Ubisoft announced earlier today that the release of Skull and Bones has been delayed. But the news of the delay came as part of a larger update that reflects the company's real problem: Ubisoft is in dire straits and has chosen to cancel three more unannounced projects in order to focus on its existing brands and live services.

In recent years, the gaming industry has shifted toward "mega-brands and long-lived titles that can reach players worldwide across platforms and business models," Ubisoft said in an update. For the past four years, Ubisoft has tried to do the same with its flagship titles, including "Assassin's Creed," "Far Cry," "Ghost Recon," "Rainbow Six" and "The Division. But it has not borne fruit: the games announced in the "investment phase" of this strategic shift have not yet come out, and the most recent releases have not lived up to expectations.

"We are clearly disappointed with our recent performance," Ubisoft CEO Yves Guillemot said in a statement (open in new tab). We face contrasting market dynamics as the industry continues to shift to megabrands and everlasting live games against a backdrop of deteriorating economic conditions affecting consumer spending."

"Despite excellent ratings, player reputation, and an ambitious marketing plan, 'Mario + Rabbids' surprised: 'Sparks of Hope' underperformed in the last week of 2022 and early January; 'Just Dance 2023' did equally poorly; and 'The Last of Us' was a disappointment."

But Ubisoft's troubles run much deeper than a couple of holiday flops. At the risk of oversimplifying things, nothing seems to be happening; Skull and Bones may be the most famous example of Ubi's recent inability to develop games, but the three unannounced projects that were canceled today are the same three that Ubisoft has been working on since Ghost Recon Frontline" and "Splinter Cell VR," just six months after Ubisoft announced the cancellation of four other games in development (open in new tab).

Frontline was a particularly stinging loss. It was announced in 2021 as a military-themed battle royale (open in new tab) game, perhaps a game like Call of Duty: Warzone, Apex Legends, Escape From Tarkov, or Hunt: Showdown The goal was to give Ubisoft a presence alongside games like "Call of Duty: Warzone," "Apex Legends," "Escape From Tarkov" and "Hunt: Showdown. Now, less than a year later, Ubisoft is merely watching the success of these games from the outside and has no plans to enter the game market itself.

But there is a bigger problem for Ubisoft. The company has canceled seven projects within one fiscal year, with nothing to show for it. There are also no big live-service games like "Apex Legends" or "GTA Online: Ghost Recon Frontline," "Hyper Scape" (open in new tab), "XDefiant" (open in new tab), and other efforts have all been abandoned, and " The Division: Heartland" (opens in new tab) was supposed to be released later this year, but has already been largely forgotten. (Incidentally, Heartland was also postponed and was originally scheduled to launch in 2021-22.) Ubisoft's best candidate for a live service hit would be Assassin's Creed Infinity (open in new tab).

To be fair, some of Ubisoft's troubles are just plain bad luck. Rainbow Six For example, "Extraction" (opens in new tab) was an interesting escape shooter, but was quickly forgotten after its release in early 2022.

But as we noted in December (opens in new tab), Ubisoft can't even seem to make the games it already made; the "Prince of Persia/Sands of Time" remake, which was supposed to be released in early 2021, seems to be stuck in limbo ( opens in new tab), and the only news about the "Splinter Cell" remake announced for 2021 is that the director quit in October 2022 (opens in new tab).

Ubisoft's final costs are ugly. The company depreciated approximately €500 million ($538 million) in capitalized research and development costs related to "upcoming premium and free-to-play games and newly cancelled titles," which essentially means that the money spent on developing these games is This means that the money spent on the development of these games is essentially going down the toilet. The company has also revised its net sales target for the third quarter of the current fiscal year sharply downward from 830 million euros ($893 million) to 725 million euros ($780 million). In addition, Ubisoft aims to cut costs by another 200 million euros ($215 million) over the next two years through "targeted restructuring, the sale of some non-core assets, and normal natural attrition."

Ubisoft is still struggling and is an attractive acquisition target. The company successfully fought off a protracted takeover bid by Vivendi in 2018, and the Gilmo family, which founded Ubisoft in 1986 and still holds a controlling stake, has repeatedly stressed its desire to "remain independent." However, Ubisoft's share price has dramatically buttressed over the past five years, from a high of 103 euros in July 2018 to less than 24 euros today, which makes it very hard to turn down a high offer like the one made by Chinese giant Tencent last year.

All of this, of course, has arisen on top of high-profile allegations of sexual abuse and misconduct (opens in new tab) at various Ubisoft studios, the lessons of which do not seem to have fully sunk in yet (opens in new tab).

While not necessarily a death sentence for Ubisoft, the company is clearly in a bad situation. To turn this situation around, the company will need to not only cut costs, but also make significant changes in its ability to actually make and release games. As is often said of farmers, it is an arduous path.