Ubisoft has established a strong market position in the gaming industry over the years. According to the group, it is the third independent video game publisher in the UK video game market. In the third quarter of fiscal 2015, Ubisoft was the third independent publisher in the US and Europe with a market share of 10.1% and 14.3%, respectively. In addition, the group has strengthened its presence in social media and gaming communities and has built a customer base of millions of fans on Facebook and 74 million players through the online distribution and services platform Uplay.

The group operates in 30 countries in North America, EMEA, and Asia Pacific. Ubisoft has established a wide distribution network thanks to its strong international operations.

The Group's international operations are managed by local subsidiaries that develop and market products based on local preferences. The group also offers direct distribution via Uplay, a digital distribution, digital rights management, multiplayer and communications service. The group has grown into a major worldwide distributor and marketer of video games due to its global reach.

Growth through acquisitions

Ubisoft solidified its leadership position in the gaming industry with its inorganic growth strategy.

In 2013 the group acquired THQ Montreal and two companies specializing in free-to-play games, including Digital Chocolate and Future Games of London. These acquisitions enabled the group to develop and distribute casual games for mobile phones and social networks. Its 2011 acquisitions include Owlient, which specializes in free-to-play games, and RedLynx, which specializes in downloadable games. These acquisitions were in line with the group's strategy to establish its position as a creator and developer of online games. with the same strategy. These include the Nadeo studio and the Tom Clancy name and Massive Entertainment studio for video games and ancillary products. Previously, the group had acquired Red Storm Entertainment and Blue Byte Software. These acquisitions have made Ubisoft one of the leading independent publishers.

Weaknesses: -

Dependency on console manufacturers

A significant part of the group's business comes from selling video games for consoles. Ubisoft purchases cartridges and game media from console manufacturers such as Sony, Nintendo, and Microsoft. Procurement is subject to prior approval of manufacturers, adequate production of these media and determination of royalties. Any change in manufacturers' terms of sale could have a significant impact on the group's results. Console manufacturers are major players and market leaders in the games market and therefore have higher bargaining power compared to Ubisoft, increasing the vulnerability of the group's revenues and operating margins to the supplier's business policies.

lack of scale

The group lacks scale compared to its peers operating in the same industry. The group recorded revenue of 1,007.1 million E1 ($1,349.7 million) in fiscal 2014. By comparison, Activision Blizzard recorded revenue of $4.408 million in fiscal 2014 (the year ended December 2014). The group also reported negative activity and net margins in fiscal 2014. Ubisoft had a negative operating margin of 9.7% and a negative net margin of 6.5% in fiscal 2014. By comparison, the group's competitor, Activision Blizzard, posted an operating margin of 26.8% and a net profit of 18.9% in fiscal 2014.

Opportunities:-

Strong growth in the mobile game market

The mobile gaming industry is expected to see strong growth in the coming years. According to industry forecasts, the mobile game market is expected to grow at an annual rate of 27.3% and reach $24 billion by 2016. paying mobile player. The tablet games market is expected to grow fourfold by 2016, reaching $10 billion. Also, Western Europe, North America and Asia Pacific are expected to remain the most attractive markets for mobile game publishers.

Strong growth in the gaming software market

The global gaming software market experienced strong growth in 2013 and is expected to continue to grow strongly during the forecast period up to 2017. According to MarketLine (a unit of Information), the global gaming software market expected to grow at a compound annual growth rate (CAGR) of 4% in 2013-17 and reached $34.6 million in 2017.

Increased presence in emerging markets

Ubisoft opened a new Russian branch based in Moscow in October 2014. Through this, the group aims to provide community development and support to Russian customers and to work closely with partners to drive marketing and sales growth in the emerging Russian video game market. The Russian market continues to expand across almost all formats and platforms. According to industry forecasts, the online gaming market is booming and is expected to grow by 20% by 2016.

Threats:-

Intense competition

Ubisoft operates in a highly competitive interactive software industry. Competition in the entertainment software industry is based on innovation, features, gameplay and product quality; brand name recognition; compatibility with popular platforms; access to distribution channels; price; marketing; and customer service. The Group competes with existing and emerging entertainment software and hardware for adequate shelf space and promotional support.

Tech changes and migration to console platforms

The rapid technological change in the gaming industry, coupled with transitions in console platforms, can impact the group's performance. The group's market is characterized by rapid technological changes, evolving industry standards, frequent new product introductions, and short product life cycles. New products offered by Ubisoft may not receive a significant market acceptance or may not generate enough sales to cover development, production, and marketing costs.

Growing software piracy

Ongoing piracy issues continue to affect the growth of gamers in the entertainment industry. Unauthorized copying of Ubisoft titles and reverse engineering of products will allow the reproduction of group programming techniques and the creation of similar competing products.

Find a SWOT analysis of the Ubisoft game company.