Ubisoft today announced their third quarter earnings for the current fiscal year, but the company is already making forecast predictions on its 2018-2019 earnings. This pretty much tells us that Ubisoft has high visibility into their development pipeline and likes what they see, hinting big-name Ubisoft games like Assassin's Creed and Far Cry could be on the way.
I noticed something interesting while combing Ubisoft's current financials report: they've already "confirmed targets for fiscal year 2018-2019" despite the fact that 2017 just started. To understand why this is a big deal, we have to do a little clarification on the differences between calendar year and fiscal year and the timelines.
Ubisoft's Fiscal Years start on April 1 and end on March 31 the following year--for example, the current Fiscal Year, FY2017, started on April 1, 2016 and ends on March 31, 2017.
Ubisoft likes to mix calendar years with its fiscal year reports, so instead of Fiscal Year 2017, the filings read "fiscal year 2016-17," but the two are one and the same. So when Ubisoft says "fiscal year 2018-19" that actually means Fiscal Year 2019, which starts on April 1, 2018 and carries over into the next year ending on March 31, 2019.
Yeah I know. It's a bit confusing. But understanding this key bit of info is extremely important to this entire article.
The new Fiscal Year (FY2018) begins on April 1, 2017 and Ubisoft hasn't yet confirmed the full release slate we'll see in this twelve-month period. Despite this, the company already knows what's in the pipeline for 2017 and 2018 beyond, even as far as early 2019. Based on this pipeline, they've already locked in earnings targets forecasts for not only this year, but next fiscal year too.
"Longer term, with the current successful implementation of our strategic plan, we are confident we will achieve our targets for fiscal 2018-19. In fact, by the end of fiscal 2016-17, we expect to meet, or even exceed, the 45% digital revenue and 17% player recurring investment targets we had set for fiscal 2018-19," Ubisoft Yves Guillemot said in the recent earnings press release.
What's it all mean? More microtransactions and heavy-hitters
So what does this tell us? It tells us that Ubisoft is working on some big projects throughout this year and next. Of course that should be somewhat obvious given Ubisoft is, well, Ubisoft, but I thought it pertinent to underline this information so you can gauge your expectations from the publisher throughout this year and beyond.
Engagement on older games will be key during this period and beyond, so new Rainbow Six Siege DLC, Watch Dogs 2 content, The Division content, and new DLC packs for fresh titles like For Honor and Ghost Recon Wildlands as well.
However it's not just new releases that has Ubisoft sharpening its pencils and scribbling in its ledgers. The company has learned quite a bit from its business strategies in the last two years or so, and has announced record nine-month digital sales and recurring consumer spending (microtransaction and DLC earnings) in key games like Rainbow Six: Siege and The Division.
So it's not just about the newer games, but a big picture that combines everything Ubisoft has learned from the market. Of course the company didn't publish these projections--it's way too soon to do something like that--but they've confirmed them for the time being.
Oh and expect to be microtransactions, season passes, DLC, subscription services and other such schemes implemented in every major Ubisoft game in the future. These schemes are money-printing machines and based on Ubisoft's current financials, it's not going to stop anytime soon.
"We are successfully pursuing our transformation into a more recurring and more profitable profile. The positive effects of this transformation are remarkable. They illustrate how far ahead of schedule we are in our digital
development, which is one key element of our three-year targets.
"Our overall player community is growing rapidly. We hit record engagement levels during the period, with 33% more MAU year on year. The number of daily players of Rainbow Six Siege is at its highest ever, an exceptional performance given that the game was released 14 months ago.
"Meanwhile, The Division has continued its successful come-back, with engagement up by more than 150% bythe end of December. This resulted in record back-catalog sales and digital revenue for the third quarter, and we saw another sharp rise in player recurring investment"
"In light of the positive impacts of our transformation, combined with our overall solid performance and tight cost control, we are standing by our objective of achieving record operating income and operating margin for fiscal 2016-17, despite lower-than-expected sales.
"Our targets for fiscal 2017-18 will be announced mid-May and will include an increase in our topline and operating income, while factoring in the very competitive environment that we expect to see throughout the year. Longer term, with the current successful implementation of our strategic plan, we are confident we will achieve our targets for fiscal 2018-19. In fact, by the end of fiscal 2016-17, we expect to meet, or even exceed, the 45% digital revenue and 17% player recurring investment targets we had set for fiscal 2018-19."