It is when Yves Guillemot lists the companies that Ubisoft first worked with that you realise just what an achievement it has been to simply survive for 25 years, let alone prosper.
He recalls deals with Domark, Elite, US Gold, Telecomsoft and Ocean – all now either defunct, absorbed by mergers, or far from the mainstream games market.
Only two of the publishers that he mentions from those pioneering days are still front and centre in today’s industry: EA and Activision.
So, 25 years in the business is an anniversary worth noting and an achievement worth celebrating, especially as it coincides with probably the most successful period in the firm’s history – a fact acknowledged last night (April 7th) at the MCV Awards where Ubisoft scooped the Grand Prix.
After a tough period that saw the 2009/10 sales fall 18 per cent to €871m and a net loss of €44m, it has recently hit top form with the Just Dance franchise, Assassin’s Creed Brotherhood and Michael Jackson: The Experience all selling strongly.
For its FY11, which ended on March 31st, sales will go back up above a billion euros and it will return to profitability.
Guillemot, however, has his sights set even higher – on the top spot, in fact. He says: “Now we are number three, and our aim one day is to beat those guys.”
Those guys being the official Big Two: EA and Activision? “Yes.”
That’s quite a task… “Well, we got from number 25 to number three, so we think that we can continue and that it is possible. It’s not certain, but we are taking the steps that we think will take us there.”
Guillemot speaks softly, and there’s no hint of bravado or bluster. He’s not saying it will happen, he’s not promising or threatening. He’s just saying, quietly, that Ubisoft is a true global gaming giant; that it will continue to create games that win market share and build its business; and it’s currently doing that so damn well that it is looking ambitiously up at the only two companies clearly ahead of it rather than nervously around at the half dozen or so around the same mark.
First though, that journey from 25 to three…
How was Ubisoft founded?
My parents had a company that sold products to farmers. They had a deal with their kids that they would pay for their education, but they would all then work for a couple of years at the company to help change it.
Two of my brothers, Claude and Michel, finished their studies and they started to look at opportunities that were more interesting than just buying and selling farm equipment and services.
One New Year’s Eve Michel was in the UK when he saw that the retail price in the UK was 40 per cent less than they were in France.
He thought maybe there’s a way to sell those products and make a bit of a margin in between. So he started a mail order company in France, called Guillemot International. He was buying products from US Gold, Ocean, Gremlin, companies like that, translating them and selling them in France.
Then, because his prices were very attractive, some retailers asked him to supply them.
Quickly after that we decided we should start properly representing publishers as their French distributor, and that we should start creating our own video games. That’s when we created a new company. We took the initials of all our girlfriends’ names to make the name of Ubisoft.
What was more important then, the distribution business, where you represented UK and US companies in France, or your own development and publishing business?
Initially, the distribution business was bigger, but the goal was always to finance the publishing through the distribution. We did it to have enough to pay for more investment in our own product.
All the money we made through distribution was invested in our own games and very soon after the company was formed it was fifty-fifty in terms of publishing and distribution.
And when did you make the transition from a French distributor and publisher to an international firm?
In those early years we did publish some very French-specific products, but we did a deal with Epyx in the US and Electronic Arts and they started publishing our titles.
Certain products helped us gain a more international reputation. Jimmy Connors Pro Tennis Tour was an excellent game that was a big step forward for us.
We also bought the licence to do a Game Boy version of Star Wars which got us to number one in the UK and also helped us realise how big this business really was.
Then in the mid-’90s Rayman was a real global hit that became known in all countries.
What are the significant differences between the company you founded and the company you run now – and what remains the same?
What remains the same is that we’re always a challenger. We are not the biggest, we need to find ways to win market share and be more creative and agile than our competitors.
We’ve always considered creativity, using new technology and entering new markets quickly as the way to gain share and be recognised.
What’s changed, of course, is the size. We now have 6,000 developers around the world, which is the second largest resource in the industry.
Bringing things up to date, the industry has been surprised by the success of Just Dance over the last 15 months or so. Has it surprised you?
The level of success took us by surprise, yes. The fact that it became a phenomenon took us by surprise.
When we created Raving Rabbids, the dancing mini game was always popular, first internally and then with consumers, so we knew we had to do a spin-off and launch it worldwide.
When we were building up towards the launch it was always a huge hit with our employees, particularly women, so we knew it had potential. We didn’t think it would be as big as it has become though, no.
What has been the secret to the game’s success?
The most important thing is having fun together, just dancing. You do have to perform and it does track your performance, but it doesn’t matter very much, you just have fun. It’s not about telling you whether you’re good or bad, it’s about the feeling you get from playing it.
Do you worry that it might suffer the same ‘faddish’ fate of the musical instrument games?
I put all those products in the category of ‘Family Games’ and I think it is a trend-driven category. After a while the consumer tends to feel that he ‘already has’ a game and the publisher needs to come up with new reasons for them to buy. There has to be major innovation in the content at that point or the sales will die.
So I think it will be strong for four or five years and if we manage to make it more appealing at that point then maybe it can continue to progress, but maybe it will become a different type of game.
New hardware will also come into play and give us the chance to do new things.
Another brand that has stepped up recently was Assassin’s Creed. Was Brotherhood a breakthrough product for the brand?
It was, and that is because we invested more in the product. It was a real focus for us and I think we delivered a better experience.
Will there be a new Assassin’s Creed game this year?
Yes, but we have not announced the details yet. All I can say is that it will be something interesting around the Assassin’s brand.
What other product highlights would you pick our for this year?
The return of Driver will be a highlight, definitely.
That was originally due in Q4 2010. Did you move it to avoid the pre-Christmas driving game pile-up or because it just wasn’t ready?
We wanted to give more time to the team. The industry is very demanding and an open world creates so many possibilities that you need time to explore them all. They are doing a fantastic job and I think Driver will be a revolutionary product.
Any other products you would like to highlight?
There will be a new Rayman game, Rayman Origins, by Michel Ancel. It will be HD in 2D and it will be a big event for the whole industry.
How many of the games are actually Michel’s and how many does he just supervise?
He created the original, of course. He oversaw Rayman 2 and he created some characters for Rayman 3. Rayman Origins is very much his game though.
Your FY2010 figures were obviously a disappointment, but how much of that was down to the market dipping and how much was down to Ubisoft’s own performance dipping?
It’s always tempting to say that when your figures go down the market is to blame and when they go up it’s all down to you, but in this case it’s hard to say where the split is.
There was a slowdown in the market and it did put pressure on all publishers. The market fell suddenly; it went from plus 25 per cent to minus 10 per cent.
On top of that, the DS became more competitive and more pirated and that had a negative effect on us. On the DS alone we went from €300m with a big profit to €100m with a big loss.
But this period was a good kick in the arse for us – a reminder to do better, to be more innovative.
One of your big corporate stories over recent years was EA buying a 20 per cent stake in Ubisoft – and then selling it last year. Does that sale make a big difference in the way you run the company, or does it just feel better?
When they left it changed lots of things for us. We had a competitor owning a big share of us and we were always wary that they could go for the company – and that would not have been welcome.
Now that we are totally independent again we feel a lot better. The problem is that when you have the number one player within your company, you can’t buy or do a deal with any company that might be in conflict with them or their strategy.
So, now they are gone, we are the number three company in the world on our own – and our goal is to beat those guys.
‘Those guys’ being EA and Activision?
That’s quite a task…
Well, we got from number 25 to number three, so we think we can continue and that it is possible. It’s not certain, of course, but we are taking the steps that we think will get us there.
Would that have to be through acquisition?
It has to be by creating or finding products that will make the difference and be recognised as the best in the industry. The products will fuel the growth.
I’m not saying we won’t do any acquisitions, but the focus is on creating products ahead of doing deals.
You have a roster of strong IP that can be re-iterated regularly, but are you still committed to introducing new IP?
If we look at the industry’s history we see that there are times when it is right to introduce new IP and times when it is harder.
At this stage in the consoles’ lifecycles it is possible to do new IP, but it will be more attractive when new consoles come along. That’s when consumers are more open to trying new things.
As consoles get more mature it is the big established brands that soak up most of the sales.
When a new format launches, we look to use the new technology to bring new games and new ideas to our consumers. We would always hope to be more successful on new formats than our competitors.
You’re obviously looking to prove that on the Nintendo 3DS, with more titles than any other publisher during the handheld’s launch period.
It is part of the DNA of the company. Each time there is new hardware it gives our creative teams more freedom and they don’t have to follow the same rules. They can try new things because the consumer expects and wants new things.
As an industry we need innovation. Kinect, Move, 3DS, NGP – all these things will help.
But what you really need is a new static console, an update to the PlayStation 3, Nintendo Wii or Xbox 360?
Yes, the accessories and handhelds are really good, but I think it would be great for the industry to take advantage of technological advancements.
Processors are more and more powerful, graphics cards have moved on, there are many technologies that would help us deliver a better experience and help the industry to grow.
This is the longest time without a new static console since Ubisoft started, right?
That’s right, and that’s part of the reason why the industry is in depression. Consumers like the current formats, but there is not enough creativity at the end of a cycle to really spark the business.
With over 6,000 developers you have the second biggest creative resource in the industry, but a very small percentage of it is in the UK. Would that change if there was a change in government policy in regards to tax breaks?
It would actually, yes. The UK has a strong creative history in the games market and we need to make sure we make games there. But the cost of doing business there doesn’t help and doesn’t compete with the possibilities in North America and the rest of the world. The creative people are there, so if the cost would come down…
I think it’s a short term view not to invest in the video games business, because this industry is at the forefront of a revolution that will affect all industries in the future.