Business of Esports TV: Ubisoft Free-to-Play

(Podcast #131)

In this segment, we discuss Ubisoft investing in free-to-play games despite warnings of a revenue drop.

The Business Of Esports brings you news, debates, and all the information you need to know about the gaming sector, the world’s fastest-growing market. With Paul “The Profit” Dawalibi leading the charge, and a variety of special guests, BoE TV is the only place to find insider information on the esports industry!

Check out the full podcast here:

Paul Dawalibi 29:15
And it the headline here is Ubisoft invests in free to play games, signals, profits might fall. So they warned us off warned that their financial year that their profits might fall this financial year, and that they may look to create new, free to play titles. So, you know, they have some existing free to play games. But they’re there their view and I’ll just read this quote directly. It’s now time to come up. With high quality Free to Play Games across all our biggest franchises, across all platforms, but of course it will take time. So I think there’s this interesting. And this you keyed in on this right away, William, and so I’m just going to borrow your sketches from me. Yeah, there’s this interesting dichotomy here of, you know, warning about profits falling, but then simultaneously saying, we want to do more free to play. Can you explain how this how we reconcile those seemingly? Two things that are opposing?

William Collis 30:33
Yeah. Because if you think about it intuitively, like, Can you imagine a company 10 years ago saying this, like, oh, we’re not making as much money, the solution is to give more stuff away, right? Like, it’d be like, like, if this were, you know, back in like the, you know, early 2000s, you’d be like, I’m really worried about that. That seems like a terrible management choice. But two things. One is, it shows I mean, it’s so many things, right. One is it shows the power, how commonly accepted free to play as as a business model today. And how, basically, clearly assumed it is in the industry, that free to play is a path to high revenue is not, you know, giving away quality games. Right. So it’s really interesting in that regard, right? Is, it shows you companies being forced to migrate more and more free to play? Right? Because the interesting thing here is, this isn’t like, if it were the scenario where profits were record, and so we’re doing more free to play development, you know, you can’t like it wouldn’t have the same impact as this is a solution. Like basically, the companies that are all doing well, right now have very significant Free to Play staples. And the companies that maybe are anticipating San Luis, I think, isn’t doing very well, it’s a great company. But like, if they’re anticipating a profit fall, like they’re almost being forced to do more free to play to combat that. So essentially, the mechanism is there to push free to play more and more. You know, the third thing I would say is like, it is interesting how many large, successful publishers still don’t have the suite of free to play titles that you would think makes sense, given these two trends we just described, right? Like, looking at Call of Duty, like Call of Duty did not have free to play until, I mean, what was it this year? last year? Right, basically, last year, a year? year and a half, maybe year and a half? Yeah. I mean, that’s crazy. That is crazy. And think of all the amazing games that will be I mean, amazing games. I mean, I can just tell you, it’ll be so stands out my favorite titles of all time, you know, marriage is marriage was the isolations those dice, but they did Prince of Persia, right, which I just to this day, I absolutely love that title like

Paul Dawalibi 32:44
Assassin’s Creed. 655.

William Collis 32:47
Yeah. Like 1000, Assassin’s Creed, which I know is, you know, maybe not, but like, they make brilliant games. Right? And Isn’t it crazy? That I mean, actually Assassin’s Creed? Isn’t it crazy that there isn’t a free to play Assassin’s Creed offering in this day and age? Right? Like, it’s crazy. That seems crazy to me. Because I know what you’re gonna say, Oh, it’s a single player experience. It’s narrative driven. Those games don’t have that too. And the answer I would have to that is, then look, your property Assassin’s Creed is not like, it’s so much more than just a narrative driven historical game, right? It’s a it’s a consumer base. It’s a it’s a larger world. It’s also like a style of gameplay. And I, I can’t imagine that not working well, in a free to play model if you’re smart. And you think expansively about the title and what it can do. I mean, if you have a property that can tell stories in the future, in ancient Rome, and in Viking lands, I think you can figure out how to make some of that free to play somehow, you know, you already have a pretty expensive flexible IP there. And look, I mean, as as much as I hate to say it, like I think and this is a weird example to cite. But even if you want more narrative driven games, I think Grand Theft Auto and the success that’s happened there with GTA Online, points to how narrative driven games can still have a second life of put up with a post monetization model that looks more like free to play. Right.

Paul Dawalibi 34:18
Yeah, I think part of it is just they need to tell the story, right? Because you have, you know, EA that crushed their earnings call. Right. And a lot of they, the one thing they focused on more than anything was the growth in Apex yet, right. And so if you’re Ubisoft, you’re going and you’re looking at going well, we have to say we’re doing something there too, right. Yeah. You’re sort of forced to play along because you’re seeing your competitors have success with free to play. I sorry, go ahead. Yeah, no,

William Collis 34:47
and I think it’s interesting that like, that’s the forcing mechanism in the market today to free to play like I know, I said that before. I think it’s so fascinating. That like that’s the world we live in that like publishers are being made to migrate more more to this model. So I hope people like free to play because I think it’s just, it’s, it’s it is it’s not just the wave of the future, it is the future anyway, keep going, Paul. Sorry.

Paul Dawalibi 35:09
No. The second point I was going to make is, and I know, I’m gonna get some pushback from you, but it’s one of these situations where people want to go after sort of the easiest, or people want to get very cute and clever with the explanation. Right. So yeah, you know, growth is down, profits are down. But, you know, it’s, we will, it’s, we’re gonna fix it, because we’re gonna do more free to play. And this is the future, right? And the future and no one sort of just sat back maybe and said, Could it be not because of business models or anything else, but just because you soft, really hasn’t made a very good game in a while. Right? Like, maybe there’s a simpler explanation here, that has nothing to do with business model that has nothing to do with free to play. And they’re looking for sort of a fix. And going yeah, we’ll just do a lot more free to play. And I just as a, you know, if I’m an investor or potential shareholder looking at, you know, am I going to buy Ubisoft stock? I’m going, I don’t know if that gives me comfort that they’ve solved the real problem here. Well,

William Collis 36:13
well, but let me I am going to push back first. So I don’t know if I agree with the statement. They haven’t made a good game recently. Like, but let let for the sake of the argument, we want to make care, because I think this is, this is interesting. Let’s just say that’s true. Let’s say your opinion is true. And Yep, Ubisoft the Assassin’s Creed titles are just too similar to each other. There’s consumer fatigue, right? Something like that. Right? Yeah. Could you argue and I think it’s kind of interesting that part of the reason may be why there’s some struggle there is because the games themselves weren’t free to play to begin with. And, and, and let me like, unpack that a little is, I think it’s very difficult to separate game design from game monetization, right? Like, I think you have problems in game world when games are developed. And then people figure out how to monetize them later. Right? Like, yep, games work, when their monetization schema is, is fundamental to the development that precedes in the title itself, right? So maybe the fact that they’re on an older monetization schema, when customers want a free to play experience that lets them sample more, that lets them have more customizable content that maybe offers more self expression, because let’s be honest, like cosmetics are such a huge piece of the Free to Play business model. Like, couldn’t you argue that features that you think are maybe missing from Ubisoft titles today are missing because they started from a premise of it’s a $60, retail box copy? And not this needs to be a long term persistent, you know, microtransactions driven experience. Like, I’m not saying I know, people don’t like microtransactions. But like, they lead to a style of game development that I think a lot of people like today. Like I think I it’s weird to say, but like, I think whether that’s because we’re used to it, or because it’s better, or I don’t know, but I think people like it.

Paul Dawalibi 37:59
I mean, I like the argument well, because I think it’s sound, but let’s take it to its next natural extreme here. Like let’s let’s like run it to the end of the course here. Not like which is okay. Yeah. Which in my mind is okay. What you’re basically saying is, if we make it free, people will have lowered expectations, and therefore subpar games will seem good in comparison. sort of thing, right? Like that’s like, like, the the 15,000 Assassin’s Creed game, if it was free to play might have been better received? Because it was cheap. Well, no, free No,

William Collis 38:41
no, I like I that’s not the argument. It’s not that free. There’s a lower perception of quality so your game as to clear a lower bar. I think it’s it changes the perceptual space, a game exists in a more fundamental way. So let me use the example of Assassin’s Creed. And again, the argument that which I’m not sure I actually agree with but let’s just take it on premise that the Assassin’s Creed’s are too similar to each other, you’re on, right? Would you feel differently about it, Paul, if there was just the assassin universe, right. And every six months, they were announcing a new historical period for you to go to you could purchase it as a 499 pack with story expansions and alternate playable assassins, and it adds up to $100 instead of 60. But like, would you maybe instead of saying the games too similar to each other, maybe you’d say Oh, it’s so great how there’s a new content. So fresh, building the content, so fresh. I love the way I was in Rome last week, and now I paid five bucks, and I’m in Greece now or I’m in you know, valo Hall or wherever. It’s

Paul Dawalibi 39:42
an interesting thought. It’s a good argument.

William Collis 39:44
Like the point I’m making is like, literally like, this precept, like you could say, like, you could argue that I’ll go back to Grand Theft Auto Online, which is, you know, the example I kind of hold up for the narrative driven parallel here like, you could argue like, that’s been the same game for like, three console cycles, but because of how its presented, and because of how snackable it is, it doesn’t wear out its welcome in the same way. And in fact, the similarities are a positive, because people can drop in, come back re consume, right. And the familiarity there. It’s like, it’s the same underlying fabric that’s providing a consistent experience, which is, so again, I it’s a weird argument to make. But I’m saying I think if the game were positioned differently, you might feel differently about it.

Paul Dawalibi 40:30
It’s a good point. And by the way, shameless plug here. Williams book, the book of Esports has a ton about business models and games, and how the two things are tied together. So make sure you go read that and and leave a review on Amazon guys, because it is it does give you structure to think about some of these conversations we’re having, which I think is interesting. And these conversations aren’t going to go away. Right? Like we’re gonna see a ton of changes innovation, I think in business models, where I think, to Williams point I think we are going to see more and more studios move to free to play because everyone’s just, you know, you just look at the guy next door seeing it work, you’re obviously tempted to do it yourself. And I think there’s pressure, especially for public companies like Ubisoft, to emulate what the success stories look like.

William Collis 41:21
Yep, completely, completely.