Ubisoft will no longer have to pay royalties to Tom Clancy after the new deal goes through, with Wedbush Morgan analyst Michael Pachter estimating that Ubisoft will pay around €60 million over three years.
Post acquisition, Ubisoft expects to have a net cash position of around €130m by the end of fiscal 2007-08, compared to a previous expectation of approximately €150m. Additional payments will be made in fiscal 2008-09 and fiscal 2009-10.
On the basis of past performance of Tom Clancy branded video games, and excluding any potential contribution coming from sales of associated products, the royalty savings generated by this acquisition are estimated to have an average positive impact on Ubisoft’s operating income of a minimum of €5m per year.
"After ten years of a highly successful collaboration which has seen the creation of blockbusters that set standards in the videogame industry, such as Tom Clancy’s Splinter Cell, Tom Clancy’s Ghost Recon, and Tom Clancy’s Rainbow Six, today, acquiring the perpetual property rights of the Tom Clancy name for video games and related projects is a major event,” said chief executive officer at Ubisoft Yves Guillemot.
"The future of our industry lies in our capacity to create and develop brands that captivate consumers and that present myriad of opportunities for the full spectrum of entertainment, be it video games, books, movies or other media."
"The Tom Clancy brand is recognised around the world for offering exciting video games, films and books," added Guillemot. "The most recent example of such value creation through brand management is the EndWar book, based on the video game story, which has been in the NY Times top 10 paperback mass market fiction bestseller list for the last four weeks. Capitalising on the strong franchises that we’ve built over the past 10 years, we will take the Tom Clancy game brand to the next level of the global entertainment industry."