Ubisoft's Digital Strategy Includes Ramping Up Its Social Gaming Efforts This Year

Ubisoft, the third-largest independent videogame publisher in the U.S. and known for such hardcore console hits as Assassin’s Creed and Prince of Persia, is slowly ramping up its softer side by investing in its social gaming efforts.

The France-based company said it is hiring in its San Francisco office, and that more than 15 percent of Ubisoft’s Bay Area workforce will be focused on its social gaming business this year.

Currently, there’s roughly 300 employees, but that number is expected to grow.

To be sure, that’s a lot smaller than other social game makers, like Zynga, which employs 1,500, or even other major game publishers, like Electronic Arts and Disney, which have acquired social game companies Playfish and Playdom respectively.

But Ubisoft’s incremental investments in social demonstrate a broader appetite in the videogame industry for emerging platforms.

It’s part of a strategy Ubisoft calls “companion gaming,” said Chris Early, vice president of Digital Publishing.

We caught up with Early last week in San Francisco to hear more about the company’s increasing digital efforts.

Early defines companion gaming as having a single brand that crosses multiple platforms, including console, social and mobile.

An analogy he uses is how a baseball fan attends professional games, but also likes to read about the games in newspapers or on the Internet–a fan wants to engage across all platforms.

So far, Ubisoft has created 10 Facebook titles and has several more titles planned for the year, he said.

One of the more successful games is CSI Crime City, which Ubisoft made in collaboration with CBS.

It currently has a modest 1.9 million monthly users on Facebook, according to appdata.com. From there, Ubisoft’s titles drastically taper off, with its next title, Castle & Co., generating only 620,000 monthly users.

However, Ubisoft is using the platform to experiment with cross promotion.

For instance, it worked with CBS to create direct ties between the Facebook game and the TV show. During sweeps week last month, the TV show writers added clues in the show that could be used to unlock in-game bonuses on Facebook.

Early says the strategy is about putting the core intellectual property at the center of the experience and then building games based on that, whether it’s on Facebook, console or mobile.

Ubisoft’s mobile game efforts so far have consisted of mostly partnering with Gameloft, which builds the games. While Ubisoft used to own stock in Gameloft, its ties to the company are now limited to family relations. Ubisoft’s CEO Yves Guillemot is the brother of Gameloft’s CEO Michel Guillemot.

While questions arise in the industry on how much focus on social and mobile there should be right now, Early is cautious because he doesn’t see digital overtaking physical games anytime soon.

“Digital will not kill physical,” he said. “There will always be support for a certain percent.”

One primary reason for that is because digital platforms have infinite shelf space, which make discovery extremely difficult for the consumer, he said.

On Facebook, consumers must sift through thousands of titles to decide what to play. Same goes for Microsoft’s Xbox Live or Sony’s PlayStation Network. “You have to look at the top 10 sellers, or rely on a friend,” he said. “There’s a significant hurdle to digital.” The same has been said about mobile, where getting visibility on Apple’s App Store or the Android Market has been difficult.

He said with physical sales, stores have limited shelf space and customers can more easily browse through titles in a store and get recommendations from employees.

For now, there’s not a lot of pressure on Ubisoft from Wall Street to make a ton of money in digital. It hasn’t purchased a social-gaming studio for millions of dollars and therefore doesn’t have an urgency to see a return.

At least not yet.

It is forecasting revenues of $1.4 billion this year, which is about 17 percent higher than in 2010. It also expects that 2011 will mark a return to profitability and positive cash flow.

In addition to investments in Facebook, Ubisoft plans to support the launch of the Nintendo 3DS portable with more than six titles. It also is investing heavily in Microsoft’s well-selling Kinect platform. So far, it has sold more than two million games for the platform, giving it an 18 percent market share in the U.S.

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