Releasing new intellectual property (IP) is an important and risky part of the gaming industry. New IPs are a starting point for what game makers hope will become successful franchises, though they do not have the established fan base of older titles. Many game developers have new IP launching in the wake of the PlayStation 4 and Xbox One releases. Among them is Assassin's Creed producer Ubisoft (NASDAQOTH:UBSFF).
The new franchise hopeful
Ubisoft has launched a new installment in the "Assassin's Creed" series almost every year since the original's release in 2007. With every numbered installment selling around 10 million copies, Ubisoft knows how to make an action/adventure game. The company is looking to repeat the success of "Assassin's Creed" games with Watch Dogs, its new IP for next-gen systems.
In Watch Dogs, gamers play as hacker and street thug Aiden Pearce who is on a hunt to find the people who hurt his family. In an interview with TrustedReviews, Managing Director of Sony Computer Entertainment UK Fergal Gara stated that the game could "define next-gen gaming and really push some boundaries."
With the excitement of the new IP came disappointment when Ubisoft delayed the game's release to later in 2014. As a result of the delay, the company's expected net income for the year decreased from $1.94 billion to $1.38 billion. According to CFO Yves Guillemot, "We have come to the conclusion that the team needed more time to realize the game's potential. We consider it to be a long-term pillar of our future performance, alongside the likes of Assassin's Creed and Far Cry." The company would rather produce a solid first installment of a potentially lucrative franchise than launch a disappointing game on time, a decision that I think is the right one.
Better to delay
There are a number of games that have had successful sales despite launch delays. Take-Two's (NASDAQ:TTWO) Bioshock Infinite was delayed twice before hitting stores on March 26, five months after its initial release date. It has since sold roughly 2.89 million copies. Grand Theft Auto V was delayed from January to September but still reached $1 billion in sales after three days on store shelves. Like Ubisoft is doing with Watch Dogs, both games were delayed to improve their quality. Once released, the games received Metacritic scores of 94 for Bioshock and 97 for GTA V. These releases show that consumers will buy quality games despite launch delays.
If a game launces before it's ready, there might be glitches that are more harmful to a company than a delayed release date. Electronic Arts' (NASDAQ:EA) Battlefield 4 was released on Oct. 29 and has since experienced game-halting glitches in online gameplay. These include a "one-hit-kill" bug and game crashes for those playing in large groups. EA DICE, the studio behind the game, responded by focusing all of its resources on fixing the bugs, delaying work on future games like Star Wars Battlefront and Mirror's Edge 2. In addition, many gamers who purchased Battlefront 4 Premium, a service that allows access to all of the games downloadable content and expansions for $50, are getting refunds from Microsoft.
Releasing a game before it is ready hurts a company's reputation and can delay production of future titles. By pushing back the launch date for Watch Dogs, Ubisoft has more time to fine tune what the company hopes will be a franchise game. While the move lowered this year's projected net revenue, it is better for the company in the long run. I think the new IP will set the bar high for other companies producing games for next-gen consoles.
Ben Popkin has no position in any stocks mentioned. The Motley Fool recommends Take-Two Interactive. 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.