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Ubisoft Reports $117M Loss On Sales Drops, Catalog Discounting

First-week sales of Assassin's Creed 2 were up 32 percent over its predecessor -- but even though Ubisoft had increased revenues on new games, retailer discounts hurt its back catalog and led to a $117.16 million loss.
With first-week sales of Assassin's Creed II up 32 percent over the previous title, Ubisoft says the game is likely to beat expectations -- but for the first six months of its fiscal year, the company reported a €78 million ($117 million) operating loss. The loss, which comes alongside sales of €166 million ($249 million) in the three-month period that ended September 30, is in line with the company's targets. Ubisoft says it's seen a sharp drop in sales over the fiscal year so far, and gross profits from its back catalog fell "sharply" on aggressive retail discounting and promotions. "First-week sales of Assassin’s Creed II, up 32 percent, with positive initial indications for the second week, combined with an overwhelmingly warm reception from gamers, validates our strategy of developing bigger franchises," said CEO Yves Guillemot in a statement accompanying the financial results. But while Assassin's Creed 2 is set to beat targets, the instability of the Wii software market in particular has harmed the publisher, Guillemot added: "Our Wii games have got off to a more contrasted start in a less predictable market." Finally, the company hopes the launch of James Cameron's Avatar film will boost launch sales of its tie-in game when it releases this week. Ubisoft retained its existing guidance, confirming its expectations of third-quarter revenues of €540 million ($811 million) and full fiscal year 2010 revenues of €1.04 billion ($1.56 billion), with full-year pre-compensation profits of at least €72.8 million ($109.3 million). The company's fiscal year ends March 31, 2010.

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