Ubisoft cancelled three unannounced games and lowered its full-year financial targets on Wednesday, citing “worsening macroeconomic conditions” in the video game industry.

The company cited the poor performance of titles Mario + Rabbids: Sparks of Hope and Just Dance 2023, as well as a challenging economic environment. For the full year, Ubisoft said it expects a 10% decline in 2022 net book revenue. The company previously forecast a 10% increase in net bookings.

“We are clearly disappointed by our recent performance,” said Yves Guillemot, the company’s CEO, in a statement.

“We are facing contrasted market dynamics as the industry continues to shift towards mega-brands and everlasting live games, in the context of worsening economic conditions affecting consumer spending.”

Faced with higher prices and credit costs, consumers are cutting back on discretionary purchases. Gambling, in particular, has come under pressure.

According to a July research note from market data firm Ampere Analysis, global sales of games and services, including console and PC games, are expected to fall 1.2% to $188 billion annually in 2022.

With consolidation in the industry on the rise, analysts see Ubisoft as a potential takeover target. Its share price plunged more than 38% in 2022, erasing €3 billion from the company’s market value.

Meanwhile, the company has been dogged by internal scandals. In 2020, it underwent a management reshuffle after reports of sexual harassment and abuse. Several executives resigned, including former chief creative officer Serge Hascoet.

Michael Pachter of Wedbush Securities said Ubisoft’s holiday game line-up “just aren’t good enough to command attention.”

He said he expects improvements from upcoming games such as Avatar, Assassin’s Creed and Skull & Bones, “but they couldn’t pull it off with Mario + Rabbids this year,” he said.

In September, Chinese tech giant Tencent increased its stake in the company. Tencent invested €300 million in Guillemot Brothers Limited, taking a 49.9% stake in the family investment firm, which owns 15% of Ubisoft.

Source: Vandal