Ubisoft Entertainment SA

PAR:UBI

Earnings Call Transcript 2021-Q1

[Operator]

Good day, and welcome to the Q1 FY '21 Sales Call. At this time, I would like to turn the conference over to Mr. Guillemot. Please go ahead, sir.

[Yves Guillemot, Co]

Welcome, everyone, and thank you for joining the call today. While our current performance and the prospects for our upcoming games are stronger than they have ever been, I want to begin our remarks today by addressing directly the very serious challenges that we have recently been going through internally.While additional investigations are still ongoing, I want first to make it clear that the great majority of Ubisoft employees, studios, businesses and divisions behave in a respectful manner. However, everyone should feel welcome, respected and safe without exception.As I have made abundantly clear to all of Ubisoft teams, I am committed to implementing profound changes across the company to improve and strengthen our workplace culture. We have already acted quickly, making the necessary decisions and taking strong actions. I would like to highlight some of the changes we have already made.First, the external partner in charge of managing Whispli, our anonymous reporting tool, will analyze and evaluate the information to recommend the appropriate actions to be taken against offenders. It will also provide regular direct reports on allegations to our Board of Directors.Second, all employees will undergo comprehensive and mandatory training on harassment matters. And we have asked our teams to participate in an overhaul of our code of conduct. We will ensure this new code of conduct is read, understood and signed by 100% of employees.Third, we will be adding a new performance criterion to the compensation schemes of all team leaders. Using these new evaluation tools, a portion of their bonuses will be tied to their ability to create a positive and inclusive environment.Fourth, these recent events highlight that bringing more diversity is critical for us. We will be recruiting 3 new VPs to join the editorial team, with the priority given to candidates coming from diverse background. We'll be recruiting a Head of Diversity and Inclusion to create a more inclusive culture.And as a reminder, our Board Nomination, Compensation and Governance Committee, which is fully independent, has decided before this situation started to add a new diversity performance criterion to my own variable remuneration. It was approved by our shareholders during the Annual General Meeting held on July 2.Finally, the decisions we have taken for our editorial team and Canadian studios are meaningful. Today, we rely on a strong creative vision, on a deep bench of talent and on a strong production organization. We now have the opportunity to review the way our creative teams collaborate and ensure we can both reform our processes and continue to deliver on our ambitious production plans.Transforming the culture of Ubisoft will require time and focus. But these actions and many more that are currently underway clearly demonstrate all the decisive actions we are taking.I now hand over the call to Frédérick. Frédérick?

[Frédérick Duguet;Chief Financial Officer]

Thank you, Yves, and hello, everybody. As I mentioned last quarter, for the sake of comparability, I will base all my comments today before the new mobile reclassification rule to ensure a like-for-like comparison with fiscal '20. This reclassification amounted to EUR 11 million in Q1.First, and very impressively, our quarter was bigger in terms of unique users, session days and play time than any given quarter in Ubisoft history. The number of unique players reached 69 million, and MAUs reached 40 million across consoles and PC. As a consequence, net bookings were very strong and reached record levels for our first quarter at EUR 399 million, up 27% year-on-year and above our target of approximately EUR 324 million before reclassification.This year-on-year growth is remarkable, as Q1 last year benefited from the launch of Anno 1800 and the recent release of The Division 2. It demonstrates how our business has become much more recurring and resilient.Similarly to the prior quarter, the year-on-year increase and outperformance mostly reflects both organic strengths and increased engagement related to confinement. This dynamic was felt across the board with strong performance from our full portfolio.We continue to reach a very wide audience, thanks to the strong diversity of our games ranging from Assassin's Creed and Rainbow Six to Just Dance, Mario + Rabbids and Brawlhalla. We also saw great trends on digital and PRI. Focusing specifically on the impact from lockdown, while April and May were exceptionally strong, June and July global trends are getting closer to January and February. This reflects the impact of the end of lockdown in most European countries, while the U.S. market continues to show solid year-on-year progression. However, overall trends are still growing year-on-year, even if less meaningfully.As such, it is still too early to have a clear view on what will be the new normalized trends, and we remain cautious today in our assumptions. Our back catalog represented 97% of our revenues and was up 42% to EUR 387 million. We benefited from our deep and diversified bench of strong franchises. Despite strong competition, Rainbow Six: Siege net bookings saw very solid year-on-year growth of over 30%, both driven by strong acquisition and PRI. The game also delivered sequential growth. This is remarkable as calendar Q1 is generally a huge quarter for the game, with the major impact from the Six Invitational.Engagement was very robust during the quarter and continued to deliver year-on-year growth in June. Following many strong quarters, the Assassin's Creed franchise delivered an amazing performance in Q1, spurred notably by the record reveal of Assassin's Creed Valhalla. Net bookings for the franchise were up over 60% year-on-year, an outstanding achievement considering the last Assassin's Creed was released over 1.5 years ago. Such levels of recurring revenues is quite a revolution for a brand like Assassin's Creed and highlights the amazing work done by our teams over the past 5 years to transform it.Two additional impressive metrics: first, the fact net bookings were also up over 50% sequentially; and second, that PRI in the quarter for Odyssey was 8x higher than Origins in Q1 last year. And finally, after an already very solid first 6 months, Just Dance had a huge quarter, up more than sixfold year-on-year. The brand continues to be a fan favorite and is definitely benefiting from the strength of Switch and its increasingly large audience. Total digital net bookings reached EUR 345 million, up 18%, and represented 86% of our total net bookings, slightly lower than last year due to our strong performance on Switch this quarter.Talking about Switch, our catalog of games for the platform grew more than 2.5x versus last year. PRI came out significantly stronger than expected. It was up 25% to EUR 188 million, representing 47% of our total net bookings. Excluding mobile, PRI was up 16%. This is a very strong performance when considering last year Q1 benefited from the material deferred revenues coming from The Division 2 Season Pass. This quarter's strong mobile growth was led by last year's acquisitions and includes EUR 11 million related to the new classification.Looking now at Q2, we expect net bookings at around EUR 290 million, including an estimated EUR 10 million from the mobile reclassification. This will represent a 16% decrease versus last year. As a reminder, Q2 last year benefited materially from early physical shipments linked to the release of Ghost Recon Breakpoint. Q2 will notably see the releases of Tom Clancy's Elite Squad and the full launch of Hyper Scape across consoles and PC. It will also see the release of Brawlhalla on mobile after a very strong Q1 for the games -- for the game on consoles and PC, with revenues 2x higher than last year.Moving on to fiscal '21. We are confirming the targets set out during the full year results with a range of between EUR 2.35 billion and EUR 2.65 billion for net bookings. Non-IFRS operating income is expected between EUR 400 million and EUR 600 million. The confirmation of our targets reflects our current momentum, the excellent health of our business and the great KPIs from the first Ubisoft Forward event, but also the potential external impacts from the COVID-19 crisis that we mentioned mid-May. It is worth noting that the vast majority of our developers are still working from home.Looking at our lineup. The 5 AAAs are now revealed. The Ubisoft Forward event outperformed versus our expectations. The live event generated historic viewership, with record high peak concurrent views and average view time above last year levels on all platforms and channels. Interestingly, the biggest countries in terms of traffic on our platforms were, in no particular order, the U.S., Brazil and China. After a spectacular reveal in April which set new records, Assassin's Creed Valhalla gameplay reveal received a strong reception with around 500 influencers and journalists playing the game for more than 3 hours. We are confident it will be one of the strongest performers at the end of the year. As Game Informer wrote, "Ubisoft has refined its formula and crafted another massive sandbox that looks to deliver on the Viking fantasy." The game will be released on November 17.We have also been humbled by players' reception to the Far Cry 6 reveal, which came after the very successful reveal for Assassin's Creed Valhalla and Hyper Scape earlier this year. The cinematic trailer, with acclaimed actor Giancarlo Esposito playing as the villain, strongly contributed to this enthusiasm. As IGN puts it, "That delivery had me hooked from the first word he spoke all the way through. As soon as he pulls the pin in that grenade, you're just hanging on every word." Far Cry 6 will be released on February 18.We had a successful hands-on event for Watch Dogs: Legion. The Play As Anyone feature, allowing players to recruit and play as any character from the world, creates a lot of depth in the player experience and has intrigued media and fans. GameSpot called the Play As Anyone system, "A fascinating take on a class-based system. It offers a variety of play styles, and it's pretty d*** impressive how well it works." The game will be released on October 29.And lastly, Hyper Scape, our new battle royale game, benefited from a very smooth technical test and was ranked #1 on Twitch on its reveal day. Reception among the community was very solid, with players praising its strong differentiating aspects, notably its verticality, its fast-paced game play and its deep social integration on Twitch. The launch of the open beta announced during Ubisoft Forward marks the next step before the global release of the game on PC, Xbox One and PS4 this summer.For my conclusion, I would like to talk about ESG, which, for many years, has been a super important driver for the company and for our teams. Today, I will focus specifically on diversity in our games.From Jade in Beyond Good & Evil 20 years ago to princess Aurora in Child of Light, Altair in the first Assassin's Creed, Adewale in Black Flag, Bayek in Origins, Kassandra in Odyssey and Eivor in Valhalla; Marcus Holloway in Watch Dogs 2 or iconic Rainbow Six Siege operators like [ Beloved ] Ash or the recently-introduced operator Melusi, from South Africa, we have represented diversity in a meaningful way in our games. And those titles are among our biggest performers, are among our most iconic games. Players can then make their own choices.While around 1/3 of players like Kassandra in Assassin's Creed Odyssey, Ash is the most-selected attacking operator in Rainbow Six Siege. The diversity I mentioned ranges from gender to ethnic diversity and also includes strong LGBTQ+ characters as well as neurodiversity with the representation of autism. As you can expect from our team's commitment and passion, Ubisoft will continue to lead the industry on diversity representation in our games in the future.Finally, we are proud to have been awarded Best Learning Game for the second year in a row at the Games for Change awards. Last year, it was for the positive social impact of the Discovery Tour, and this year, it is for Rabbids Coding, which teaches kids the basics of coding in a fun way.Before I hand over the call back to Yves, please note that we will have another exciting Ubisoft Forward event in September. And we can't wait to show you more.

[Yves Guillemot, Co]

Thank you, Frédérick. An essential takeaway from the past quarter is the fact that our teams performed remarkably. They performed strongly on the activity side, with across-the-board outperformance from our catalog and live services. They performed strongly as well on the announcement side. They delivered powerful reveals for Assassin's Creed Valhalla, Hyper Scape and Far Cry 6 and a strong comeback for Watch Dogs: Legion, which is fully benefiting from the additional development type.Our 2 other AAA games, Gods & Monsters and Rainbow Six Quarantine, are also benefiting from this extra time. It is clear that the difficult decision we took last year has given our teams the means to deliver their full vision. And this is a -- and this is greatly benefiting the overall quality of their games and working conditions.We have a lot to further showcase in the coming months. This demonstrates that we are well on track to return to a path of great execution. As a matter of fact, we want our execution to be even stronger than before. We believe that our games' performance over the past 6 months are clear indications of where we are heading.As a conclusion, I would like to emphasize that at Ubisoft, we invest to create significant long-term value for our teams, players and shareholders. We are committed to building a sustainable and inclusive business. We develop a high-value direct relation with our communities and strongly expanding live services with [ everlasting ] games. We create solid long-term assets with IPs, technologies, and platform ownership and a deep portfolio of amazing franchises. We can rely on a deep bench of amazing talent at every level of the organization from the business, production, creation and support divisions.And with the second production and creative powerhouse of the industry, we are ideally placed to capture the biggest opportunities as the industry's prospects are meaningful and plentiful. Finally, as I said earlier, we need to make sure that moving forward we are providing the best conditions for the development of our people. As with every past challenges, we believe the serious situation we are currently facing will allow us to progress and become a better company.We are now ready to take your questions.

[Operator]

[Operator Instructions] We will now take our first question from Ryan Gee of Bank of America.

[Ryan Gee, Vice President of US Equity Research]

So Frédérick, you mentioned that Europe, it's returning to normal in terms of demand. Can you update us on the worker side for your employees over there in Paris? I think last quarter, you said you were still a couple of weeks behind in terms of productivity and production delays. Are you guys back on track now?And related to that, we still haven't heard anything regarding -- or not much regarding 2 of the 5 AAA titles for fiscal '21. I think Gods & Monsters and Quarantine are still TBD. Is this something we can still expect? Any update on those 2 titles?

[Frédérick Duguet;Chief Financial Officer]

Sure. Thank you, Ryan. Yes, it's something that we are monitoring carefully. We still have a vast majority of our developers working from home as we need to follow strict protocols, putting the safety of our players first in many countries. We have the -- a high number of employees going back in the offices in some areas in China or France, of course. But across the world, we still have a vast majority of workers in the -- working from home.So we think that, like we said back in May, we have put in place the right solutions. It's true to say that we had lost a few weeks of productivity. So far, we're happy with the progress. This is still something that we are monitoring on a weekly basis. But we're happy with the progress across the board.And as far as the 2 titles you mentioned, Gods & Monsters and Quarantine, they are doing well. Actually, as Yves mentioned just before, they are benefiting from the extra time we gave them. And we're happy with the progress.Today, we reconfirm the release schedule with 5 AAA games in the fiscal year. But of course, we continue monitoring the situation closely, including for the 2 Q4 titles, as we said, that are potentially, for one of them, at risk to postpone to fiscal '22. But as we said repeatedly, if we were to take that decision to postpone a game, we will do it for the long-term value of the game.

[Ryan Gee, Vice President of US Equity Research]

Okay. And if I can just fit in another one. Hyper Scape was a surprise inclusion for fiscal '21. Can you talk about sort of the player activity in the beta, both the closed and the open beta? And what that sort of indicates for potential contribution to PRI once it does launch later this summer?

[Frédérick Duguet;Chief Financial Officer]

Yes. So we had said before that we wanted to accelerate our investment in free-to-play. And I think Hyper Scape is a very good illustration of our first entry in that fast-growing segment. We've been very impressed with the impact of the reveal on day 1. We were #1 in Twitch through the technical test. That went very smoothly. And we are still in an early phase of the beta. So we are preparing ourselves for a big launch later in the summer across console and PC.And as far as we can see, the first reveal put it on a strong trajectory in the player's mind. So we think that we have a solid and strongly differentiated game in this genre. That bodes well for this game.

[Operator]

And we will now take our next question from Robert Berg of Berenberg.

[Robert Berg, Analyst]

A couple of questions from me. And the first is on the allegations. Obviously, a very important issue, very concerning, but glad to see you're taking these allegations very seriously. I hope that that does have a material impact. But with regards to the upcoming releases, a very busy year, as you've reminded us numerous times.Could you give us a sense of the impact, if any, on the day-to-day work of employees? Can the allegations cause distraction or the management changes have any impact on the timing or quality of any upcoming content? And I'll ask the other question after that, just to save confusing.

[Frédérick Duguet;Chief Financial Officer]

Yes. What we -- as you say, we indeed take the allegations seriously, and I think it was important that we acted fast and from day 1 Yves has -- to personally lead the drive to look at the situation carefully and lead a very strong action plan to really improve the company for the best.When we look at the daily operations, we see that our teams are really focused on delivering their games. They want our games to be massive successes, and we've seen that the very good reception from players at the Ubisoft Forward has given them a very high level of energy. So we see that we are relying on very strong teams, very dedicated and passionate teams and we have -- we see that these teams really want our games to be great successes.

[Robert Berg, Analyst]

Okay. And the second's on the guidance, Q2 is down sequentially. Could you give us a sense of how much of this is the moderating shelter-at-home that you mentioned versus how much is prudence on economic uncertainty? Just a sense.And you mentioned the U.S. is still seeing more of a positive impact from shelter-at-home than rest of world. And clearly, 50% of your revenues is U.S. So what are you assuming happens to the U.S. growth?And the final point on the guidance, if I can. How much, if anything, are you factoring in for the free-to-play launches this quarter, Hyper Scape, Brawlhalla mobile and the Elite Squad mobile game?

[Frédérick Duguet;Chief Financial Officer]

Yes. So in terms of impact of the confinement on the different geographies. So as you know, of course, the -- Asia has come back to work for quite some time. More recently, there was a lift in the restrictions in Europe, which we saw in June. We see -- still see that North America has an impact in terms of confinement. In our guidance, we have not assumed any confinement beyond July. So we will be prudent on that front.In terms of the way we factor free-to-play in our guidance. Today, it's still a new business model for us. So we think we have solid games in our hands, but we want to be prudent and reasonable in our guidance. It's important when you look at the guidance to keep in mind that, as I said earlier, Q2 last year was materially impacted by the physical shipments of Ghost Recon Breakpoint.

[Operator]

And we'll now take our next question from Nicolas Langlet of Exane BNP.

[Nicolas Langlet, Research Analyst]

Yes. Three questions for me. The first one on pricing. So Take-Two recently announced that NBA 2K21 for next gen will be sold with $10 premium compared to current gen. Just curious to have your take on this announcement, and whether you plan to follow this move with your upcoming titles on next-gen console?And second question on the back catalog. I think at the beginning of the year, you were looking at a slight decline in back catalog. Now given the strong Q1, is it still the case?And finally, on mobile, if we take into account the accounting adjustment, the M&A contribution and the new games release, what sort of net booking you are expecting for the full year?

[Yves Guillemot, Co]

Thank you for your questions. For the Christmas games, we plan to come with the same price than previous generation of consoles. And that's what we focus on at the moment.

[Frédérick Duguet;Chief Financial Officer]

Nicolas, yes, on the back catalog, it's true that we said in May that we count on a slight decline versus last year for back catalog. It's true to say that we've been significantly overperforming in the first quarter. So at this stage, it gives us greater visibility, and it continues to contribute to improving the risk profile of the year. So far, we haven't adjusted our assumption because it's still early. We are still early in the year.On mobile, it's true that with the combination of a good base business that was nicely performing in the first quarter, a strong contribution of the acquisitions and the launches that we estimate this year, we, of course, rely on the strong growth on mobile this year.

[Operator]

We'll now take our next question from Omar Sheikh of Morgan Stanley.

[Omar Farooq Sheikh, Equity Analyst]

I have 3 questions if I could. I want to start maybe, if I could, on the management departures. And so for Yves, perhaps. Could you maybe talk a little bit about how important Serge Hascoët was to the development process? And whether or not you'd have -- you expect any disruption to the development pipeline, not just in this year but in sort of forthcoming years? That would be useful to hear your comments on that.And then secondly, on Hyper Scape, you mentioned the very strong initial reaction on Twitch to the game. I just -- I'm sure you noticed that the engagement on Twitch after the first day went down quite a bit after the technical test. So I wonder whether you could just comment a little bit on that, and what you would sort of interpret that or whether we should interpret anything into that decline in Twitch engagement? That's the second question.And then lastly, on the last call, you expressed some confidence that you were, I think, tracking towards the original target of releasing 5 AAA games during fiscal '21. I just wondered whether you could say whether you're confidence in tracking towards that 5-game release number has changed at all since last quarter.

[Yves Guillemot, Co]

Thank you for your questions. So at Ubisoft, we have a strong vision on all the games that are underway at the moment. And what is important to consider is we have a deep bench of senior talented creative people in the company. We have 18,000 people in the company and a lot of creative minds.So I am now taking directly the role of CMO. And I'm really taking care of all those games that are underway. You probably know that I was already following all those games carefully. And I have a strong team to follow all the games that are created, and we are going to actually take advantage of the evolution of the company to make sure there's more communication and more investment from all local teams into the production of the games and the way they are followed.

[Frédérick Duguet;Chief Financial Officer]

On Hyper Scape, yes, as I said, we are still early in the phase of the launch. The big launch has not come yet. We're preparing ourselves for a big launch later in the summer across all platforms. So far, when we look at the game and the way the players value it, it's really coming well because they value the strong element of differentiation. And so we think that we are here for the long term with a very solid game.In terms of the release schedule, yes, we reconfirm that we are well on track to deliver these 5 games in fiscal '21. As I said earlier, we still focus carefully on the weekly follow-up on the productivity progress in the context of a high proportion of our people are working from home. And it's important that we keep in mind that the solutions that we put in place are working well. We have prioritized the critical tasks that are difficult to be done at home when prioritizing the people that came back to the office. So that's working well. We're happy with our progress there. We're also carefully looking and tracking the productivity we have on the games that come in fiscal '22 because, of course, we also have the same proportion of people working from home. So it's coming along well, but also something that we are focusing on and monitoring very carefully.

[Omar Farooq Sheikh, Equity Analyst]

On Hyper Scape?

[Yves Guillemot, Co]

Hyper Scape. Yes. On Hyper Scape, you have also to consider that we are going to make a big launch when it comes, when we launch it on PC and console this summer.

[Omar Farooq Sheikh, Equity Analyst]

Okay. That's very clear. And just one final follow-up, if I may, for Frédérick. Do you actually have a number for the physical sales that you generated from Breakpoint in Q2 of last year?

[Frédérick Duguet;Chief Financial Officer]

It was material. That's what I can say with you. It was really a material number.

[Operator]

We'll now take our next question from Mike Hickey of The Benchmark Company.

[Michael Joseph Hickey, Senior Equity Analyst]

Congrats on the quarter, success there. We have some new consoles coming out this holiday, and it's been an interesting set up for a while. I think we were worried about supply disruption, and we were hearing that maybe supply was going to be -- is coming, but it's a little bit less. And now we're hearing, maybe we're going to get 2x the amount we thought we're going to get. So obviously, it looks like next gen's going to be a good setup for you here especially with all the new games you have coming to market. So I was hoping you could just give us a little bit of your view of the opportunity you see this holiday, with maybe a lot more supply of consoles coming to the market.

[Yves Guillemot, Co]

Thank you for your question. In fact, we are very excited by the fact that there are new consoles at the end of the year. It is each time putting a boost on the industry. And the fact that they are able to create the number of machines they want to create is a very positive element for the industry. So we are going to be there ready with lots of great games for the launch of those consoles. And so we are very excited by that.

[Michael Joseph Hickey, Senior Equity Analyst]

Great. The -- I guess, after your quarter then, it looked like some of the reviews on Watch Dogs was, call it, mixed. You had a little bit of pushback, I think, compared to at least to Valhalla and some of the other games like Far Cry that were decidedly positive. Can you speak to some of the pushback on Watch Dogs and if you changed your expectations? Or if there's anything else you can do for that game?

[Yves Guillemot, Co]

Yes. On Watch Dogs, we were actually very happy with the reception. The people that were able to play, the players, anyone, really loved it. And what we know is when they will be able to play the full game, they will be extremely happy with the story side. So altogether, Watch Dogs is coming along extremely well, we think. And it's going to come the 29th of October. And then it will be relaunched by -- with the launch of the new console. So it's -- we have big expectations for Watch Dogs.

[Frédérick Duguet;Chief Financial Officer]

Yes. From the KPIs, the vast majority of the feedback has been very positive. And I'll -- should add to that that the London setting has been also very well received.

[Michael Joseph Hickey, Senior Equity Analyst]

Okay. Last question for me, guys. Can you reiterate your PRI guide for the year and if that's changed or not? I think it was a percentage of '19 before. I'm curious if that's still the case? And how much of that presumed growth is from new games and live services versus your back catalog?

[Frédérick Duguet;Chief Financial Officer]

Yes. So we -- yes, we reiterate our PRI guidance that in percentage would be higher than the level of fiscal '19, so above 32%. So that should follow a strong growth year-on-year. It's -- what we see is that back-catalog games and live services are expanding very well, so they will contribute to that growth. But of course, the fact that we are coming with 5 AAA games as well as free-to-play games will also contribute very nicely to this strong growth.

[Operator]

And we'll now take our next question from Doug Creutz of Cowen.

[Douglas Lippl Creutz, MD & Senior Research Analyst]

You guys emphasized that a big part of your success has been the growth of your catalog business. I'm just wondering how you're thinking about that in context of the console transition? Do you think you'll be able to transition that catalog business well over to the new consoles? Or will there be a bit of a reset period as you build up a library of next-gen games?

[Yves Guillemot, Co]

Yes, we will make sure all that catalog can play on the next consoles, and we think it will actually boost the sales of those games on the long run.

[Operator]

We'll now take our next question from Matthew Walker of Crédit Suisse.

[Matthew John Walker, Research Analyst]

So just a question for Yves. First of all, it's great that you're addressing all of these different issues with workplace culture. Can you just reassure us that basically, you're able to take on so many different things at this time, and you're not becoming sort of overloaded with activities having to take on the mantle of the Chief Creative Guy? And can you actually give us a few names of people who've taken over and stepped up to the plate in terms of creativity and management so that we can be reassured that this issue around keeping the games on track is being gripped? Because obviously, you've got 18,000 employees, but we need to know who are these people who are stepping up to take over responsibility? And then the second question is on the crowding aspect in Q4 in terms of the releases. It sounds like Valhalla's had a very strong reception. So I guess that's not an issue going up against Cyberpunk, but maybe you can speak to some of the other releases and say if you're worried about the crowding aspect, particularly in this holiday season.

[Yves Guillemot, Co]

Yes. Thank you for your questions. In fact, what we started at the beginning of the year was to increase the number of VPs in the editor organization. And we have done that on 2 of the teams. And that is really bringing fruits to how we follow our games. And so I have really a good team that now is following all the games that we are developing. So we will continue to recruit from our studios and from the outside, but mostly from our studios, people that are -- have been working on different games, so that we can have the necessary know-how and understanding of how to give advice and help the teams in our studios. And at the moment, I feel we have the -- we have a good team to follow the games that we have. And I see that we will be able to recruit from our teams other people that I think can really bring and help to continue to follow and also to inspire some of the teams that are developing the future games of the company.

[Frédérick Duguet;Chief Financial Officer]

In terms of the Q4 -- hello, Matt. In terms of Q4, yes, we are very happy with the visibility we have on the quality that we can expect on Assassin’s Creed and Watch Dogs. And we know that each time we come with great quality, we do very well. Assassin’s Creed has a unique fantasy in the landscape, and the Viking one is resonating very well. And we think that with the breakthrough we are bringing with Watch Dogs, we also have a very unique positioning, keeping in mind that we are coming in a quarter of very deep consumption with Thanksgiving and Christmas. And of course, again, as Yves mentioned, we will be strongly supported by the excitement around the new generation of consoles. So all this bodes well for a strong consumption in this quarter for our games.

[Operator]

We'll take our next question from Ken Rumph of Jefferies.

[Kenneth Charles Rumph, Equity Analyst]

If I could ask to begin with a couple of questions about this year and next year. Firstly, this year, just to try and understand how things have developed today versus when you gave your guidance in the middle of May. At the time, for instance, you mentioned that you're assuming that lockdown basically ends at the end of June, and you're now saying the end of July. So arguably, we've had some better news. As you said, the possibility of a game delay remains a possibility. So perhaps no change there. The other thing you were factoring in, particularly in the lower end of the guidance, was the unknown impact of recession, if you like. So have any of those things changed? And I guess you were factoring Hyper Scape because you knew about its costs. And as you say, you were being modest about expectations. But has any -- it would seem to me that we've had a little better news at this stage than you might have been factoring in in the middle of May.

[Frédérick Duguet;Chief Financial Officer]

Yes. So it's -- in terms of lockdown impact, yes, we said that today, we factor that lockdown might continue supporting the North American business until end of July while in the rest of the geographies, we don't see any potential impact in our assumptions so far. Yes, as you say, we -- when we look at where we are versus back in May, we benefit from a stronger visibility from the further good visibility and better visibility from back catalog. We think it's still too early to change our assumption on that side. But of course, it's there for the better. You're right, we had factored Hyper Scape from the beginning, and we have reasonable ambition on our free-to-play games this year. In terms of what we had factored in beyond the prudence relative to our employees working from home in terms of productivity, we also said that we need to be careful about the impact of the crisis on our business partners. So, so far, so good. But we're coming in a period where we'll need a strong support from our retailers when we launch our big games. So that's something we'll be looking at. As I said, so far, so good. We see that there has been some good resilience on that side so far. In terms of general consumption, we have not seen any negative impact so far, but that's also something that we're looking at. And just to come back to the work-from-home -- yes, sorry?

[Kenneth Charles Rumph, Equity Analyst]

No, please go ahead.

[Frédérick Duguet;Chief Financial Officer]

Just come back to the work-from-home that we spoke about earlier, what is -- we have challenges coming with work-from-home, but we have also lots of opportunities. And the fact that we are able to have people act and work on different projects all over the world is something that is also helping tremendously the different games that we are creating. And it's also helping our editorial team as well.

[Kenneth Charles Rumph, Equity Analyst]

Okay. I'm going to ask one question about the future, and then a question for Yves personally. The question about the future was just that we've heard some reports of further changes to Skull & Bones. I just wondered if there was anything to comment on that. But then I wanted to ask a question of Yves as a founder and CEO of the company, and more important people than me will ask, but in a sense, I could present the question regarding what's happened recently as kind of 3 options. Either as CEO, he didn't know this was happening -- or you didn't know this was happening, which is not great, or you perhaps didn't know enough and should have asked more? Maybe that's the answer. Or you knew, which of course would not be good. Now those are my possibilities. You may answer the question differently, but I'd like to ask what would be your answer to the question about your responsibility as CEO. And as I say, I'm asking the question, but probably more important people than me will ask it.

[Yves Guillemot, Co]

Yes. Thank you for your question. In fact, each time we have been made aware of misconduct, we made actually tough decisions and made sure that those decisions had a clear and positive impact. So that's very important. It has now become clear that certain individuals betrayed the trust I placed in them and didn't live up to Ubisoft shared values. So I have never compromised on my core values and ethics. I never will. I will continue to run and transform Ubisoft to face today's and tomorrow challenges.

[Operator]

We will now take our next question from Tom Singlehurst of Citi.

[Thomas A Singlehurst, MD & Head of European Media Research]

Tom here from Citi. Actually, just one question except it's about the launch of it -- I mean, the 2 titles you haven't given launch dates for: Gods & Monsters and I guess, Rainbow Six Quarantine. I mean they're both titles that would have come out last year. So it's interesting, and I see the point about more time being taken to sort of perfect the game. But I suppose the question is, one, just qualitatively, how fundamental has the overhaul of those games been, given they were potentially meant to be launched earlier this year, and they probably won't be launched till next? That's the first bit. And then the second bit is, leaving aside the risk of them getting delayed, is there just a higher risk that they won't succeed, given there's potentially been a much more fundamental overhaul of how they look or what they deliver?

[Frédérick Duguet;Chief Financial Officer]

Yes. So what is important to have in mind is that when we decided to postpone these games, we really wanted to take the most of the extra time, and that's what the teams have been benefiting from. And so it's about really providing even more depth to the game play and strengthening the key angles of the creative and artistic vision and also making sure that we further polish, refine, further balance the game so that, learning from last year, we come with a great player experience from launch. So I think the team are very excited with what they've been achieving so far. This is -- these are games that, as we said, are in polish time now. And it's clear that they're on track to be there in the fiscal year. And we're happy to show more, of course, in the next pulse points coming in the next month.

[Operator]

And we'll take our next question from Drew Crum of Stifel.

[Andrew Edward Crum, Vice President]

Okay. On Hyper Scape, can you discuss the content road map for the game in terms of the cadence or frequency around the add-on content? And then separately, I didn't hear you address Uplay+. Can you talk about its performance during the quarter under the stay-at-home mandates?

[Yves Guillemot, Co]

So on Hyper Scape, what we have to consider is that we have a very good team. And so they are going to provide a really high fare of content on a regular basis. They really plan to compete with the best there.

[Frédérick Duguet;Chief Financial Officer]

In terms of Uplay+, it's -- we had a nice uplift benefiting from the confinement. What is clear about Uplay+ is that we are here for the long term. And we expect that coming from the big releases that we have this year with massive content coming, Uplay+ will strongly benefit from this content coming.

[Operator]

And we'll take our next question from Charles Scotti of Kepler.

[Charles-Louis Scotti]

Yes. I've got 3 questions. Actually, the first one, it seems that the audience on Rainbow Six Siege has come back to pre-lockdown level. Can you tell us if you are experiencing the same trend across the board? The second question. There was a few articles mentioning a complete reboot of Skull & Bones and Gods & Monsters, that could even change the name. Can you give us a little bit more color on this? And finally, it seems also that you have canceled the closed beta of Roller Champions. When can we expect these games to be released? And have you changed your plan and game play on this game?

[Frédérick Duguet;Chief Financial Officer]

On Rainbow Six Siege, it's -- this game is really in better shape than ever. We've had a stellar quarter, we must say. Very strong growth, not only on the engagement side, but also on the acquisition side, which bodes well for the rest of the year, given the retention that we have on this game. In June, we continued to grow across platform, less meaningfully, but we continued to grow across platforms. And we also continued to grow in terms of engagements over the first 3 weeks of July. So we think this game is really in a very good position. We see the team that has a strong opportunity to further enhance and increase the value of the Battle Pass for the players. So that should provide a strong support in terms of engagement for Rainbow for the rest of the year.

[Yves Guillemot, Co]

For the 2 games, Gods & Monsters and Skull & Bones, they are well underway, and they are performing very well. So we are very happy with the way it's going on those 2 games. On Roller Champions, we are taking some time, refactoring some of the elements, thanks to the beta we did earlier. And we are making also lots of good progress on that game that we expect will be a very good one.

[Operator]

And our next question comes from Brian Fitzgerald of Wells Fargo.

[Brian Nicholas Fitzgerald, Senior Analyst]

Hello? Yes. Can you hear me?

[Yves Guillemot, Co]

Yes. Yes, Brian.

[Brian Nicholas Fitzgerald, Senior Analyst]

Sorry about that. Current consoles focus on selling a place to build communities with things like exclusives, et cetera. However, with the success of cross-play, Fortnite, Rocket League, those such things, the trend is pushing towards player ubiquity across platforms. Will cloud gaming, in your point of view, accelerate this, similar to what happened with physical to digital? How does Uplay figure in there? And then any comment on what we're seeing with the mobile app stores being scrutinized, Apple, for these kind of egregious or higher take rates?

[Frédérick Duguet;Chief Financial Officer]

Yes. So in terms of cross-play across platforms, including mobile, PC and console, we're happy to provide more and more of these cross-play experiences on free-to-play in the coming years and starting this year. It's true that we expect that streaming in the medium to longer term will allow players to enjoy AAA experiences on mobile as well. But it will -- of course, takes time before the 5G gives full speed on that. But that's what we expect in the medium to longer term.

[Yves Guillemot, Co]

It's a great opportunity for the industry. It's taking a little bit of time, but we feel that the next generation of games will be played on all screens. And we have good teams working on taking advantage of those technologies.

[Brian Nicholas Fitzgerald, Senior Analyst]

And one quick follow-up on the catalog because you guys highlighted it of particular performance and strength. To what degree are you seeing during the pandemic, lapsed players come back into the platforms, step back into the games or maybe step back in their catalog favorites? Is that a trend you're seeing with the pandemic and as we go forward, are you seeing it being more sticky as we reopen the economies?

[Frédérick Duguet;Chief Financial Officer]

Well, during the confinement, what we observed is that we got a strong contribution in terms of audience and engagement. What has been remarkable during this period is that we had a combination of recruiting a significant portion of new players. But also, we had the players, as you say, lapsed players coming back after 3 or 6 months into our games. And despite the fact that the audience was significantly higher, the engagement per player on average actually increased as well. And the revenue per session didn't go down. So that's why it's been very favorable across console and PC. As we said earlier in the call, it's still too early to anticipate the portion of these extra players and lapsed players that will stay for a longer period of time with us beyond the confinement. But what we see is that because we have such a wide and diversified catalog, we've taken the opportunity to see players circulating between our games, and we'll look at this opportunity moving forward.

[Yves Guillemot, Co]

And what is interesting is that many of the games that were less played before continued to be played a lot after confinement. So the rediscovery of some of our games was important for many players and for many families especially.

[Operator]

And we'll take our next question from Michael Ng of Goldman Sachs.

[Michael Ng, Research Analyst]

I was wondering if you could expand on your comments about engagement in June and July going back to January and February levels in some cases because of the end of lockdown in some European countries. Are you seeing a clear correlation in ending shelter-in-place measures and declining video game engagement? And could you just talk a little bit about how that informs your expectations for U.S. engagement and whether or not that -- whether or not there are any differences that may cause that behavior to be different than what we're seeing in Europe?

[Frédérick Duguet;Chief Financial Officer]

Yes. So it's true that we had -- we do see engagement level closer to January and June -- January, February, keeping in mind that January and February were very strong months for us. It's true to say that we continue to see strong engagement in the U.S., strongly growing versus last year. It's still difficult to isolate the latest impact because over the first week of July, we've seen still a strong growth in terms of engagement across the board versus last year. And we definitely benefit from the strength of our catalog. So it's not that easy to isolate the impact on confinement even if we see U.S. ahead of the other geographies. Over July, we've seen that we got the benefit of our growing free-to-play business, not only Hyper Scape but also Brawlhalla doing very well. And over the last week, actually, in terms of engagement, it's been super, super strong because we got the benefit of the Ubisoft Forward event, combined with strong promotion on our biggest franchises. So we are off on a good start in terms of engagement on this quarter. The only thing we can say today, it's too early to anticipate what will be the engagement beyond lockdown. We still see a stronger engagement in the U.S. in July. That's why we think that there is still a confinement impact there.

[Yves Guillemot, Co]

And on many of our games, which is very good. Sorry, go.

[Michael Ng, Research Analyst]

Oh, I just had a follow-up. Just on Rainbow Six Siege and Assassin’s Creed, the growth rates that you guys are seeing at the franchise level in the quarter, 30% for Rainbow 6 and Assassin’s Creed up 60%, could you just unpack that a little bit more? Is that largely PRI driven, or is that more unit sales?

[Frédérick Duguet;Chief Financial Officer]

It's been both. We've seen stronger dynamics on both sides, on acquisition growth and PRI. As we said just before, the PRI increase, multiplication by 8 versus last year on Origins, when we look at Odyssey over the quarter is a key revolution for the brand. But we also saw a strong acquisition, and it's clear that Valhalla helped a lot in driving the franchise to have such a stellar growth across all the Assassin's Creed games, but of course, mostly Odyssey and Origins. And for Rainbow Six Siege, the 30% growth is being driven both by acquisition and PRI.

[Operator]

And we'll now take our final question from Nick Dempsey of Barclays.

[Nicholas Michael Edward Dempsey, Research Analyst]

I've got 2 left. First of all, just on the question of $70 pricing that was discussed earlier, I think you said that your price for 3 games to be launched before Christmas at the $60 level. Does that mean that there's a possibility that you could run with $70 for any of the games launching in calendar Q1 of 2021? Second question, given the boost to engagement from lockdown to the start of this year and the fact that you have 5 games launching this year, are you still hopeful that you can show positive year-on-year growth in net bookings for FY '22?

[Yves Guillemot, Co]

So as we said earlier, for the $60 price, we are really concentrating on the Christmas releases. And we have decided that those games would be launched at $60.

[Frédérick Duguet;Chief Financial Officer]

Yes, on fiscal '22, yes, we said that we are shooting for top line growth relative to fiscal '21. We expect to release 3 to 4 AAA games, including Skull & Bones. That is a new brand. We also said that we will release free-to-play games, and they're still well on track on that side. And we rely on a very strong back catalog growth next year, including digital growth, including PRI, including mobile growth as well as strong growth from PC and Asia. So all of this is still well on track. As we said before, we're closely monitoring the productivity on each and every game that will be released next year, given the important level of employees still working from home. So that's still something that we are looking carefully.

[Operator]

And there are no further questions at this time. I would like to hand the call back to you.

[Yves Guillemot, Co]

Well, thank you very much for all your questions, and have a nice day or a nice evening. Thank you.

[Operator]

And that now concludes the call. Thank you all for your participation. You may now disconnect.