French Government Set For Fresh Domestic Industry Bailout – Key Issue Not Addressed

Widespread appeals were heard yesterday from France’s games industry, calling on the government to bail it out of yet another huge crisis.

The news follows the revelation that Ubisoft contacted fellow French outfit Vivendi in an attempt to spark up friendly merger talks following the ‘hostile’ attentions of American giant EA, which recently consumed around 20% of the Rayman firm.

Ubisoft shares have doubled over the course of the last month, now sitting at 26.19 Euros, generating an impressive - if false - 476 million Euro market cap for the company.

However, Ubisoft is clearly concerned that EA’s ‘strategic gain’ may well prove its loss. According to reports, a panel headed by the Guillemot brothers was dispatched to Vivendi looking for a white knight deal, though Vivendi was reportedly not interested in tackling EA.

Meanwhile, troubles at Infogrames continue to mount. CEO Bruno Bonnell, having already pledged to walk if a refinancing agreement is declined by shareholders, urged the French government to step in. “Companies have chosen to live by the rules of the free market. But there is a strong number of US competitors and healthy competition from Asia, so we need to keep European actors to prevent this from becoming a mono-cultural industry, just as we do for cinema and music.”

According to a report in the Financial Times, the French government may well be about to dish out a considerable sum to its games sector. The paper claims that president Jacques Chirac is investigating ways to ‘invest [into games] funds from privatisations in high-growth industry.’ However, non-French firms operating within the EU are likely to cry foul to trade bodies if the French government again injects massive cash into its industry.

However, any fresh injection of cash will fail to address the problems faced by companies such as Inforgrames. The firm is still to spend a day trading in a real marketplace. The company has a huge team of bean counters constantly trying to prove that its current level of turnover indicates that it will emerge as an organically functioning player, though to date this has not proven to be the case. For instance, Vivendi posted an operating loss of 185 million Euros in the first nine months of 2004.

And while we're on the subject of Ubisoft, Infogrames, et al, in an interesting footnote to yesterday's statement from Infogrames/Atari's outgoing CEO Bruno Bonnell, we hear that Atari/Infogrames/The Bruno Bonnell Beat Combo is prepared to join the resistance too. The amusingly-named arstechnica.com today carries a story in which it is posited that Bonnell has vowed to get behind the Ubisoft cause and chase away any potential takeover by the Redwood giant that is Electronic Arts.