Wednesday, November 8th 2017

Ubisoft's Microtransactions Surpass Digital Games Sales in Earnings

Ubisoft has announced on its latest Q2 financials that earnings from microtransactions have exceeded proceeds from digital game sales. Digital revenue increased by a very respectable 69%, but Ubisoft says that Player Recurring Investment (PRI), or the sale of in-game items, DLC, season passes, and subscriptions, increased by a staggering 83% year-over-year, being responsible for €175 million (~$202.6 million) earned during the first two quarters of the year. This amounts to a cool 51% of total digital income, which means that actual digital games sales earned less than DLCs and microtransactions.

Total sales across both Q1 and Q2 came in at €466.2 million (~$539.9 million), up 60% year-over-year, but that's hardly the key point to this story. The key point here is that while a company that heavily focuses on linear, story-driven, single player games has just announced a 25% reduction in its workforce, Ubisoft has just announced tremendous games seemingly on the back of microtransactions and DLC, or, as the company puts it, Player Recurring Investment. We can say what we will regarding the chronicle of an announced death for story-driven single player games, but one fact remains: players love microtransactions, even as there's a universal understanding of loathing towards them.

Sources: Ubisoft Earnings PDF, via Gamasutra, Ubisoft Earnings Presentation PDF
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16 Comments on Ubisoft's Microtransactions Surpass Digital Games Sales in Earnings

#1
StrayKAT
It's not the death of story. They just made too many games, as I commented in the TellTale thread.
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#2
Raevenlord
News Editor
StrayKAT said:
It's not the death of story. They just made too many games, as I commented in the TellTale thread.
When I say that, I'm referring to not only the layoffs, but Microsoft's announcement that single player, story driven games development is becoming increasingly less rewarding financially (they said that Games Pass-like subscriptions could be ways of funding these games). There's also the matter of new video game development philosophies (for honor, destiny 1 & 2, the division, anthem..), which have led to the cancellation of at least one announced game and the shuttering of one studio - visceral.

Also, your profile pic - Preacher? Awesome.
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#3
erixx
"one fact remains: players love microtransactions"

Fact of fiction? I must be weird, I know I am, lol, but I hate them.

A juicy DLC is one thing, and micro-stuff a whole other world...

Ah, and I got both The Division and Ghost Recon for free with two hardware acquisitions and I haven-t spend a penny ingame, not even looked into how that works.
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#4
_JP_
How to lose notion of something's cost/benefit ratio, the report.

Started with in-game cash, now micro-transactions aplenty. All mechanisms in order to make sure one loses track of how much money is spent in order to get the content. Splendid.

Well, I do vote with my wallet still. :)
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#5
john2001
Season Passes and a lot of DLC are not microtransactions. Interesting how Ubisoft want to report to investors it all pooled into PRI rather than separated out.
Posted on Reply
#6
StrayKAT
Raevenlord said:
When I say that, I'm referring to not only the layoffs, but Microsoft's announcement that single player, story driven games development is becoming increasingly less rewarding financially (they said that Games Pass-like subscriptions could be ways of funding these games). There's also the matter of new video game development philosophies (for honor, destiny 1 & 2, the division, anthem..), which have led to the cancellation of at least one announced game and the shuttering of one studio - visceral.

Also, your profile pic - Preacher? Awesome.
I see what you mean. If they go full gusto in that direction, I'll seriously get depressed. Video games have always been an extension of traditional competitive games, but my interest in them is in being extensions of literature and film. There's no future or artform to me if they're little more than just fancy ways of competing and socializing. Those are astronomically better in real life anyways. But it brings something far more unique as far as storytelling goes.
Posted on Reply
#7
erixx
john2001 said:
Season Passes and a lot of DLC are not microtransactions. Interesting how Ubisoft want to report to investors it all pooled into PRI rather than separated out.
yeah. Guilemot says the 2016 3-year plan is wow and ohaa!, but we are only halfway, so the graphic is just expectations.
Posted on Reply
#8
Chaitanya
Raevenlord said:
When I say that, I'm referring to not only the layoffs, but Microsoft's announcement that single player, story driven games development is becoming increasingly less rewarding financially (they said that Games Pass-like subscriptions could be ways of funding these games). There's also the matter of new video game development philosophies (for honor, destiny 1 & 2, the division, anthem..), which have led to the cancellation of at least one announced game and the shuttering of one studio - visceral.

Also, your profile pic - Preacher? Awesome.
That whole report sounds like death of one time purchase of games, for example just look at what Adobe did with Lightroom. This whole microtransaction/paid DLC/Cloud subscription model sounds like a ransomware more than anything.
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#9
HimymCZe
>I don't want to live on this Planet anymore.
Posted on Reply
#10
StrayKAT
Chaitanya said:
That whole report sounds like death of one time purchase of games, for example just look at what Adobe did with Lightroom. This whole microtransaction/paid DLC/Cloud subscription model sounds like a ransomware more than anything.
I expect other industries will be boycotted first before games. Designers can and will find a way to get an alternative. Especially if they're paying for it themselves. Gamers otoh are the most impulse driven. And some may not even value money and use parents' credit.

I almost hope governments get involved too, just to prevent the gambling type of exposure MT has on kids. This is going continue until game companies get hit. Gamers themselves don't have the sense enough to do it.
Posted on Reply
#11
R0H1T
erixx said:
"one fact remains: players love microtransactions"

Fact of fiction? I must be weird, I know I am, lol, but I hate them.

A juicy DLC is one thing, and micro-stuff a whole other world...

Ah, and I got both The Division and Ghost Recon for free with two hardware acquisitions and I haven-t spend a penny ingame, not even looked into how that works.
It's not fiction, a matter of fact, in fact. Ever heard of Travian, basically Travian was the template for all these microtransactions o_O

They're still going strong & a good number of adults spend their money on premium features/privileges unlike what many believe. Of course it varies from one game to another, but there's very little facts backing certain other assumptions that people associate with microtransactions.
Posted on Reply
#12
StrayKAT
R0H1T said:
It's not fiction, a matter of fact, in fact. Ever heard of Travian, basically Travian was the template for all these microtransactions o_O

They're still going strong & a good number of adults spend their money on premium features/privileges unlike what many believe. Of course it varies from one game to another, but there's very little facts backing certain other assumptions that people associate with microtransactions.
If adults are doing it, then I'd say it's more silly than people who buy all kinds of memorabila. At least that has lasting value. Buying pixels in a game that'll soon be dead? Not so much.

But they can do what they want. So long as they don't drag the whole industry down with them.
Posted on Reply
#13
Fx
john2001 said:
Season Passes and a lot of DLC are not microtransactions. Interesting how Ubisoft want to report to investors it all pooled into PRI rather than separated out.
As I read the story I also thought this.

As a consumer of DLCs and season passes, I don't even pay the full price for them because I always wait until huge sales of no less than 25% off, but usually found between 50-75% off on Black Fridays.

They never get their intended full price from me when trying to add to the experience of the base game when more often than not is content that should have already been included.

They are only spinning this to justify their practice of micro-transactions.
Posted on Reply
#14
kn00tcn
StrayKAT said:
If adults are doing it, then I'd say it's more silly than people who buy all kinds of memorabila. At least that has lasting value. Buying pixels in a game that'll soon be dead? Not so much.
there is no lasting value if the collector doesnt sell or show anyone the memorabilia, it's the exact same thing, they value looking at or having their object, whether it's physical or digital
Posted on Reply
#15
StrayKAT
kn00tcn said:
there is no lasting value if the collector doesnt sell or show anyone the memorabilia, it's the exact same thing, they value looking at or having their object, whether it's physical or digital
They may live on an island, but that potential is always there. i.e. "There's a market" for it. Even for grandma's knick knacks.
Posted on Reply
#16
FordGT90Concept
"I go fast!1!11!1!"
It's all about the whales: people that will spend thousands of dollars on a game through micro transactions and not even realize (or not care) they're doing it. Greater than 50% of the micro transaction revenue comes from about 3% of the player base.

I'd argue they're exploiting a behavioral pattern, not unlike a gambling addiction.


Edit: Found a case where a free-to-play dev got sued over microtransactions:
http://cdn.arstechnica.net/wp-content/uploads/2015/10/gameofwarsuit.pdf

The case was dismissed "saying the losses at issue involved virtual, not real money."
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