Ubisoft Shares Take a Hit Over Investor Unease

Gamers have nothing on investors when it comes to fast twitch muscles. 

Shares in major video game publisher Ubisoft took an over 7% hit on Monday after an investor with a less than 1% stake in the company published a letter suggesting it should go private and shake up its management. The fact that such a minnow of an investor could significantly dent the share price shows how on edge the sector is lately.

Still In the Game

Ubisoft is known for popular franchises including “Assassin’s Creed” and “Far Cry,” and recently released a big, blockbuster “Star Wars” game. But, as reported by The Wall Street Journal, its recent work has been plagued by delays and cancellations, and its share price is down 41% year-to-date. Although the games industry is suffering a crunch overall, Ubisoft’s share price is faring worse than most.

But shares jolting downward isn’t the only symptom of the gaming sector’s hair-trigger pessimism: 

• Last week, Sony (which owns PlayStation) shut down a game called “Concord” just two weeks after it was released. “Concord” was a live-service game, meaning its business model was based more on an attention economy and keeping players engaged in the game, rather than just selling copies.
• PlayStation spent eight years developing “Concord,” but negative reviews from gamers and poor sales prompted it to shut down the game. It shows the risk that game companies take trying to bank on an attention-economy effort.

“In the end, live services are a high-risk, high-reward venture,” Rhys Elliott, a gaming analyst at MIDiA, told The Daily Upside. Despite this, Elliott expects Sony to keep plugging away at live-service games. “It only takes one big live-service win to generate billions in revenue and unlock new audiences — two things PlayStation wants as the console business faces growth challenges.”

Big in Japan: In another bizarre move, Sony raised the price of its PlayStation 5 console in Japan by 19% at the beginning of this month. The PS5 is now a 4-year-old console, so bumping the price up is pretty unreal. Sony said the increase was due to “fluctuations” in the global economy. Why those fluctuations only hit its home country of Japan is a mystery.