E3 News: Ubisoft Vows to Support Wii U With "Just Dance," "Watch Dogs," and Mystery Games

Can fears that Ubisoft will abandon Nintendo's platforms finally be put to rest?

Jun 11, 2014 at 11:05AM

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Source: Ubi.com

Earlier this year, signs pointed to the possibility of Ubisoft (NASDAQOTH:UBSFF) abandoning Nintendo's (NASDAQOTH:NTDOY) Wii U. The publisher delayed the Wii U version of its now smash-hit game Watch Dogs, and also stated that it would not have any games for the console to show or demo at this year's E3. This led to speculation that Watch Dogs had actually been canceled on Nintendo's system, and that the console might not even receive the annual installment in the Just Dance series. With E3 come and gone, fears that the publisher is abandoning the Wii U completely can be set aside.

A new Just Dance will hit the Wii this year, Watch Dogs is apparently on track for a fall release, and Ubisoft has at least one finished Wii U title waiting to be released. What is this mystery game, and what does it say about the state of the Wii U? How are Ubisoft and Nintendo performing relative to their competitors?

Guess the mystery game
According to Polygon's interview with Ubisoft CEO Yves Guillemot, the company has a number of unannounced Wii U projects. Even more interesting, one of these games is apparently finished, and Ubi is waiting until the Wii U user base has grown to release the game. Guillemot said that this unknown game has been complete for six months and that the company needs more families to own the console before it can justify a release. The latter part of his comments to Polygon indicate that the title is likely family oriented.

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Source: Ubi.com

One reasonable guess is that the mystery game is from Ubisoft's "Rabbids" series. Some have speculated that it could be the rumored Assassin's Creed: Comet that will reportedly hit Sony's PlayStation 3 and Microsoft's Xbox One this year. This seems unlikely, as the title was a no-show at Ubisoft's press event, meaning it's probably not complete if it exists, and previous entries in the Assassin's series have sold poorly on the Wii U. Some sort of fitness, mini-game collection, or rhythm game would seem like a more likely fit. Still, Ubisoft's plan to release the mature-rated Watch Dogs on Wii U this fall suggests that the company believes it can cultivate an audience.

Watch Dogs is a huge hit for Ubisoft
Prior to the explosive success of Watch Dogs, Ubi's future was looking a lot shakier. The publisher was one of the big winner's of the last console cycle, and did particularly well thanks to its performance on the Nintendo DS and the Wii. But the migration of the casual audience threatened to erase many of the gains that the publisher had made. Making matters worse, its premier franchise, Assassin's Creed, showed signs of slowing down, and the company had to delay key titles.

The incredible performance of Watch Dogs has erased much of the cause for concern, selling more than 4 million copies to consumers, and proving the doubters wrong. The game's success is a great sign that the console gaming market has a hunger for new properties and experiences, and also that Ubisoft is capable of developing new hit content.

How strong is Ubisoft?
Ubisoft's valuation has risen substantially since the release of Watch Dogs, with shares trading at the highest price since July 2009. There's still reason to be cautious about the company, however. Ubisoft employs more than 9,200 people in studios around the world. For comparison, Nintendo's most recent fiscal report shows 5,213 internal employees and 1,977 external employees as of March 31. As of this writing, Nintendo has a market cap of approximately $13.78 billion. Ubisoft has a market cap of approximately $1.57 billion. Nintendo's revenue for the last fiscal year was approximately $5.6 billion. Ubi's was approximately $1.37 billion across the corresponding period.

Looking at another third-party publisher, Electronic Arts (NASDAQ:EA) employs approximately 9,000 people. The company has a market cap of approximately $10.96 billion and generated approximately $3.8 billion in revenue across the fiscal year ended March 31. These numbers don't tell the whole story, but Ubisoft's size could quickly become a problem if even a few titles underperform.

Third-party publishers are looking good
While Ubisoft's business structure may give reason for concern, the company has undeniably started the new hardware generation off on the right foot. A lack of early success on the Wii U has been largely smoothed over by the emergence of Watch Dogs as the best-selling new IP on record. All of the major publishers -- Activision Blizzard, Electronic Arts, and Take-Two Interactive -- now look to enjoy strong opportunities for growth in the next several years.

Amidst uncertainty, Ubisoft is a big asset for Nintendo

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Source: Nintendo.com

Things are different on the console front. Nintendo needs to reenergize its offerings and make future hardware more hospitable for third parties. The fact that Ubisoft is sitting on finished games, waiting for Wii U sales to hit a magic number is a disheartening indication of the situation facing Nintendo. Still, Ubi's plan to stick with Mario and company is good news for Nintendo's future. It's also a good sign that the publisher will be there to support future hardware from the company.

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Keith Noonan has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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