At 12% of total revenue, digital games are no longer an afterthought at Ubisoft (interview)

Ubisoft, the big French video game publisher that makes games such as Splinter Cell: Blacklist, has been through the ups and downs of several generations of digital games now. It has had to cancel its Ghost Recon Facebook game, but it has had increasing success with digital features of its blockbuster games such as Assassin’s Creed.

Chris Early, the head of digital publishing at Ubisoft, said at a press event that Ubisoft’s digital revenues grew 86 percent in 2012 and now constitute 11.7 percent of total revenue. About a quarter of Ubisoft’s worldwide staff now works on digital titles, and every new console game now comes with a lot more downloadable content or companion apps. On top of that, Early is encouraged that digital versions of games, such as the wacky sci-fi Blood Dragon add-on for Far Cry 3, have become much more creative. Spartacus, a free-to-play downloadable game on the consoles, got more than 4 million users in two months. On the downloadable platforms for Xbox Live Arcade and PlayStation Network, Ubisoft was the No. 3 publisher.

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He said that retail game sales are not going away. But Early declared that at Ubisoft, digital is “no longer an afterthought” and the day is coming when 50 percent of Ubisoft’s revenues will come from digital games. We caught up with Early at Ubisoft’s recent Digital Day event in San Francisco. Here’s an edited transcript of our interview.

GamesBeat: You started out with some baby steps into digital games, and then you did the companion gaming initiative in 2010. Is there a new stage that Ubisoft has entered in digital?

Chris Early: I don’t know if there’s a name for it, but the way I characterize it internally is that digital used to be an afterthought. Now it’s more central to everything we’re doing. It’s thought of in the design process, in the marketing execution, in the ongoing customer relationship. To me, that’s a huge success when I think about where we were a few years ago compared to where we are today. It’s much more mainstream within the company.

GamesBeat: You seem to have learned some things. You tried out Facebook games and moved on to mobile. You’re trying to figure out what works and move forward.

Early: I can’t say this is new within Ubisoft, because they’ve done this for years, but the good news is that having the number of studios that we do allows a fair amount of trial and experimentation. Not all of it works. There is a strong initiative, though, to take those learnings and codify them and make them available for all the studios. You mentioned Facebook. That’s a lot of what we’ve done with the Facebook side of things – seeing what’s worked there and what’s not worked there.

That gave us a leg up on Spartacus. It’s giving us a leg up on the design of some of the free-to-play titles we’re doing on mobile. Trials Frontier is based on a lot of the learnings we have from those games. But it’s not just on the monetization mechanism, either. Even looking at games that have gone and not done so well, they provided a springboard for a platform. The Ubiart Framework is a great example. It started off relatively small. We realized it was something we could use it as a design tool. Now it’s a game engine that makes it much easier to makes games express our creativity.

GamesBeat: Is it fair to say you guys are still waiting for your breakout hit in digital? EA had that last quarter with 79 percent digital revenue because of The Simpsons: Tapped Out. Then there are things like Minecraft. Other folks have had some spectacular hits.

Early: I’m proud of some of our efforts. They’ve not been home runs on the Minecraft level. It’s great for me to hear, on Spartacus, that both Sony and Microsoft say it’s the best-performing free-to-play title that they have. Trials Evolution has been one of the top XBLA titles for a while. We have big plans for how to expand that franchise as well.

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I know, inside, that I want more. I want us to deliver more to our players. It’s a mixed bag in there. It’s great to have that acknowledgement, but it’s not where I want us to be. I don’t know whether I want to say it keeps us humble, but we’re solidly producing games. We’re going to keep doing that.

The closest thing, I would say, to a home run is the change in unit distribution we did for Assassin’s last year. That’s not just digital, but from an overall standpoint. It became a major franchise at that point. The fun side of that on the digital side is that when we look at Black Flag, there’s a lot more digital content planned around Black Flag, whether it be consumables or add-on content or the way multiplayer is being managed. Digital is riding along, sometimes, on the success of other franchises.

GamesBeat: You disclosed those figures, with digital at 86 percent growth last year and 11.7 percent of total revenue now. Do you have particular targets you want to hit for the percentage of revenue that’s going to be digital?

Early: No, we don’t approach it that way. We have projections for what we think we’re going to do from a financial standpoint, to help us run our business, but it’s less about trying to move market share one way or the other. It’s more about being in a place that makes it convenient for our players.

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We’ve done day and date digital already on the PS3 and Vita and with some of the Nintendo and PC things. It really varies, the percentage of people that will go for it. We’ve guessed wrong a lot. Vita ends up being significantly more for digital delivery than we expected. The first time we did it on PS3, we thought it was going to be 10 or 20 percent, and it wasn’t.

I have some ideas as to why that is, and that’s also why I think that retail experience is not going away. The platforms have to solve a couple of problems first, especially when you’re talking about games that are measured in gigabytes. I would say that gamers are not the most patient people, overall. While it may take almost as long to drive down to the store and bring it back, you’re doing something there instead of just waiting for a download to happen.

When the platforms get to pre-caching games and making sure they’re there for delivery, that will tip more toward digital distribution. When there’s broad bandwidth availability throughout the world, wherever the consoles are installed, that will tip it a little more. There are places in the United States that still have terrible connectivity. You could order from Amazon quicker than you can download in some parts of the U.S. [laughs]

GamesBeat: If you look at all the digital strategies in the market today from all the game companies, what are you learning from them? What do you see out there that people are doing?

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Early: What we’re trying to do, that I see some other people doing, is making it an integrated approach. It’s not either-or. That’s why I’m so pleased with the companion experiences we have. It’s an extension of how you’re playing and that engagement you have already. In the past we had mobile games that were based on the Assassin’s franchise, so if you’re an Assassin’s fan, it’s great to be able to play in the milieu. But it’s unrelated.

The ability to carry it on—That’s how people act. When it’s baseball season, people talk about the Giants, or the A’s this year. That’s a topic of conversation. They’re involved. It’s not like, “I want to talk about baseball, but not my team,” or “Let’s talk about last year’s team.” It needs to be correlated. That’s what we’re getting to. It’s a big focus inside the company, allowing people to extend their experience. And not just extending on a time basis, but extending on a world basis. There’s a lot more of our games that are open world, where you have the ability to explore and play and not just get involved in scripted action.

GamesBeat: It’s interesting to see some strategies from people who have started out spreading everything across all platforms – especially larger companies – and now they seem to be honing in on particular platforms that work. EA is doing iOS exclusives for who knows how long, like Plants Vs. Zombies 2. They went that route on consoles, too, with exclusives for Microsoft. Is Ubisoft at that stage as well, where you’re just focusing on the platforms that work?

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Early: We absolutely do focus on platforms where there’s a known market. But not to the exclusion of new platforms and new ventures. Ubisoft has a long reputation for being experimental. You look at how much we had on the Wii U. You look at how early we were on Kinect. You look at where we were on 3DS. We bet big on new platforms. How do we make an Ouya game? We were on Android. We talk to a lot of people about lots of things. Sometimes it doesn’t work out. Sometimes it looks like we’re geniuses because we were there at the right time.

The genius is that we’re doing a lot of things on all kinds of platforms. We’ll continue to do that. In the day to day business, as we look at where we apply the bulk of our resources to develop, it’s a business decision. Is there an audience? Is there adequate distribution? Is there buying behavior?

GamesBeat: Some of these look like brand-new IPs on digital. Valiant Hearts — is that one of them?

Early: Valiant Hearts is a brand new IP. What you’re seeing, probably, and one of the things we’re looking at highlighting today, is that there are triple-A brands Ubisoft has that are doing amazing things digitally. And there are equally unknown, unheard-of IP that are someone’s creative passion. From my perspective, it’s great to see a company that can foster that. Ubi can say, “You can be as creative as you want to be. Build your passion. You don’t have to do that somewhere else. You can do that within a company that provides you with the support systems here and still make that creative game you want to make.”

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GamesBeat: And you can also pull out these old IP and make them seem new. Dust off the old favorites that people have come to miss.

Early: Right. It’s different than just dusting off, though. We’ve definitely done that with PC back catalog sales or whatever. But most of the things you’re seeing here are reworkings of old IP. Endwar is faithful to the concepts of the original Endwar, but now it’s a massively multiplayer game where there are lots of people playing together. Might & Magic: The Duel of Champions takes some of the most beloved factions that people have played with over the years and puts them into a card game app. It’s a mechanic that people know and enjoy. The IP is set up unintentionally well for that, because of the breadth of characters and factions.

I would classify that more as, we look on a constant basis at the IP that we have. Have we done work on them? Have we created a lore around them? Is there a bible on it? Will they work with an existing or a new mechanic to bring that back to players?

Panzer General is a great example, doing Panzer General Online. That was a great game by SSI for many years. Then it went away and nothing was happening. We did an arcade game, which did okay, but not ideal. Now, the current execution is great.

GamesBeat: A lot of these reimaginings seem to be in the areas that are working well, like card games.

Early: Part of what do is, whether it be with Ubiart or with the card game engine, when something is working, where do we go from there? How do we leverage that? That’s just good business. Far Cry Blood Dragon used the Far Cry 3 engine. It’s kind of overkill when you think about it from an arcade game perspective. You wouldn’t go out and develop a whole engine to make an arcade game. But now that we have it, you can make that game pretty easily and it ends up being a lot of fun.

GamesBeat: There seem to be areas where you could make some more calculated moves, into things like user-generated content or e-sports. What is some of the thinking in these kinds of areas that could be hot?

Early: We’ve flirted with eSports over the last year. We did a lot around ShootMania with IPL and some other partners. We’ve been doing things with Duel of Champions, a lot of physical events at GenCon and PAX and the whole Paris tournament. The learning that we’ve seen there has brought us to create The Next Level.

I would say that our titles aren’t structured, today, to be super hardcore eSports competitive. They’re not going to be popular at that level. Yet there are plenty of fans for each of these franchises. The concept we’ve come up with – this decathlon of gaming side of things – tends to make it approachable. I could never go compete in eSports. But I might be able to compete at this type of level. I might be able to dance better than the guy who can play Assassin’s multiplayer. [laughs] So that’s a little bit about how Ubisoft has gotten involved in the eSports space. A lot of that has come from where we’ve grown.

Mobile is another one of those spaces. The world mix of free-to-play versus premium games is like 90-plus percent free-to-play, probably. We’re still closer to 50-50, because some of the things our studios know how to do are more along the premium lines. Those games make money. They’re good games. You’re seeing us move toward that.

You also probably know, from watching Ubisoft for a long time, that we’re not a huge acquirer of companies. A lot of our focus has been on how to build that expertise internally. That tends to make us a little slower sometimes in some spaces, if it’s not something we were working on already.

GamesBeat: You have mentioned that your triple-A console game designers are sometimes jumping across genres to do something totally different. Are there a lot of those examples?

Early: Yeah. The team that did Valiant Hearts is a combination of people who had been working on a bunch of hardcore games, like some Rayman level designers. They’re doing a game that’s focused on five people’s struggle through World War I. It’s a grim topic, but they’ve made it fun. It’s historically accurate. There are elements of many of these people’s personal histories in there. Some guy’s grandfather’s actual dog tags are in there. It’s a small team making the game, maybe 20 people. So there’s a bunch of those examples inside Ubisoft.

That’s not to say we aren’t still making Assassin’s and these other top-line titles. But the freedom is there, so that when people come and pitch and want to make something, they’re able to do it. Endwar Online came the same way. The Shanghai studio said, “Look, we think we can do something with this. We have the IP.” They didn’t have an engine for it, but they had a strong belief that they could do something, and away it went.

GamesBeat: It certainly seems like you have the volume and variety of activity going on in digital. The degree of experimentation that Ubisoft does seems to exceed that of other folks. Maybe they keep what it’s doing hidden, but Activision is down to three franchises now.

Early: The plus and the minus is that they don’t look like they’re failing anywhere, either. Maybe they do a bunch of things – I know we do. But I think that comes back to the learning process. It helps our studios grow.

GamesBeat: What’s your opinion of cloud gaming?

Early: A lot of what’s gone on has been thinking about cloud as a distribution mechanism. In many cases, part of the failure for that is, there haven’t been that many players. I have a good gaming PC. Do I really need a dumbed-down PC to play through the cloud? The bigger opportunity, where we have some design teams working, is where you think about having an unlimited amount of processing power in the cloud, to deliver a better experience.

What if, instead of having just a few cores in an Xbox or a PlayStation 4, you had 40 cores in the cloud working on creating gameplay for you?

GamesBeat: Like the cloud processing idea Microsoft has floated with the Xbox One.

Early: Yeah, where you talk about parallel computing from a gaming perspective. What if you had the equivalent of two or three PCs running your AI? How much more intuitive or more random of an AI could there be?

I’ve played games where it’s like, “Okay, I know what that guy’s gonna do now. He’s coming around that corner. I’ll get right around here. That’ll work every single time.” What about when there’s enough processing power to let that AI figure out, “Okay, don’t get caught around that corner”? Or when you start to have personality-based AI, where it takes a lot of processing power to render a decision. What the AI actually does looks similar to what’s going on today, but it’s the decision-making process that has to go on – plus weather and environment and interaction between players. It opens the door for the massively-multiplayer-affected world. Now you can afford to keep that type of data ongoing. That’s where I see huge opportunities for making games better than they are today.

GamesBeat: That’s interesting, because I wasn’t sure yet whether anyone was taking Microsoft up on that suggestion. It looks like it’s one of those still-to-be-realized advantages of the cloud.

Early: It takes a different design perspective. It takes a game that won’t run offline. There’s a risk with that as well. You’ll have to play in an environment that is only available online. Nobody has a problem with that when it’s World of Warcraft. The rest of the packaged goods industry has to battle that on a regular basis. So we’ll see. Maybe it’ll only be online games and multiplayer games that start doing that. But we’re looking at what we can do there and how we can use that power to deliver that.

When you think about it from a game design perspective, it lets worlds continue to exist and evolve. We do that in a broken way today. You play a game on your Xbox. You come back tomorrow. The system looks and says, “So many hours have passed, I’ll advance the game like so.” But it’s brute force. You get 10 hours of deposits into your bank account or whatever it’s supposed to do. There’s no real “happening” happening while you’re not there.

What this opens up, not only can the world evolve, but in a multiplayer adversarial environment, where you have enough control to code your defenses, it could play a decent defense for you. You’ll feel like you aren’t going to get victimized just because you’re offline.