to follow closely the releases of new video games and in particular those which are already profitably licensed by Ubisoft. To do this, you will need to follow the group's news and announcements in this area.
The evolution of the company's market share in terms of sales and competition will be strategically interesting to follow. At the same time, the strengths and weaknesses of the main competitors in this sector should be studied.
It will also be necessary to carefully monitor the partnerships that the group may set up, in particular with video game manufacturers or with licence publishers, with the aim of improving its range and its product portfolio and thus gaining new customers.
Ubisoft's customer loyalty strategy is also interesting to study in order to know if it is effective and if the users of these video games are loyal to them.
It will also be necessary to look at the group's other strategies by consulting the company's shareholder communications, which include strategic growth plans and detail the financial objectives for the coming years.
Finally, before selling or buying Ubisoft shares, you should also keep an eye on the company's actual financial results by observing how they have changed over time.
Let's move on to a slightly more detailed presentation of the Ubisoft group and its activities, so that you can better analyse its share price before buying or selling Ubisoft shares. Here is some detailed information about the company and its major sources of revenue.
Ubisoft Entertainment is a French video game company and is currently one of the world's leading developers and publishers of interactive video games for a variety of platforms including game consoles, PCs, smartphones and tablets.
To better understand the activities of the Ubisoft group, they can be divided into different divisions according to the share of sales they generate, as follows:
It is also possible to break down these activities by type of product and service, still in terms of turnover, as follows
Photo credits: map
Now that you have a better understanding of who Ubisoft is and what it does, let's take a closer look at the company's main competitors in the industry with the largest companies in the video game industry in terms of revenue.
The Chinese group Tencent Holding, founded in 1998 and specialised in internet and mobile services and online advertising, offers various products and services including social networks, web portals, online commerce and multiplayer online games. It is the head of China's largest web portal and instant messaging service.
The Japanese multinational company based near Tokyo is active in various fields of activity including electronics, telephony, computers, video games, music, cinema and audiovisuals. The group owns more than a hundred companies around the world and is present in more than 183 countries around the world.
This American computer and microcomputer multinational was founded in 1975 and is now one of the largest market capitalisations on the NASDAQ along with Apple and Amazon. The group is of course partly active in the field of video games and game consoles. It currently employs over 148,000 people and operates in 120 countries around the world.
This is another American company that specialises in both video game development and publishing that was created in 2017 through the merger between Activision and Vivendi Games. It is currently one of the most important video game publishers in the world, which is notably behind the Call of Duty licence.
Of course, we will also keep an eye on Eletronic Arts or EA which is an American company created in 1982 and which is today based in Redwood City in California. EA is also one of the largest developers and producers of video games in the world. It was the leader in this sector until 2008, notably through its strategy of buying up companies and game franchises, but also through the acquisition of sports licences such as those for FIFA, the NBA, the NFL and the NHL.
Finally, we will also keep an eye on the competitor Nintendo which is a Japanese multinational company that was founded in 1889 near Kyoto in Japan. Today, the group specialises in the development, manufacture and distribution of game consoles, some of which have become famous in the past, such as the NES or Nintendo Entertainment System, the Nintendo 64, the Wii, the Nintendo GameCube and the Nintendo DS or the most recent, the Nintendo Switch. But the group is also present in the video game segment since it is behind the design of games such as Super Mario and The Legend of Zelda.
In 2013, Ubisoft announced the signing of an agreement with the board game publisher, Hasbro. This allowed the French company to publish titles such as Risk, Monopoly or Trivial Pursuit for consoles.
Coca-Cola then renovated a partnership with Ubisoft in 2014. Which had a worldwide success with Just Dance, a console game created in 2009 that sold more than 50 million units, including 3.6 million just in France
Ubisoft and Sony established a partnership for the Electronic Entertainment Expo (E3) with the game “Assassin’s Creed Syndicate” as a theme, aiming to offer original content on PlayStation 4. “Assassin’s Creed Syndicate’ for PS4 came out on October 23, 2015.
One of the main advantages of Ubisoft is of course, its position in the world of video games, since it is the third largest independent publisher in the world. The success of this group is mostly due to some of its very popular licenses such as Assassin’s Creed, Just Dance, Watch Dogs, Far Cry or the saga of Tom Clancy with Splinter Cell, Ghost Recon, Rainbow6 and the Division. Ubisoft is particularly well positioned on the so called “open world” games category, which has been very successful for several years now and represent more than 60% of shares in the market of video games industry against only 16% in 2008 with among others the games Assassin’s Creed, Far Cry and Watch Dogs. Ubisoft is present and evidently well represented in all the different segments of the world of video games with consoles integrating the blockbusters of the group, the free to play on PC with the games Ghost Recon Online in particular, but also the games for mobile phones with the famous Rayman. Ubisoft also bought the mobile game publisher Ketchapp, who created the game 2048.
Ubisoft has also had an increase in shares on the market in the last years with not less than 33% on PlayStation and Xbox consoles. The group has also invested a lot in the digital domain, which currently generates the majority of the company’s turnover (75% of its turnover). The group’s shares on the market in the United States rose to 10%, which is twice of what they had in 2015 and it increase to 14.3% in the European market. The demand of video games in the United States has particularly benefited from the loss of value of the euro against the American dollar and now accounts for nearly 40% of the group’s total sales.
But of course, Ubisoft shares does not only have advantages its also has some disadvantages. We can mention in particular, that it remains difficult for investors to anticipate accurately the results of this company because of a dispersion of the market consensus in this sector of activity. Ubisoft also faces strong competition concerning high-end video games with an increase in its cost of production and significant pressure on the prices for casual games.
Moreover, it is regrettable that the group is not positioned correctly on the sector of massive multi-player online games like most of its major competitors.
Concerning the company’s recent results, they were rather disappointing concerning the sales of the blockbuster Assassins’s Creed in 2015. The group was expecting to make a reboot of this franchise in the near future and put this production on hold. The company’s free cash-flow was also degraded by the launching of the two AAA games in 2016, which caused concern among investors regarding the fast turnaround of its value.
In summary, even if Ubisoft presents real advantages for investors and seems confident about its future, you should carefully follow its news and results before making your mind about its growth prospects on the long-term.
Ubisoft is currently listed on compartment A of the Euronext Paris market and is one of France's largest market capitalizations. It is therefore included in the benchmark CAC All Shares index but not in the CAC 40. However, it is also included in the composition of other stock market indices, including the CAC All Tradable, CAC Large 60, CAC Next 20, Euronext 100, PEA, SBF 120 and the Stoxx France 50.
In 2020, the Ubisoft group did not pay a dividend to its shareholders. The return on this stock for this period is therefore also a negative return at -0.09. It should also be noted that the group currently holds €1,322 million in shareholders' equity. The absence of a dividend is due to the fact that the company recorded a deficit of 124 million euros for the year 2019.
In 2020, the Ubisoft group's shareholding structure will be split between different types of private shareholders, with the Guillemot Family still holding 17.79% of the company's shares, JP Morgan Chase & Co bank holding 11.09% of the shares, Crédit Agricole Corporate and Investment Bank with 9.49% of the shares, Tencent Holding with 5.01% of the shares, Baillie Gifford & Co with 5% of the shares, BlackRock with 4.92% and finally WCM Investment Management with 3.95% of the group's capital.
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