Take-Two Interactive's (NASDAQ:TTWO) competitors received some welcome news when Take-Two announced it was delaying the release for Red Dead Redemption 2 to spring 2018. While the top video game companies historically have performed just fine by clustering big releases together ahead of the important holiday shopping season, the removal of one major title out of the fall release schedule has to been see as positive news for Take-Two's rivals. After all, gamers have only so much money to spend on games, and Red Dead Redemption 2 is expected to sell millions of copies.
Ubisoft's great year just got even better
Red Dead 2 will likely be one of the most talked about and most played games of the year when it launches. The game has already received more than 13 million trailer views on YouTube compared to the original Red Dead Redemption's 1.2 million views. More importantly, Take-Two's guidance for fiscal 2019 reflects strong sales expectations of the game, with management guiding for $2.5 billion in sales versus fiscal 2018's expected sales of $1.7 billion.
On its fiscal first quarter conference call in July, Ubisoft's (NASDAQOTH:UBSFF) CFO Alain Martinez was asked how he thought about Take-Two's decision to delay Red Dead Redemption 2. Here's what he said:
Clearly the fact there is no Redemption is a positive for our fiscal year 2018. This is something we had taken into our [financial] assumptions. So the absence of that game is, of course, giving us a better window for launch of some of our games.
He also said there are "positive elements" occurring that are making Ubisoft's guidance for this fiscal year more "beatable," with the absence of Red Dead 2 likely one of those. Along with its U.S.-based rivals -- Activision Blizzard (NASDAQ:ATVI), Take-Two, and Electronic Arts (NASDAQ:EA) -- the Paris-based game maker has been enjoying growing revenues and profits as the industry shifts to a digital distribution strategy. Ubisoft's sales have roughly doubled over the last three years to about 1.45 billion Euros ($1.7 billion at current exchange rates) for fiscal 2017 ending in March. For fiscal 2019, management expects sales to grow to 2.1 billion Euros ($2.4 billion). Operating income was 237.7 million Euros ($279 million) last year, and is expected to reach 440 million Euros ($518 million) by fiscal 2019.
A jam-packed fall for video game lovers
It's a crowded fall release schedule with anticipated releases from several of the major sluggers in the industry. Activision Blizzard has two big ones in Destiny 2 and Call of Duty: World War II -- both are seeing very strong early interest based on trailer views and pre-orders. Other highly anticipated titles -- Electronic Arts' Star Wars: Battlefront 2, Nintendo's (NASDAQOTH:NTDOY) Super Mario Odyssey, Microsoft's (NASDAQ:MSFT) Forza Motorsport 7, and Ubisoft's Assassin's Creed: Origins -- round out a strong slate for fall 2017.
Ubisoft has strong momentum heading into the fall after a very successful E3 2017 in Los Angeles. The company came out of E3 more "confident" about its game slate than when it went in. Here's how CEO Yves Guillemot described it on the first quarter conference call:
It was a very successful E3 for Ubisoft...As proof, I would like to point out that our games received 14 nominations for the E3 2017 Game Critic Awards versus just three the prior year. We also ranked second best company in terms of number of video and trailer views with a very high 'like' ratio.
A little breathing room is good for everyone
By removing a heavy hitter out of the fall release schedule, it will no doubt provide some breathing room for other releases from other companies, as Ubisoft's CEO indicated. I believe all of the games mentioned above would have still performed well if Red Dead Redemption 2 had not been delayed. Nevertheless, gamers who were planning on buying Red Dead 2 this fall will have $60 more to spend on other games and content. This works both ways, as well. With a spring release, Red Dead 2 will likewise face less competition and may sell more copies at launch than it otherwise would have this fall.