Ubisoft's $3 million tournament shows why game publishers are betting big on esports

Key Points
  • Ubisoft's Six Invitational esports event kicks off this weekend.
  • it celebrates Rainbow Six Siege but, importantly, also shows how Ubisoft's business model has shifted.
  • Games are treated more like services, continuing to drive revenue over many years, instead of one-off purchases.
Ubisoft Six Invitational

A $3 million prize pool is on the line for gamers this weekend as Ubisoft's annual Six Invitational kicks off.

It's an event that not only celebrates the Ubisoft's Rainbow Six Siege game, but also how Ubisoft has used Electronic Sports (esports) to transition its business into a more modern "games as a service" model that's become a huge revenue driver for game publishers.

Here's a little history of how the invitational came to be, and why esports events are important to game publishers.

Rainbow Six

Ubisoft Six Invitational

Ubisoft has been releasing titles under the Rainbow Six games since 1999. But up until 2015, the franchise was primarily a narrative-based shooter that was focused on a single-player experience.

That year, the publisher released Rainbow Six Siege, which Ubisoft's senior vice president of marketing and customer experience, Tony Key, said was an attempt to reboot a series that had fallen into a "creative hole." At that time, much of the gaming industry had also moved towards a service model for games where consumers pay for subscriptions and in-game content.

Rainbow Six developers decided to lean into the game's multiplayer elements and to create a Rainbow Six entry that hinged on new kind of service model. Much of that involved a constant rollout of fresh content, in this case new "operators" (characters in the game) and new maps. Consistent content updates are important for publishers who want players to stay engaged and spend money.

That ultimately paid off for Siege.

"It was the first time [at Ubisoft] where there were more people playing a game 8 months to a year out," Key told CNBC. "We realized [what it was like] to run a service."

The Six Invitational

Ubisoft Six Invitational

Given that esports, at its core, provides additional content for a game's player base, it wasn't long before Ubisoft began throwing smaller events and contests for Siege fans. The first Six Invitational was launched in 2017 with an original prize pool of $100,000. This year's $3 million prize pool – capped by Ubisoft – was crowd-funded by revenues from an in-game battle pass bought by players.

But Ubisoft hasn't been alone in buying into the esports hype, especially as more traditional publishers also race to adapt to the modern games business with esports generating much of the needed content.

American publisher Activision Blizzard, for example, has had a handful of their games become grow on the competitive scene, but it wasn't until the launch of its Overwatch League in 2017 that the publisher ran an esports league of its own. Last month, Activision Blizzard launched its competitive Call of Duty league more than a decade since the game's first installment was released.

Siege has managed to increase its registered player base on a consistent basis, now clocking in at over 55 million registered players from the 10 million users that were first reported in November 2016.

It also generated Ubisoft more than $1 billion in revenue in less than four years, according to the publisher's earnings report last May. The company has committed to sustaining the game for another ten years.

Ubisoft's senior director of esports, Che Chou, emphasized that Ubisoft's esports operations serve as marketing for the game and to help provide continued interest as the game ages.

"It's an understanding that for a game that's five years old, you can't market it the same way as a game that just launched," he said.

Since Siege's release, Ubisoft has committed more heavily towards transitioning many of its franchises and new titles into service games. It also released its subscription gaming service Uplay+ last June. And it aims aim to grow the esports scene for a few more of their titles.

"We want to create an ecosystem [and it's] what we're starting to do with our different games like Brawlhalla," said Chou. "We're going to lean into the competitive community and keep investing in these programs for our players to stay around."

Ubisoft stock is up 19 percent year to date, even though the company reporting a drop in net bookings in its earnings report earlier this month. The company exceeded its forecast, however, and CEO Yves Guillemot attributed some of its success in part to continued interest in Rainbow Six Siege and other older titles.

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