After traditional games face difficulties in production, Ubisoft continues to invest in Web3.

Ubisoft persists with investment in Web3 after traditional game production struggles

Author: Mu Mu

Ubisoft, the game giant behind the production of “Assassin’s Creed”, has made a new move in the Web3 gaming field.

After its first attempt at NFT failed, Ubisoft’s Strategic Innovation Lab has partnered with Web3 gaming network Immutable to build a Web3 gaming platform using Immutable’s game development experience and ecosystem.

This is not Ubisoft’s first exploration of Web3 games. In June of this year, Ubisoft announced its first Web3 game.

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As a leading traditional game developer, Ubisoft has developed many popular games such as the “Far Cry” series and the “Assassin’s Creed” series, creating a myth in the industry with “5 3A games released in a year”. However, in the past two years, this gaming giant has been struggling with content production, not only failing to produce another blockbuster 3A game, but also experiencing a decline in stock price and unsuccessful acquisition attempts.

In this situation, Ubisoft in 2023 has made many innovative attempts, including collaborating with external major IPs, expanding their own IPs, and actively introducing AI-assisted creation. They have also set their sights on Web3.

So, will this new move by Ubisoft bring in new traffic? And will the entry of mainstream games bring changes to the Web3 blockchain gaming market?

Ubisoft is building a Web3 gaming platform

Ubisoft, headquartered in France, has studios around the world and is known as a “creative genius” in the gaming industry. Its series such as “Assassin’s Creed” and “Call of Duty” have been regarded as classics by gamers. Ubisoft has also created the industry myth of “5 3A games released in a year”.

However, compared to its glorious history, Ubisoft has been lagging behind recently. In the past two years, this game giant has not produced a 3A game that can match the reputation and sales of “Assassin’s Creed”.

This decline is also reflected in its stock price. Since 2021, Ubisoft’s stock price has been falling from a high point of 86 euros and by January 2023, it has plummeted to 19 euros, almost reaching the level in 2015. Ubisoft’s financial report for the 2022-2023 fiscal year shows that as of March 31, 2023, the company’s operating losses amounted to 538 million US dollars, which is almost equal to the total net profit of Ubisoft in the past five years.

Ubisoft's stock price has returned to the level of 2015

Faced with consecutive losses, Ubisoft has shown a strong will to survive. In addition to attracting external major IPs, Ubisoft is relying on its own old IPs to save the day. “Rainbow Six Siege” has achieved “significant growth” for the company. Thanks to the influence of its own IPs, Ubisoft’s financial report for the first half of the 2023-2024 fiscal year shows that the company’s revenue is 836 million euros, a year-on-year increase of 14.33%. Its net bookings amounted to 822 million euros, a year-on-year increase of 17.59%, and it has finally turned losses into profits.

But lying on laurels is far from enough, and Ubisoft realizes this. It has extended its tentacles to Web3.

In June of this year, Ubisoft unveiled its first role-playing game developed based on Oasys blockchain technology, “Champions Tactics: Grimoria Chronicles”. According to limited information currently available, players in this game seem to be able to use classic characters from mythology to form teams and battle against other players.

Before the first blockchain game was officially released, Ubisoft quickly partnered with Web3 game network Immutable, planning to utilize the blockchain infrastructure to build a Web3 game platform, leveraging their experience and massive ecosystem.

Ubisoft’s first encounter with Web3 dates back to 2021. At that time, NFTs were very popular. Ubisoft introduced NFT virtual items based on the Tezos network for the PC version of “Ghost Recon: Breakpoint” and held a series of events for the appearance of these NFTs. However, after the events ended, only 15 pieces of the NFT were claimed, with a total transaction value of less than 400 US dollars.

The game players didn’t buy it, and even NFT enthusiasts showed no interest. The main reason is that the NFTs in the game are not necessary for the game progress, but they require players to grind for 100 hours or 600 hours to claim them. Such a virtual item with little gain is difficult to arouse players’ interest. As for NFT players, the most popular track in the market at that time was image NFTs, which can be minted and sold for profit without the need to encounter high barriers within a game.

After failing in the NFT market, can Ubisoft succeed this time by building a Web3 game platform using the Immutable blockchain network?

The key is the economic model

The last time Ubisoft dealt with NFTs, it missed the industry development node. Releasing game NFTs while image NFTs were booming was a case of bad timing. Now, it might have encountered a rare market trend.

According to DappRadar data, as of the second quarter of 2023, the number of daily active wallets in the Web3 gaming sector was 699,956, accounting for 36% of the industry’s total participation, far ahead of other types of applications.

The number of daily active wallets in Web3 games far exceeds other applications

Other game manufacturers also seem to see the increasing activity of Web3 games. Game manufacturers such as Square Enix, NCSOFT, and Jam City have started strategic layouts. At this time, Ubisoft follows suit and, with its excellent production capabilities, as long as it manages to create a hit game fast enough, it is very likely to capture the Web3 game players.

Web3 blockchain games that are fun and profitable are indeed a rare commodity in the market. From 2021 until now, most Web3 games based on blockchain technology and economic models are not playable and their economic models tend to fail in the later stages.

The main appeal of Web3 games with limited gameplay lies in the fact that game assets can be monetized: players buy basic items to start the game, obtain game assets, and then sell them on the market. This process is also referred to as “mining, withdrawing, and selling” by Web3 players.

Therefore, Web3 games are also known as Play To Earn (P2E) games, which have gained popularity in China. However, in P2E games, the crypto assets ultimately fall into a cycle where supply exceeds demand, leading to a fate of fluctuating prices. When game assets cannot be sold at a high price and the game itself lacks gameplay, players lose their earning opportunities and eventually abandon the game.

As a result, people in the Web3 industry who are optimistic about the game sector always urge for enhanced gameplay in P2E games and hope for the birth of a Web3 game that perfectly combines game design and economic models. Some place these hopes on traditional game companies.

As a major AAA game company, Ubisoft clearly has mature production capabilities. However, for Ubisoft to enter the Web3 game market, it not only needs to bring games that meet the Web2 user experience to a blockchain that can support game operations but also design a good economic model for game assets.

In the new layout of Web3 games, Ubisoft has chosen Immutable, a company that originated from the gaming industry but transitioned to blockchain infrastructure. Its vision is to support the development of all Web3 games, and it has built a Layer2 network known as Immutable X, which facilitates the trading of game NFT assets and is widely recognized in the Web3 world.

Immutable X belongs to the gaming-exclusive blockchain market, and it not only offers zero transaction fees but also supports high concurrency in transactions. Just the fact that it eliminates transaction fees greatly reduces the entry barrier for users. At the same time, Immutable X can process up to 9,000 transactions per second, enabling fast circulation of on-chain game assets.

In addition to the infrastructure, Immutable also owns a game studio that independently publishes and operates several blockchain games.

Furthermore, Ubisoft’s previously announced Web3 game was built on the Oasys blockchain, which is also a blockchain infrastructure specifically designed for gaming. Apart from Ubisoft, Sega is also developing its first blockchain game, “Sangokushi Taisen” (Web3 Remastered Edition), based on Oasys, attempting to attract new fans to this old IP.

Based on the advantages of high performance and zero gas fees, both major game blockchains have cooperated with Ubisoft, with the former providing basic design and technical services, and the latter providing high-quality game content and design. It is expected that truly playable Web3 games will be born in this collaboration.

Currently, Ubisoft has not disclosed the specific details of its Web3 game. What is certain is that AAA-level game production, immersive game plots, and a good gaming experience are the direction of development for Web3 blockchain games, which is likely to attract traditional game companies to enter the market. However, the biggest challenge for these game giants is how to combine game mechanics with a good economic model.

In simple terms, whoever can create a Web3 game that breaks free from the cycle of “mining, withdrawal, and selling” and has a strong sustainability, will dominate the blockchain gaming market.

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