Back in February, I wrote in a previous article that Ubisoft (EPA: UBI) was well positioned to grow and I believed that it was a solid share to invest in. Today, Ubisoft announced that Far Cry 5, a game that was released by the company last week, was one of their most successful games to date in terms of first week sales. This resulted in a 10+% increase in Ubisoft’s share price today.
Let’s look into the announcement a bit more:
Digital distribution accounted for more than 50 percent of those sales. Far Cry 5 also now represents the second biggest launch ever for a Ubisoft game, following only Tom Clancy’s The Division, with $310M USD in consumer spending through the first week.1
The first thing to note is that digital distribution accounted for more than 50% of the sales. Digital sales have a higher margin that sales sold in store, so you can expect a high rate of profitability for each sale. In addition, the game generated $310M USD of consumer spending throughout the first week! This would have included both game sales and game purchases, but to put things in perspective, most movie blockbusters aren’t anywhere close to these levels of sales! This dwarves the recent opening of Black Panther (just over $200 mln for the opening weekend). It’s anybody’s guess what the lifetime sales for Far Cry 5 will be, but it’s safe to say that good video games normally have longer legs than movie blockbusters in terms of lifetime earnings.
Let’s continue to the next paragraph:
In addition to the strong first week of sales, record-breaking numbers of people are engaging with Far Cry 5 content. People streamed more than 55,000 hours of Far Cry 5 on Twitch and YouTubers’ videos earned more than 117 million views.2 Both are records for a Ubisoft title in a week following launch, and evidence of the impact user generated content is having in convincing players to join the Far Cry community.
Gamers are liking this game and are engaged. Engagement is important for lifetime in-game sales, and streaming is free marketing that can result in even more game sales.
The remainder of the announcement talks a bit about the game and ends off with a couple of thanks to players and persons who worked on the game.
I’m a game enthusiast myself and I normally check out Steam’s rankings to gauge how well a particular game is doing; And at this time, Far Cry 5 is currently in the top 10 most played games . Not bad for a game that was released about a week ago!
In short, increase sales = increased income for Ubisoft and it’s pretty much a certainty that they will outperform their guidance for the last quarter and FY when they announce earnings on May 17th. I still believe Ubisoft is a great pick, and that there is much more growth investors can expect, over the next couple of years.
As always though, please do your own research before buying/selling this share; the opinions above are only my personal views.
