MAY 14, 2015 • A year and a half after the arrival of the PlayStation 4 and Xbox One, Ubisoft Entertainment S.A. disclosed during a financial conference call that it is dropping development on the PS3 and Xbox 360. For the publisher’s fiscal year 2016 all of its AAA releases, with the exception of the Just Dance franchise, will be on current generation systems and the PC. For the fiscal year 2015, Ubisoft reported sales of €1.5 billion ($1.7 billion), up 42%. Four franchises – Assassins Creed, Far Cry 4, The Crew and Watch Dogs – collectively sold 30 million units on all platforms. The publisher’s digital revenue also saw growth, increasing 97% to €383 million ($435 million). Of that amount, €269 million ($305 million) was full game digital sales.
Impact: In its latest forecast, DFC Intelligence is expecting software sales for the previous generation systems will be down 50% in 2015. However, that only tells part of the story. PS3 and Xbox 360 software in 2015 is only expected to be about 15% of its peak and only about 25% of what is expected for the PlayStation 4 and Xbox One. Furthermore much of that will be driven by catalog titles, not new product. Ditching Xbox 360 and PlayStation 3 development is just another sign that core gamers are driving the games business. The days are passing when last-generation systems can be discounted and sold for years to many millions of mainstream consumers with significant publisher support.
Another important factor is the migration of casual console content to digital distribution through the PlayStation Network and Xbox Live instead of physical retail. So not only are core gamers driving console trends, the marketing mainstream consumers are exposed to reinforce the image of consoles and their software as hardcore products. The rise of mobile gaming has also had a major effect by drawing mainstream consumers away from video game platforms, which leads gamemakers to rely more heavily on the core segment. All of this leads us to wonder whether we will ever see as long-lived a console cycle as the one that ended in 2013. Core gamers simply have too huge a love affair with new hardware to speculate in terms of 10-year cycles if software support dies less than two years after a generation is supplanted. Is there a way to keep video game platforms relevant for the mainstream consumer? Nintendo hopes to lure them back with purpose-built mobile content, but that’s a hypothesis that has yet to be proven.