$400 million. $1.3 billion. $18 billion. These enormous numbers are examples of the kind of money that's flying around among the top two video game publishers as they try to buy their ways into the online gaming market.
So the rundown: EA bought social game developer Playfish in 2009 for $300 million plus a possible $100 million earnout, then this year bought casual game maker PopCap for $1.3 billion as part of its digital strategy. And while not an acquisition, in 2007, Activision merged with World of Warcraft
developer Blizzard in a deal worth $18 billion.
These deals made EA and Activision formidable forces in online and social gaming virtually overnight. But that's not how Yves Guillemot, CEO of Ubisoft, the fourth-largest games publisher by U.S. marketshare, wants to do things.
While the publisher makes an acquisition here
, Guillemot said Ubisoft, known for franchises like Rayman
, Prince of Persia
and Assassin's Creed
, is more about growing its online business
organically from within
, rather than through mergers and acquisition.
"We don't buy companies for $1 billion to quickly get in, but we understand the fundamentals that will help us to get in, and step-by-step we'll get there," Guillemot told Gamasutra in a recent interview. But the question remains if baby steps are enough to keep Ubisoft running with the big boys in the burgeoning digital space.
What's the background on your acquisition of Trials HD developer RedLynx?
As you know, we want to do more in the digital world, so we looked at all the best players, and this one was obvious. We met with them, and from the first meeting, we really saw that we could work well with them. We had the same spirit in how to create games, and making sure they're high quality, and taking the time they need to make them high quality.
When you look at competitors like EA, they're expanding digitally by making these giant acquisitions. What's your take on that approach? Are you going to grow organically from within, or through mergers and acquisitions?
We've always done the same, which is to grow a lot organically, but to also go outside to find competencies that we don't have -- or brands or technologies. So it's either people, brands or technology. And in this case, Trials HD
, the brand was fantastic. Not only the brand, but also the technology behind it, it's fantastic. The team was great as well.
What we need is to go step-by-step in all the segments of this market, take some groups that are really well-integrated within it, that have a really good brand, and we can look at how we might learn and continue to learn and make great products.
Ubisoft's approach in general, I've listened to you on earnings calls, you seem to be much more cautious about the way you approach the digital space. Do you feel looking back that you haven't been aggressive enough? You've got EA Origin, you've got Battle.net, Call of Duty Elite, those types of online services coming from your two major competitors.
Sure. I think what counts is where we will be, compared to what the others are doing today. What we know is that in the pipeline, we have what it takes to be very successful in this area. So we don't buy companies for $1 billion to quickly get in, but we understand the fundamentals that will help us to get in, and step-by-step we'll get there.
So do you feel at all that you're a little bit behind the curve on that?
No, we think we are right on track with our strategy to make sure the teams are ready, learning, and use all these new possibilities in their games. So we don't buy a company or work with a company to create [sales], we actually work from within the company, so that all of the games can take advantage of this revolution within the industry. [The revolution is based on] socializing, on top of [metrics] tracking, and the fact of being connected more and more. Those things are really a revolution for the industry, but we need to use that in all the games we create, not only games from companies we acquire.
You're an advocate of the "socialization of triple-A games." Can you expand on that?
The idea is that triple-A games can really benefit a lot from the revolution that's happening around us. At Ubisoft, we already have games on the way that take advantage of asynchronous gameplay, the fact that you are connected all the time, and the tracking system that can actually give an experience that is more adaptive to each player, and also to his friends. So we can give the gamers the possibility to play alone, but also with his friends if needed.
The task of our developers is to give challenges that will ask him to get his friends together to achieve a goal. For example, what I see is the triple-A business, with this revolution that is on the way, can become even more interesting for players, and closer to real life, because people you have around you will be real friends, they will be there.
The other element is using the fact that you're connected and have many platforms that will allow players to play from where they are with their friends, before going back home to play again. It's to use all those devices to give a better experience to players.
I can definitely see something like that for a game like Ghost Recon, which is inherently a connected, online game. But something like Assassin's Creed... does the console, triple-A version of Assassin's Creed that's mainly bought for the single-player experience need to be socially connected like that?
It depends on the challenges you give the player. Imagine you have to decrypt a language. You're in a world, there's a language, so it's either a language that has been decrypted by specialists, or it's a new language that we've created that's to be decrypted that needs a certain number of competencies. If you decrypt the language, you will be able to discover a place in the world, and discover treasures and different civilizations.
If the group is capable of decrypting that -- you can still play normally [alone] -- but you can do it with friends who can help decrypt it. And then they can take advantage of this, to go and fight other groups.
We can stop being alone when we play, and play with friends who prepare something to help you succeed. And then that group who wins can be against other groups that will have other advantages and influences. The potential is just infinite of what can be done.
I'm not sure how familiar you are with Demon's Souls, but it's one of those games where people are all connected, but it's still a single-player experience. People drop hints in the world on how to progress through the game.
Yeah, you have a mission, you see that you'll be better with friends. Your friends hear about your problem. They give you information on the map or something. You have your own experience, but you are together with your friends. They are there.
Moving on from that. Ubisoft is known for investing in new platforms very early. You did that with the Nintendo Wii and DS, and that did very well for you for awhile. And then I think you guys were surprised when the bottom fell out of it so fast. Will what happened there influence your plans to support the Wii U?
What it depends on is if we believe in the machine. We are big believers in the Wii U, on two subjects. One is for high-end games, where we'll be able to do a game for the Wii U, but also for other machines, but also with specific use of [Wii U's] tablet. And also the Wii U for all the casual games.
Today, the Wii still is 45 percent of our business. Just Dance
, all those casual games, are selling extremely well. So we are supporting the machine because we believe Nintendo is going to push it to another level. We think it will be successful.
Now to [what audience] will it be addressed? We don't exactly know yet. But the potential of the machine, and the tablet, I think is a good way to improve the potential gameplay. What we saw is the ease of play is also a part of the revolution we are seeing today. The fact that it's easier to access games is what can make more people play. Maybe they can do a good job there.