Good day, and thank you for standing by. Welcome to the Ubisoft full year 2023-24 earnings webcast and conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there'll be a question-and-answer session. To ask a question during the session, you will need to press star 1 and 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 and 1 again. Please be advised that today's conference is being recorded. I would now like to turn the conference over to your speaker today, Yves Guillemot. Please go ahead.
Welcome, everyone, and thank you for joining the call today. Our financial year 2024 results confirm Ubisoft is back on track on its profitable growth trajectory, with record annual and Q4 net bookings, operating income, and cash flow per operation aligned with our targets. This year marked a pivotal first step in our turnaround, showcasing solid performance and the first benefits of our transformation toward a more balanced and recurring business model, one supported by multiple revenue streams. The year also demonstrated the strengths and value of our key assets, including: our talented global teams, a diversified portfolio of high-quality franchises which drove our back catalog revenues to all-time highs, passionate communities of fans across our franchises, cutting-edge proprietary technologies, and a unique position in the gaming industry that enabled us to sign profitable B2B partnerships.
At the same time, we continued to adapt to a fast-changing industry and made further progress on transforming the organization at all levels. I will now let Frédérick detail our financial performance. Frédérick?
Yes, thank you, Yves, and hello everybody. The year was marked by improved activity metrics across console and PC, with 138 million unique active users, up 4% versus last year, and MAUs at 37 million, also up year-on-year. Playtime progressed well, up 12% year-on-year, with higher PRI per hour. Full-year net bookings came out at record levels, reaching EUR 2.3 billion, up 33% year-on-year. Our Q4 net bookings stood at EUR 873 million, up 179% year-on-year. Record back catalog was a key driver for Ubisoft performance this year, with net bookings up 49% to EUR 1.5 billion. It notably reflects a stellar Rainbow Six Siege performance, as well as our capacity to increasingly value and monetize our IPs through B2B partnerships.
Rainbow Six Siege, in its ninth year, strengthened its leadership in the highly competitive first-person shooter live services landscape, with impressive and sustained numbers throughout the year: the phenomenal reception of the six invitationals that broke all previous viewership records, a record battle pass conversion, and multiple gameplay and player safety improvements contributed to the game's remarkable performance this year, with net bookings up more than 50%. Session days grew significantly year-on-year, up 38%, and session days per player grew 24%, leading the game to start fiscal year 2025 in very good shape. Indeed, in April, we have already seen an acceleration of its year-on-year session days growth versus Q4.
Additionally, the introduction of the marketplace beta generated a positive reaction from the community and bodes well for the future of the game thanks to the potential of much stronger network effects.
The Assassin's Creed back catalog continued to outperform in Q4, benefiting from the recent Assassin's Creed Mirage launch and the inclusion of Assassin's Creed Valhalla in the Game Pass. Overall franchise quarterly active users grew double-digit year-over-year. The overall brand grew net bookings by more than 30% over the year. I will also like to highlight that the Assassin's Creed and Rainbow Six franchises both benefited from solid fan bases, each surpassing 30 million unique active players over the year.
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Activities, as well as its well-balanced economy.
Yves, quadrupling year-on-year. For its part, Assassin's Creed Mirage contributed to the strengths of the franchise, winning the audience award of the 2024 Pégases ceremony, and players continued to engage in the game that notably saw the addition of the Permadeath mode in February. And finally, Avatar: Frontiers of Pandora was praised for the visual quality of its world, setting an industry benchmark and showcasing the power of Ubisoft's Snowdrop, our proprietary game engine. Furthermore, in an industry marked by strong demand for high-quality content, the uniqueness and attractiveness of Ubisoft's portfolio of wholly owned IPs was once again highlighted this year, thanks to our continued ability to sign profitable B2B partnerships that are incremental to the lifetime value of our back catalog titles while providing quality content for our partners.
Together, we continue to unlock and create value and deliver great experiences for a growing number of players. The year was also marked by B2B partnerships on streaming, including licensing the Activision Blizzard streaming rights on a non-exclusive basis. Total digital net bookings reached EUR 1,988 million, up 34% year-over-year, and PRI stood at EUR 879 million, down 12% year-over-year. The latter is due to last year's significant contribution from the licensing agreement granted to Tencent to publish Assassin's Creed Jade. For its part, mobile revenues stood at EUR 138 million. Let me now go into the detail of our earnings. First, you will find our non-IFRS P&L on slide six of our presentation.
Gross margin was firmly up year-on-year by 370 basis points to 91.2%, notably reflecting the growing back catalog, the partnership we signed this year, and to a lesser extent, the impact from the cost reduction program. R&D was down year-on-year. I will come back to that on the following slide. SG&A was up 10%. This reflects a 4% decrease in our fixed cost structure, representing EUR 17 million that was more than offset by higher variable marketing expenses to support our much larger new release schedule versus a year ago. Non-IFRS EBIT came out at EUR 401 million, in line with our objective.
Please refer to our press release or presentation appendix for the full IFRS to non-IFRS reconciliation. Turning now to slide 7. P&L R&D was down 26% year-on-year, of EUR 369 million, reflecting the accelerated depreciation we booked in the previous year.
For its part, total cash R&D was down 5%, of EUR 73 million. The reduction in the capitalized investment that will flow through the P&L over the coming years is EUR 112 million. While we got costs firmly down, we sustained investment to pursue solid net booking growth over the coming years, and notably in fiscal year 2025, which resulted in a still meaningful cash R&D versus P&L gap of EUR 229 million. Looking at our cash flow statement on slide 8, free cash flow stood at EUR 509 million, down year-on-year.
This mostly reflects the following impacts: on the one hand, as expected, positive cash flow for operation that stood at EUR 91 million, and on the other hand, working capital requirement increase of around EUR 500 million, notably related to elevated trade receivables on the back of a record Q4, as well as a year-on-year increase in investment in capital assets relative to the acquisition of the Activision Blizzard streaming rights last October. Non-IFRS net debt stood at EUR 985 million, and cash and cash equivalents amounted to a comfortable EUR 1.2 billion.
We expect to grow non-IFRS cash flow for operation next year, leading to positive free cash flow generation. Of note, equity increased strongly over the exercise by around EUR 400 million, up to a solid position of nearly EUR 1.9 billion. I will now like to provide an update on the cost reduction plan on which great progress has been made this year.
In Q4, there have notably been further reorganization within the global publishing teams, both at the APAC region that is now organized into three engagement hubs and at the central level. Thanks to the targeted restructurings combined with the continued tight control on recruitment this year and more selective investment, the total number of employees stood at 19,011 at the end of March 2024.
This represents a decrease of more than 1,700, or -8% over 18 months, while retention has continued to improve over the period. Overall, this has led to a reduction in our fixed cost base by around EUR 150 million this year, or 8% at current foreign exchange, including a close to EUR 50 million favorable foreign exchange impact. As said, out of the EUR 150 million, EUR 112 million was a reduction in capitalized investments, which will flow through the P&L in the coming years.
The remaining part that positively impacted the P&L was EUR 38 million. While there remains work to be done, we are on track to reach the annual EUR 200 million cost reduction objective by fiscal year 2026. Additionally, in line with the increased selectivity of our investment, we have decided to stop development on The Division Heartland and are redeploying resources to bigger opportunities such as XDefiant and Rainbow Six Siege.
Turning to the outlook, we expect for fiscal year 2025 solid net bookings growth, a slight increase in non-IFRS operating income, and growing non-IFRS cash flow for operations, leading to positive free cash flow. So let me summarize the different moving parts that explain the expected slight increase in operating income. First, the solid net bookings growth will be driven by a mix skewed towards stronger releases compared to last year.
Our much bigger releases on the premium side than last year will come with significantly higher R&D, royalties, and marketing expenses in year one, as we are coming with strong ambitions for this. Our free-to-play releases will come with an expected negative contribution, reflecting early cautiousness in the guidance in year one for this new business model. Yet, this higher contribution coming from new releases, together with a growing Rainbow Six Siege and the impact of our cost reduction program, are expected to be partially offset by a lower contribution from high-margin partnerships. The above translates into gross margins likely declining year-on-year. P&L R&D expected to be above the historical range of 35%-40% of net booking, and SG&A expected to be at the high end of the historical range of 25%-30%.
As always, here are a few fiscal year 2025 housekeeping items for modeling purposes. Stock-based compensation is expected at around EUR 60 million. The non-IFRS net financial charge is expected at around EUR 45 million, reflecting the full-year effect of the additional financing of last year. The non-IFRS tax rate is expected at between 30% and 35%, and the number of weighted shares is expected at around EUR 157 million, mostly reflecting the full-year impact of the recently issued convertible bond. Now turning to the lineup for this fiscal year.
It includes, on the premium side, Assassin's Creed Shadows and Star Wars Outlaws, two of the industry's most anticipated games for the year. And on the free-to-play side, Rainbow Six Mobile, The Division Resurgence, and XDefiant. Ubisoft Forward would take place on June 10th and will provide updates on the upcoming releases.
Star Wars Outlaws recently had its comeback with a story trailer generating excitement and anticipation for its upcoming release on August 30th. Developed by Massive, the first-ever open-world Star Wars game, we invite players to live out a scandalous fantasy as Kay Vess and her loyal companion, Nix. They navigate the underworld, including formidable crime syndicates, to pull off one of the greatest heists of the galaxy has ever seen, exploring both iconic and new distinct locations. Assassin's Creed Shadows, the next flagship title in the franchise and the future of the open-world RPG in Assassin's Creed, was just revealed a few minutes ago through the official cinematic world premiere trailer.
Set to release on November 15th and developed by Ubisoft Quebec, the studio behind Assassin's Creed Odyssey, the game will let players embark on a journey through feudal Japan, a setting that has been long awaited and highly anticipated by the community, featuring an all-new generation of the Anvil engine technology. XDefiant, a PC and console free-to-play GaaS-native game, will launch its preseason on May 21st. Developed by Ubisoft San Francisco, the fast-paced 6v6 first-person shooter arena experience will leverage factions from different Ubisoft's, enabling players to enjoy varied play styles. The game will start with 14 maps, five game modes, five playable factions, and will be enhanced by regular new content updates every quarterly season. To conclude, we expect Q1 net bookings to come in at around EUR 275 million, representing a slight year-on-year increase of 3%.
There will be no new release in the quarter, with the exception of XDefiant, for which we have strong ambitions in the long term but are initially cautious that it is a new business model for us. Of note, this quarter will see the port of Assassin's Creed Mirage to mobile on iPhone 15 Pro, thanks to our Anvil technology and our engineers that, together with the Apple teams, have adapted the AAA game controls to the touchscreen, delivering a comfortable and engaging gaming experience. This breakthrough opens new opportunities for AAA games to be natively developed on our proprietary technology and further expand the reach of our big IPs within and beyond our core mature markets. I will hand it back to Yves, who will say a few words on our current strategy focus.
Thank you, Frédérick. As you have seen, in financial year 2024, we realized initial returns from our ongoing transformation, advancing our strategy to expand the global reach of Ubisoft's biggest brands and enhance our recurring model through long-lasting live games. As a result of detailed market analysis, as well as a pragmatic and more selective organic investment strategy, we are playing to our strengths and sharpening our strategic focus on two verticals: open-world adventures and GaaS-native experiences. This focus not only offers profitable growth and recurrent prospects but also allows us to leverage and better cross-fertilize our established brands as well as our proprietary technologies to reach and sustain a competitive advantage. Our first objective is to return to leadership in the open-world adventure, which are immersive worlds with a rich lore that deeply engages players.
The open-world adventure market represents EUR 25 billion today and is expected to grow over the coming years. This market is dynamic, frequently benefiting from technological disruptions, and is characterized by high barriers to entry. We can rely on big franchises such as Assassin's Creed, Far Cry, The Division, Ghost Recon, and Star Wars to address this market. This will start, as Frédérick mentioned, in financial year 2025 with the launch of Star Wars Outlaws and Assassin's Creed Shadows, and will continue in future years as we deliver immersive experiences that can attract more players into our universes and reach new audiences, notably thanks to multiplayer and mobile.
Our second objective is to expand our footprint in GaaS-native experiences, one of the major segments in the video game industry. It currently represents EUR 120 billion. It's a growing market and has the largest total addressable market in terms of number of players.
In this segment, we have notably successfully installed Rainbow Six Siege, which has become one of our largest and most profitable games. The objective is to expand our footprint in this dynamic market, notably thanks to growing our existing experiences as well as the upcoming releases of XDefiant, Rainbow Six Mobile, and The Division Resurgence. We are fully convinced that our proprietary cutting-edge technologies will provide critical competitive advantages in these two core verticals, driving not only efficiency but also differentiation. Ubisoft has always been a technologically forward-looking company and has significantly revamped its engine model in recent years through a dual approach. First, we have streamlined, consolidated, and rationalized our tech assets to achieve economies of scale.
Notably, we have rationalized the branches of Ubisoft Anvil and Snowdrop, our proprietary game engines, converging on just two reference branches shared among our games in production, enabling our teams to focus on breakthrough innovations and facilitating sharing across studios. The impact will be notably visible this year with the release of Star Wars Outlaws and Assassin's Creed Shadows. Second, we continue to invest in the potential of new technologies that can open new frontiers for creativity and players' experience, especially generative AI.
Notably, at GDC 2024, we unveiled Neo NPC, our first player-facing generative AI prototype. It is designed to transform the way players interact with non-playable characters and create more immersive gameplay experiences by natively integrating generative AI features. And beyond several ongoing internal projects, we are also partnering with leading AI companies on joint initiatives. We are also pursuing a pragmatic and selective organic investment approach.
The aim with this increased focus is to drive growth and recurrence with the objective to gradually expand operating income and generate robust free cash flow. Thanks for listening, and we are now ready to take your questions.
Thank you. To ask a question, you will need to press star one and one on your telephone and wait for your name to be announced. To withdraw your question, please press star one and one again. Please stand by while we compile the Q&A roster. Once again, if you would like to ask a question, please press star one and one. We will now go to our first question. One moment, please. Your first question comes from the line of Nicolas Langlet from BNP Paribas. Please go ahead.
Hello. Good afternoon. Yves, Frédérick. I've got three questions, please. First, on the licensing deals and partnership. So can you help us quantify what was the impact in Q4 and how it split between the back-catalog partnerships and the streaming licensing deals? And looking at full year 2025, have you included any contribution from, let's call it, non-recurring licensing deals or partnerships compared to the usual level? Second question, on The Division Heartland, have you already written down all the capitalized development costs, or it will be part of full year 2025? And finally, on the reorganization, so you announced it early 2023. Since then, the market condition has been tougher than expected, and many companies have announced multiple restructuring. So given the current market condition, would you consider going beyond the EUR 200 million non-variable cost reduction? Thank you.
Thank you, Nicolas. So on your first question, as we said, early February, we expected a significant contribution in Q4 from B2B partnerships. That came in line with what we expected. We've been happy to materialize a profitable partnership. I won't provide you with the split between the different ones. What we can say relative to the non-exclusive licensing and the streaming rights is that the revenue came in at a higher level than the initial purchase price, which we said had been comprised between EUR 50 million and EUR 100 million. So we've been happy to already secure a strong return on investment. In fiscal year 2025, as I said, yes, we included further partnerships.
As we've said in the past already, we've seen recurring revenue streams from this B2B partnership because we see a diverse number of players that want to get access to high-quality content and to get access to our high-quality back catalog. So we will continue, but to a lower extent than in fiscal year 2024. For Heartland, yes, it was a difficult but necessary and important decision to decide to stop the game as we see bigger opportunities coming with XDefiant and Rainbow Six. Yes, we already depreciated the full game costs.
And in terms of the cost reduction, as we mentioned, we've been progressing along the lines that we had defined in a significant manner, combining selective investment, strict control on recruitment, reduction in real estate footprint, reassessing external spending both in the production and IT side, and proceeding with targeted restructuring. And we will continue along these lines.
We are confident to deliver on the EUR 200 million at least objective, but there is still meaningful work to do to get there. So we will stick to that objective for now.
Perfect. Thank you.
You're welcome.
Thank you. We will now go to your next question. Your next question comes from the line of Nick Dempsey from Barclays. Please go ahead.
Yeah. Good evening. I have three questions. So first of all, just on your guidance for Q1 net bookings, it's more or less in line with the first quarter of 2024. Considering the Rainbow Six Siege, it sounds like it is continuing to do well. You should have some follow-on unit sales from some of your launches in the second half of 2024. I don't think there were notable partnership deals in the first quarter of 2024, and you've got XDefiant coming up. Why wouldn't the first quarter of 2025 be higher than first quarter of 2024? That's the first question. Second question, apart from games that are always in the portfolio, like Just Dance, are you building into your guidance any releases that you have not yet revealed to us?
The third question, looking at your geographical splits in Q4, quite a big spike up in North America, can we assume that the partnership deals were very weighted to partners from that region?
So on the first question, yeah, we are usually cautious with our early guidance getting into the year. So that's what is being reflected here. We are happy indeed to see early strong progression from Rainbow Six Siege, so that bodes well for the rest of the year. In terms of the new releases for the full fiscal year, we're happy with what we shared with you today. So we have nothing more to share. Just one word around Just Dance that you mentioned, which has moved to a live service model. So it's now being reported as back catalog. On your third question, yeah, so in North America, indeed, it was a higher number significantly versus last year. That reflects the profile of our new releases, the fact that Rainbow Six Siege has had a remarkable growth, and first-person shooter games are particularly stronger in the U.S.
Yes, to some extent, a repartition of the partnership revenues.
Thank you, Frédérick.
You're welcome, Nick.
Thank you. We will now go to the next question. Your next question comes from the line of Ed Young from Morgan Stanley. Please go ahead.
Good evening. Thank you. I've got two, please. First of all, it's a very strong net bookings number for the year just reported. You talked about strong growth. Perhaps it's certainly a beat from where consensus was. Is that what you anticipated? Is that what you really thought strong would be? Or is it a little bit? Is it fair to say that's above your expectations going in? And if so, how do we bridge the IFRS non-operating profit being in line with where you originally came to? And then second, there was some discussion there about generative AI and NPCs and sort of the very sort of start point of that.
Do you have any formed view on what kind of efficiencies AI can generate in terms of efficiency production or better production in terms of how you think about the opportunity set, let's say, the next 1-2 years? Or is this very much kind of theoretical upside as you think of it? Thanks.
Yeah. Hello, Ed. Thank you for your question. So yes, for Q4, net bookings came in line with our expectations. As I said, the B2B partnership came in as we anticipated. We had a softer launch than expected on Skull and Bones that was offset by an overperformance from Rainbow Six Siege.
On the GenAI, we really have two groups working on GenAI, one for the different jobs that we have: marketing, sales, IT, legal, and all the other jobs, where we look at how we can be more efficient and how we can automate a certain number of things. And that's coming along quite well with good systems to improve our efficiency there. And on the other side, it's how we can improve the quality of our games in making those games more alive. So we did present Neo NPC at the last conference, and it was well appreciated. And it showed what we'll be able to do in our games that will make them more alive and richer. So I expect a lot from GenAI in our games to make our games more interesting and for people to really have a personalized experience.
Thank you. We will now go to the next question. Your next question comes from the line of George Brown from Deutsche Bank. Please go ahead.
Perfect. Good afternoon, guys, and thanks for taking my questions. I have 2, if I may. Just firstly, how should we think about your free-to-play contribution for next year? I notice you have several games now confirmed to release. How do you account for these games in your guidance for next year? And also for your Q1 net bookings guide, how are you accounting for XDefiant? And then secondly, can you help us understand what you mean with your guidance for next year? You expect strong net bookings growth in fiscal year 2025. Does that mean above or below 10% growth? And then on profitability, you expect a slight increase over the year. Again, is that above or below 10%? Thanks, guys.
Thank you, George. So on the free-to-play side, as we said, we are very excited to come with three games that will be contributing to growing our game-as-a-service native experiences, starting with XDefiant next week. As I mentioned, because it's a new business model for us, naturally, that led us to take a true stance in terms of top-line expectation for fiscal year 2025. So that's why we factored in a negative contribution this year. As for the net booking growth and profitability progression, I won't provide you with more granularity.
What we can say is that we expect a solid net booking growth, mostly driven by our new releases and mostly coming from premium launches such as Star Wars and Assassin's Creed. And in terms of profitability, as we said, it would be growing slightly. And that reflects a stronger mix skewed towards new releases.
That would be partially offset by a lower contribution from high-margin partnerships.
Perfect. Thank you.
You're welcome.
Thank you. We will now go to the next question. Your next question comes from the line of Ali Naqvi from HSBC. Please go ahead.
Hi. Good evening. Thank you for taking the questions. Could you just sort of break down the working capital outflow this year in a bit more detail, please, and just link to that? I mean, the partnership revenues, what is the sort of cash conversion on those, and how material should we think about that in terms of working capital contributions for next year as well? Secondly, just on The Division Heartland cancellation, could you just talk about how this sort of new strategy from open-world games and games as a service reconciles with your previous strategy of focusing on the five key IPs? Should we no longer think about that? Is this the new sort of guidance on how to think about it on a conceptual basis?
And then finally, in terms of the Star Wars revenue split, will you book 100% of it in your bookings and then pay royalties? Or how will that be accounted for, please? Thank you.
Yeah. Hello, Ali. So the breakdown in terms of working capital increase in fiscal 2024 is pretty simple. It was nearly all driven by the fact that we delivered a record Q4, so leading to a high level of trade receivable. In terms of cash conversion from partnership, these are, of course, sensitive information that we keep confidential, so we don't share the payment schedule. What we can say is that the majority of this cash will be cashed in within the first 18 months and a significant part of it within the first year. In terms of working capital for next year, we're not guiding specifically on this. We said that we expect cash flow from operations to grow versus fiscal 2024 and that will lead to positive free cash flow.
On the new strategy, in fact, the strategy is very close to the one we had. It's just more focused on action open-world adventures and GaaS-native games. Heartland was not really aligned with that strategy.
It stays very consistent with our focus on the big IPs, on our five big IPs. As we mentioned, Ghost Recon, The Division, Assassin's Creed, Far Cry are very important IPs for us to secure strategic territories in the open-world adventure market and to grow from there, and notably to bring multiplayer and mobile there. Game-as-a-service, of course, starts with the expected growth from Rainbow Six, but not only, all our other existing GaaS-native brands, but also making sure that we create new experiences such as XDefiant contributing to that.
As for The Division, we have an ambitious roadmap that relies on investing in The Division 2. The Division Resurgence will come on mobile this year. We have The Division 3 that is in development. In terms of Star Wars, so we will have the revenues that will be reported like any other games.
The royalties that we'll be paying will be a function of the economic success of the game. So we accounted for a significant amount this year on the back of strong expectations for Outlaws.
Understood. In fact, I'd just ask one quick follow-up, please. What is the expectation for free cash flow? Are you expecting this to grow year-on-year?
Yes, we do. We expect, as I said, to come back to positive free cash flow in fiscal 2025 and from there to grow to more robust levels on the back of.
Understood.
On the back of a solid top-line growth over the years together with a growing impact from our cost reduction plan.
Beyond '25?
Yes, by fiscal 2026. Yeah.
Thank you.
Thank you.
Thank you. We will now go to our next question. Your next question comes from the line of Adrien de Saint Hilaire from Bank of America. Please go ahead.
Thank you very much. I've got two questions, probably more for Frédérick. Is it fair to say, given the language that you've used around slight increase in EBIT growth but solid growth in bookings, that you expect EBIT growth to be below revenue growth? And then you've given us already a lot of moving parts, but I would appreciate if you could perhaps point us to the right level of cash R&D for fiscal 2025 from the EUR 1,255, which was reported in fiscal 2024. Thank you.
Yes, that's the expectation. EBIT will be growing but behind top-line growth. In terms of the expectation for cash R&D, we expect it to be up versus fiscal 2024 driven by royalties. That will be significant. But if we exclude the royalties, as we said, we'll continue along the line of reducing our total cash R&D, excluding variable elements such as profitability bonuses.
As we said, as we launch free-to-play games, it's not as profitable as the other types of games we launch because there's a large investment in marketing, and it takes more time to generate more revenue.
In year one, yes. But of course, we expect a superior operating margin over time.
Yes.
Thank you, both. If I can just ask one follow-up. I know these are all very sensitive deals, but can you say anything in terms of the profit contribution out of the EUR 401 in fiscal 2024 from the B2B partnerships?
So I will stay along the line of what I said already, which is we've been happy to materialize a significant contribution into fiscal year 2024. And all of them are profitable to very profitable. And they are bringing for the ones where we value more the back-catalog titles, they are really bringing incremental value to their lifetime sales. So that's positive. And that allows our games to drive more penetration across a higher number of platforms. And that's mutually beneficial with our partners, which benefit from also increased activity on their platform. So that's a sustainable business model that has been part of the industry for quite a few years now.
Thank you.
Thank you. We will now take your next question. Your next question comes from the line of Doug Creutz from TD Cowen. Please go ahead.
Hey. Thank you. As far as the licensing revenue in fiscal Q4, it doesn't look like you flowed that through the PRI bucket, whereas you had flowed licensing revenue through PRI in the past. So, just one, could you confirm that? Two, could you talk a bit about why the difference in categorization? And then maybe if you could speak a bit toward what you expect, generally speaking, for PRI in fiscal 2025, maybe both on an as-reported basis and then kind of on an underlying basis, ex-licensing. Thank you.
Yes. Doug, I think you're referring to the licensing agreement on mobile for AC Jade. So that's why it was reported in PRI. It's true that this licensing of streaming rights is not reported in PRI. Our expectation for fiscal 2025 is that it should be growing on the back of a strong contribution from extra content with our big premium launchers together with further growth expected from Rainbow Six Siege against a higher comparison base but still growing and also coming from the three free-to-play games that we'll be launching this year.
You expect it to grow even including the licensing revenue you booked in PRI in Q2?
Indeed.
Yeah. Okay. Thank you.
You're welcome.
Thank you.
Thank you. We will now go to the next question. Your next question comes from the line of Sebastian Patulea from Jefferies. Please go ahead.
Hello, everyone. Thank you for taking my questions. I've got three, please. Firstly, can you please help me understand how Star Wars Outlaws is performing? To frame the question here, one, is the take-up for the game at a higher level versus other games at this point in pre-ordering? And two, given some of your peers seem to want to leave licensed deals, can you please discuss the profitability of Star Wars Outlaws in context of your full-year profitability, please? My second question, can you please discuss your pricing strategy for new video games?
Given the price differences between a one-off buy and also subscription to Ubisoft+, it implies the group is more focused on securing recurring revenues even if there is a risk of a less total payment. Thirdly, please, what was the total investment in The Division Heartland? Thank you very much.
On Star Wars Outlaws, we've been very happy with the reception that has been driving excitement among the fans, notably of the franchise because it's the open-world game coming on Star Wars. We are focusing on a narrative part between movie 5 and 6 that will be intriguing the fans of the franchise. Of course, back to your question on pre-ordering, we will look at it whenever we show gameplay because that's a key plus point to judge on this. In terms of licensing IPs and profitability matters, when you have the opportunity to come with such a great franchise with Star Wars where Ubisoft can bring something very special with an open-world setting and bringing many new players to the Ubisoft ecosystem together with good financial terms that we've agreed on with Disney, it's a great opportunity.
So of course, each licensing opportunity needs to be judged in terms of opportunity cost versus proprietary IPs. But in the case of Star Wars, it's very attractive. Now, of course, we need to deliver strong performance.
Thank you.
I think there were two other questions. You asked on Heartland investment. We don't disclose detailed numbers on the budget. It was, of course, a significant investment, material investment that we had put in the game. And in terms of your third question around pricing strategy for new video game, I think your question relates to pricing-based game versus recurring revenues. What we look is we want to be relevant in any business model.
So we want to bring high production value into our paid games, high production value and content for players behind additional content, and make sure that our gameplay loops and their capacity to design GaaS-native gameplays with social interactions, frequency of updates will also be very relevant for the future. So our objective is for our games to be relevant in our portfolio in any business model, paid, extra content, in-game monetization.
When you are good in in-game monetization, you are also good when you go to subscription because you keep the monetization for you.
Also, subscription in our Ubisoft+ are generally long-term. So it's a very good way also to give players the possibility to play many of our games and perform in all those games. And they actually buy also more of the games later on. So it's a good way to make people understand all the Ubisoft offering and for them to test those different brands.
Thank you very much.
Thank you.
Thank you. There are no further questions. I will hand back for closing remarks.
Thank you very much for your questions. Have a good day or a good evening. Thank you. Bye-bye.
Bye-bye.
Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.