(Reuters) - France's largest video game maker Ubisoft (EPA:UBIP) has decided to discontinue development on XDefiant, its free-to-play first-person shooter title, it said on Wednesday.
As a result, Ubisoft will close its San Francisco and Osaka production studios and ramp down production in Sydney, leading to a loss of 143 jobs in San Francisco and a likely reduction of 134 people in Osaka and Sydney.
Ubisoft said half of the XDefiant team worldwide would transition to other roles within the company.
"The decision follows a thorough review of the game's performance, profitability, and market conditions, and aligns with the company's increased selectivity in its R&D investments," Ubisoft said in a statement.
"Season 3 of XDefiant will still launch and servers will remain active until June 3, 2025," it added.
It said that although XDefiant generated initial excitement, it did not retain a large enough player base to establish it as a viable competitor to other free-to-play first-person shooter titles or to support Ubisoft's continued investment in it.
"The cancellation of the project shows how tough the shooter market is, where it is difficult to break through among strong IPs that have dominated the segment for years," Erste Group analyst Piotr Bogusz said.
Ubisoft said it would apply the lessons learned from XDefiant to its future free-to-play titles.
The French group has been plagued by delays and the underperformance of some key titles, including Star Wars Outlaws which lagged sales expectations after its August launch. Its shares have lost half of their value so far this year.
Ubisoft added the Games-as-a-Service (GAAS) category remains its key strength and a central pillar of its strategy, with notable successes such as Rainbow Six, The Crew and For Honor.