Game On: Tencent, Guillemot family weigh taking Ubisoft private

“Game On” is The Fly’s weekly recap of the stories powering up or beating down video game stocks.

NEW RELEASES: Among this week’s most notable new releases is Activision Blizzard’s (MSFT) “Diablo IV: Vessel of Hatred,” a downloadable expansion to 2023’s “Diablo IV.” The game released October 7 for PlayStation 4 (SONY), PS5, PC, Xbox One, and Xbox Series X/S. Also out this week is Konami’s (KONMY) remake of horror game “Silent Hill 2,” which launches October 8 for PC and PS5. Meanwhile, Bandai Namco’s (NCBDY) fighting game “Dragon Ball: Sparking Zero” launches October 11 for PS5, Xbox Series X/S, and PC, while Sega’s (SGAMY) role-playing game “Metaphor: ReFantazio” comes out October 11 for PS4, PS5, PC, and Xbox Series X/S.

UBISOFT TAKE-PRIVATE TALKS: Late last week, Bloomberg (TCEHY) and the Guillemot family are considering options including a potential buyout of Ubisoft (UBSFY) after the company lost more than half its market value this year. Tencent and Guillemot Brothers Ltd. have been speaking with advisers to help explore ways to stabilize Ubisoft and bolster its value, with one of the possibilities being teaming up to take the company private, sources told Bloomberg.

Days after the report broke, a spokesperson for the French game publisher acknowledged the recent report and told VideoGamesChronicle that it “regularly reviews all its strategic options.” “Ubisoft has noted recent press speculation regarding potential interests around the Company,” a spokesperson told VGC. “It regularly reviews all its strategic options in the interest of stakeholders and will inform the market if and when appropriate… The Company reiterates that management is currently focused on executing its strategy, centred on two core verticals – Open World Adventures and GaaS-native experiences.”

The news prompted upgrades to the stock from UBS and Bernstein, both of whom upgraded their firm’s ratings to Neutral-equivalent, while Barclays reiterated its Equal Weight rating and noted that it remains difficult to know what a potential bid price for Ubisoft would be. The firm noted, however, that it is possible that Ubisoft’s four largest AAA intellectual properties – namely “Assassin’s Creed,” “Rainbow Six,” The Division,” and “Far Cry” – could be worth more than the current equity value of EUR2.5B.

GOOGLE/EPIC: After a U.S. judge ordered Alphabet’s (GOOGL) Google to overhaul its mobile app business to give Android users more options to download apps and to pay for transactions within them, the company’s vice president of Regulatory Affairs Lee-Anne Mulholland said that the search giant plans to appeal the ruling, adding that the Epic Games vjury verdict that prompted such changes “missed the obvious.” “Today, the court overseeing our ongoing U.S. legal proceedings with Epic Games ordered changes to Android and Google Play, requested by Epic,” said Mulholland. “As we have already stated, these changes would put consumers’ privacy and security at risk, make it harder for developers to promote their apps, and reduce competition on devices. Ultimately, while these changes presumably satisfy Epic, they will cause a range of unintended consequences that will harm American consumers, developers and device makers. These Epic-requested changes stem from a decision that is completely contrary to another court’s rejection of similar claims Epic made against Apple – even though, unlike iOS, Android is an open platform that has always allowed for choice and flexibility like multiple app stores and sideloading. We are appealing that underlying decision and we will ask the courts to pause Epic’s requested changes, pending that appeal.” Investors in Epic Games include Tencent, KKR (KKR), Disney (DIS), and Sony.

ROBLOX SHORT REPORT: Roblox (RBLX) has reported net losses every quarter since becoming a public company, with last twelve months losses totaling $1.07B, Hindenburg Research stated in a report in which the firm discloses that it holds a short position in the stock. “Since Roblox isn’t profitable, its stock price (and, in turn, insiders’ ability to dump hundreds of millions of dollars of stock) is reliant on the growth metrics it presents to Wall Street. Our research indicates that Roblox is lying to investors, regulators, and advertisers about the number of “people” on its platform, inflating the key metric by 25-42%+. We also show how engagement hours, another key metric, is inflated by an estimated 100%+,” the firm stated in its short report. The firm adds that it believes “Roblox intentionally conflates ‘people’ with DAUs, consistently inflating the reported number of people on its platform.” The short-selling firm added: “Beyond inflated key user metrics, our in-game research revealed an X-rated pedophile hellscape, exposing children to grooming, pornography, violent content and extremely abusive speech.”

Following the report, a Roblox spokesperson told Bloomberg that the company “totally” rejects the claims made in the report. “The authors are, admittedly short sellers (and have an agenda irrespective of the substance of Roblox’ business model and results)…We firmly believe that Roblox is a safe and secure platform and in the financial metrics we report,” the spokesperson said.

Click here to check out recent Media Buzz Sentiment on Roblox as measured by TipRanks.

SAUDI ARABIA PIF GAMING INVESTMENTS: Reuters lowered its stake in Nintendo (NTDOY) to 7.54%-8.58%. Other Japanese video game companies PIF currently has a position in include Nexon (NEXOY), Capcom (CCOEY), and Koei Tecmo (TKHCF).

MORE VIDEO GAME NEWS:

• U.K. video game sales rose 8% year-over-year in September, rebranded as Halo Studios and has shifted development of future “Halo” projects to Unreal Engine 5 from its proprietary Slipspace engine
• Epic Games CEO Tim Sweeney said that ecompany is now “financially sound,” Gamesindustry.biz says
• Take-Two’s (TTWO) Rockstar Games said that 2010 game “Red Dead Redemption” will release on PC for the first time on October 29, 2024