Ubi Soft Entertainment S.A.

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Ubi Soft Entertainment S.A.

28, rue Armand Carrel
93108 Montreuil sous Bois
France
Telephone: (+ 33)1 48-18-50-00
Fax: (+ 33)148-57-07-41
Web site: http://www.ubisoft.com

Public Company
Incorporated: 1986
Employees: 1,700
Sales: EUR 259.8 million ($239 million)(2000)
Stock Exchanges: Euronext Paris
Ticker Symbol: UBI
NAIC: 5112 Software Publishers

France’s Ubi Soft Entertainment S.A. is aiming for pole position in the world’s video gaming industry. The Montreuil-based company is a producer, publisher, and distributor of video games for every gaming platform—from Gameboys, to PCs, to next-generation platforms including the Playstation2, Xbox, Dolphin, and Game Cube. Ubi Soft has grown rapidly since the mid-1990s to capture one of the top 20 spots in the world’s gaming industry. Not content to rest, the company is gunning for a position in the global top five by the year 2005. Ubi Soft is already France’s number two games maker—behind Infogrames—and one of the top three European publishers. The company develops its own games with one of the world’s largest in-house production studios, publishes games developed by third-party producers, and acts as a distributor for other game publishers. Ubi Soft has more than 1,200 titles in print, and continues to develop new titles each year. The company’s software is generally grouped under the educational, cultural, and entertainment categories. The company’s early growth was fueled by the worldwide success of its Rayman character, which was launched in 1995 and which has helped the company sell more than six million copies of games under that title alone. The Guillemot family continues to own 30 percent of Ubi Soft, which is traded on the Euronext Paris stock exchange.

Brotherly Beginnings in the Mid-1980s

The five Guillemot Brothers—Yves, Michel, Christian, Gerard and Claude—were in their twenties when they took over their parents mail-order business in 1984 and formed Guillemot Informatique. The brothers originally oriented the business toward the distribution of hardware and accessories for the growing computer market in France. By the mid-1980s, however, the Guillemot family had recognized the importance of computer software—particularly as the computer industry neared full standardization of computer hardware platforms.

In 1986, the Guillemots set up a second company dedicated to the distribution of computer software. The young Brittany-based company had already become interested in entertainment software long before anyone ever dreamed that the video gaming industry would one day become larger than the motion picture industry. The Guillemots established Ubi Soft Entertainment S.A. in 1986. The company set out building up a distribution business, acting as a middle-man to bring foreign software titles to French retailers.

Expansion in the Late-1980s

By 1988, Ubi Soft had succeeded in attracting a number of important customers. Electronics Arts, Sierra, Microprose, Novalogic, and other early entertainment software leaders granted Ubi Soft the French distribution license for their titles. Soon, these companies had rapidly expanded their relationship with the young French company by extending their agreements to include international distribution contracts, as well. Ubi Soft not only imported and distributed games and software, but also began taking responsibility for adapting the software to specific language markets.

Ubi Soft established its first international subsidiary in England in 1989, launching Ubi Soft Entertainment Ltd. The company then quickly opened offices in the United States and Germany. The computer gaming market, however, remained restrained to a small but growing hard-core audience. While technology had come a long way from the original text-based computer games of the early 1980s, computers still were not powerful enough to offer the graphics, sounds, and music needed to help computer gaming take off with the general population.

Ubi Soft, however, was quick to recognize opportunities coming from other areas. The birth of a new generation of gaming consoles, taking over from such former game systems as the computer-like Atari and Commodore systems, sparked new industry in home video gaming. The new consoles by Sega and Nintendo needed a new array of software titles, and Ubi Soft quickly added such titles as “Star Wars: The Empire Strikes Back” and “Street Racer” to its distribution lists.

A Game Developer for the 1990s

A number of events marked the beginning of a mature video game industry in the early 1990s. An important step forward came with the birth of the Soundblaster computer sound card standard that opened new possibilities of music and sound on the formerly silent computer. The Guillemot brother’s hardware distribution business was to become a chief factor in the success of the Soundblaster standard, which in turn produced benefits for Ubi Soft. Another significant event was the release of the computer game “Myst”, which produced the first great hit for the video game industry and attracted an entirely new audience to computer games and video games in general.

Ubi Soft profited from the growing interest for the products it distributed. By then, the company was already preparing to transform itself from a simple distributor into a software production house. In 1993, Ubi Soft made a first step toward its goal when it acquired licenses from Sony and Sega to produce software for their video game platforms. By the following year, Ubi Soft had set up its own production house. The production house operated as a collection of studios, each of which were in charge of a specialized production area. In this way, Ubi Soft was able to keep up with the fast-pace of technological developments, while also developing strong characters for its games. The company also continued pursuing its international growth, opening distribution subsidiaries in Spain and Italy.

The Launch of Rayman in the Mid-1990s

Ubi Soft’s big break came in 1995 when it launched “Rayman”, its first company-produced title. Based around the title character’s mission to save the world, Rayman became an international hit, and also set the company’s tone for the next several years as a specialist in family and children’s software. Rayman and its sequels, developed for the full panoply of video game platforms, proved to be a lasting success for Ubi Soft. Rayman titles topped 6.5 million copies sold by 2001, and even formed the basis for the character’s own television cartoon series.

The success of Rayman enabled Ubi Soft to restructure its operations around its three areas of operations: distribution, publishing, and production. Ubi Soft also created a new organization for its software titles, grouping them under four principal lines: games, educational, artistic, and children’s. The company then took a leap onto the stock market, taking a listing on the Paris bourse’ secondary market in 1996.

1996 also saw the company achieve a new publicity coup. The widely publicized launch of a new Intel processor featuring so-called MMX Technology—which was supposed to enhance a computer’s graphics performance—was accompanied by a Ubi Soft title, “POD”, the first game to highlight the new technology’s capabilities. Ubi Soft achieved international recognition through POD, which would go on to sell more than two million copies for the company. Ubi Soft also produced another hit that year, the “Fl Racing” simulation.

Meanwhile, Ubi Soft continued to develop its international network, opening production and distribution offices in Canada, Australia, and, significantly in Shanghai, China—where the company soon captured some 30 percent of that country’s growing and potentially enormous market for video games. The company won another important license from Playmobil, releasing its first title under that brand name in 1998.

Ambitious Growth in the New Century

1998 saw an acceleration in Ubi Soft’s activity. The company opened a new string of production studios in New York, Casablanca, Barcelona, Milan, and Tokyo. It also launched distribution subsidiaries in the Netherlands, Denmark, and Belgium. The company signed a number of important new distribution and licensing agreements with such companies as 3DO and Criterion. Meanwhile, the huge success of Sony’s Playstation, the Nintendo 64, and the latest Sega, was helping to boost the company’s revenues. The company’s console-specific titles, including Rayman, Monaco Grand Prix and SCARS, came to represent nearly 50 percent of its annual sales.

Ubi Soft was also an increasingly international company—by 1999, nearly 70 percent of its sales came from outside of France. The North American market was also becoming more and more important for the company. By 2000, the United States market alone topped 30 percent of the company’s sales. By then, Ubi Soft had won another important round of licenses, including those for Batman from Warner Bros., Donald Duck and Jungle Book from Disney Interactive, and others. In that year, the company also launched a children’s television cartoon series based on its Rayman character. Adding to its international activities were the opening of a new production studio in Beijing, China, and a distribution subsidiary in Brazil.

Company Perspectives:

Ubi Soft’s aim: be part of the top 5 worldwide publishers in 2005; make Rayman one of the 10 most popular cartoon characters in the world in 2005. Ubi Soft’s ambition: spark your curiosity and desire to learn, take you beyond your dreams into these imaginary and yet incredibly realistic worlds … Invite you into this 360 degree-free world, which will quickly become yours. Ubi Soft strategic choices: the creation of innovative, quality software; creation and exploitation of strong brand names; the development of a major international production structure; the continuous deployment of a sales and marketing organization; exploration of the wide possibilities for expansion within the interactive entertainment market.

Ubi Soft’s growth enabled the company to move its stock listing to the Euronext Paris main board in 2000. By then, the company’s sales topped the FFr 1 billion mark, and Ubi Soft could claim a position among the world’s top 20 video game companies—an achievement made almost entirely through internal growth, as opposed to through acquisitions, etc. Yet Ubi Soft now set even higher goals for itself, becoming determined to top EUR 1.5 million in sales and to crack into the top five of the world’s gaming companies by 2005. In order to meet this goal, Ubi Soft finally set out on an aggressive—yet selective—acquisition drive, targeting companies to fill out its lists of titles.

In 2000, Ubi Soft made several important acquisitions—most notably, that of Red Storm, the games producer co-founded by Tom Clancy and a successful developer of titles based on Clancy’s written works. The Red Storm acquisition, which cost Ubi Soft US $45 million, also gave the company a strong new online gaming component. Other acquisitions followed, with the purchases of U.S.-based production studios Sinister Games, and role-playing game specialist Grolier Interactive, based in England. The company also developed its distribution network through the purchases of Italy’s 3D Planet SpA and Austria’s Gamebusters.

At the beginning of the new millennium, online gaming became widely tipped as the next major trend in video game entertainment, and Ubi Soft rushed to boost its own presence in that market. In 2000 the company launched a new subsidiary, Ubi Ventures S.A., with its mission being to provide capital and aid in the development of start-ups related to online gaming. The company, together with Guillemot Corporation, acquired a position in the online gaming platform Gameloft.com. Another investment was in Ludi Wap S.A., a company specialized in providing games for the growing number of internet-access-capable mobile phones. The company expected online gaming to provide as much as 40 percent of its total revenues by 2005.

Ubi Soft started the new century with two more important acquisitions—those of Germany’s Blue Byte, the country’s leading gaming software producer, and the entertainment division of the Learning Company, which brought Ubi Soft a strong list of some 80 software titles (including the rights to the Myst series). Ubi Soft’s sales topped EUR 250 million for its 2000 year. The company’s selective approach to acquisitions had given it a series of strong brand names, while also extending its catalog to include game titles targeted at every segment of the increasingly diverse video game market.

Still led by CEO and founder Yves Guillemot and his four brothers in 2001, Ubi Soft seemed likely to meet its ambitious goals for gaming dominance. By 2005, Ubi Soft hoped to boost its revenues past EUR 1.5 billion.

Principal Subsidiaries

Ubi Soft Divertissements Inc. (Canada); Ubi Soft Entertainment Ltda (Brazil); Ubi Soft Entertainment Inc. (USA); Ubi Soft Entertainment Ltd (UK); Ubi Soft Entertainment GmbH (Germany); Ubi Soft SpA (Italy); Ubi Studios Sri (Italy); Ubi Soft Entertainment S.A. (Spain); Ubi Studios SI. (Spain); Ubi Soft Entertainment (Belgium); Ubi Soft Entertainment B.V. (Netherlands); Ubi Soft Entertainment A/S (Denmark); Ubi Soft Sri (Romania); Ubi Soft Entertainment SARL (Morocco); Ubi Computer Software Co., Ltd (China); Ubi Soft KK (Japan); Ubi Studios KK (Japan); Ubi Soft Entertainment Pty Ltd (Australia); Ubi Ventures S.A.

Principal Competitors

The 3DO Company; Acclaim Entertainment, Inc.; Activision, Inc; Eidos pic; Electronic Arts Inc.; Hasbro, Inc.; Infogrames Entertainment S.A; LucasArts Entertainment Company LLC; Microsoft Corporation; Nintendo Co., Ltd.; SEGA Corporation; Sony Corporation; THQ, Inc; Vivendi Universal Publishing.

Key Dates:

1986:: Guillemot brothers create Ubi Soft Entertainment S.A.
1988:: Ubi Soft wins international distribution agreement from Sierra, Microprose, Electronic Arts, etc.
1989:: Company opens subsidiary in United Kingdom.
1994:: Company launches in-house production studios.
1995:: Rayman is launched.
1996:: Ubi Soft is listed on Paris stock exchange.
1997:: Ubi Soft releases POD and opens production studios in Shanghai and Montreal.
1998:: Production studios are opened in New York, Barcelona, Milan, Tokyo, and Casablanca.
1999:: Production studios are opened in Beijing.
2000:: Company acquires Red Storm (USA), Sinister Games (USA), and Grolier Interactive (UK); Ubi Ventures S.A. is launched.
2001:: Blue Byte (Germany) and Learning Company entertainment division (U.S.A.) are acquired.