· Ubisoft has announced that it has decided not to put The Division 2 on the Steam platform when the game is released in March.
· Instead, the company is supporting the arrival of a new distribution platform from Epic Games (Fortnite developer) and said that they will “also partner on additional select titles to be announced during the coming year.”
· For years, Valve’s Steam has had a monopolistic position within the digital PC game distribution space.
· As outlined when Epic first announced the launch of its store, I think this is one of the most significant attempts to challenge Steam’s dominant position (mainly due to the fact that Epic’s game launcher is already on countless computers due to its success with Fortnite rather than the more favourable fee structure).
· I noted that in order to convince players to further fragment their game libraries, Epic would need to create a compelling enough offer – adding games from a major developer such as Ubisoft is a big step in the right direction and may lead to other large publishers following suit.
· Epic’s store is offering an appealing 88/12 revenue split rather than Steam’s historic 70/30 (or very recent 80/20 for games above certain benchmarks) and should thus result in higher revenues and margin for Ubisoft.
· Assuming sales are not largely impacted from the move, it would demonstrate that the balance of power is shifting in favour of the content creators.
· Yesterday Activision announced that it plans to give Bungie full publishing rights and responsibilities for the Destiny franchise.
· Going forward, Bungie will own and develop the franchise. As a result, the company does not expect to recognise material revenue, operating income or operating loss from the Destiny franchise in 2019.
· With ATVI management recently stating that sales of the latest update or Destiny 2 (Forsaken) have been disappointing, I expect that there have been some disagreements with Bungie as to how to take the game forward from here.
· In essence, ATVI has decided not to throw more money at the franchise. Clearly this is disappointing as Destiny is one of Activision Publishing’s biggest franchises, even if Destiny 2 has been disappointing (high single digit million units) versus the stellar release of Destiny 1.
· It now increases the reliance even more so on Call of Duty. It will be up to management to show they have a better use of this cash going forward, either by creating a new franchise or otherwise.