Patrick Leleu, a former telecom executive who recently took on the role of CEO at ailing French video game maker Infogrames, is trying hard to convince the market that he can turn the company around with a new strategy that calls for, among other things, more deals with independent producers, moves into online gaming, and developing
titles that appeal to both sexes and all ages.
It is a tough sell. Infogrames, which was once Europe's biggest electronics games publisher and No. 2 worldwide after Redwood City (Calif.)-based Electronic Arts (ERTS), hasn't shown a profit in seven years. It was recently forced to sell off most of its studios and best-selling titles to
help reduce its mountain of debt.
A recent press conference to announce its annual results for the year ending Mar. 31 didn't inspire renewed confidence: Revenue fell 16.5% to €305.3 million ($408.9 million), due in part to a 42.1% drop in U.S. sales, which represent 30% of the group's activity. Leleu conceded that the U.S.
losses pose a serious concern but offered no insights into how he was going to fix the problem. The company's shares remained flat after the press event, trading at €0.24, down more than 98% from their 2000 peak, when the company was worth $4.1 billion.France's Flair for Games
The near-collapse of Infogrames has been a black eye for one of France's most promising technology sectors. Though the country is blessed with deep engineering expertise, it has relatively few global info-tech champions. Video games were a notable exception, thanks to stars such as Infogrames, Ubisoft Entertainment (the world's No. 4 game producer), and the Vivendi Games unit of entertainment giant Vivendi.
Even with Infogrames' problems,
France retains outsized influence in video games, a $30.3 billion global business that could grow to $48 billion by 2010. For one, it's among the few countries that has held on to a strong local movie industry, giving it a strong talent base in cinema and animation. That, plus strong programming skills, a cadre of ambitious entrepreneurs, and ample dot-com era financing, led to the emergence of a world-class video game sector in the late 1990s.
Today, Ubisoft is riding high on a string of high-profile hits such as the Tom Clancy's Splinter Cell series and a game based on Peter Jackson's King Kong movie. Crosstown rival Vivendi owns the online version of the popular role-playing game World of Warcraft, which was developed by Blizzard Entertainment and has 8.8 million subscribers worldwide.
At the same time, France is taking an early lead in mobile games, thanks to Paris-based Gameloft and Bordeaux-based In-Fusio. Gameloft, which ranked No. 1 in BusinessWeek's annual European Hot Growth list for 2006, is 20%-owned
by Ubisoft and makes the hit game Lost, based on the popular U.S. TV series. It can be played on a mobile phone or Apple (AAPL) iPod (see BusinessWeek.com, 10/19/06, "Gameloft: Games for a World on the Go").Infogrames' "Bill Gates of France"
Yet the tale of Infogrames illustrates how industry leaders can stumble.
In its early days, the company's ambitions were limitless. Founded in 1983 by Bruno Bonnell and college classmate Christophe Sapet, it struck gold the next year with the hit Alone in the Dark, a horror survival game series that today is one of the few big titles left in the company's portfolio.
Article Source: www.businessweek.com.