Ubisoft Facing Shakeup as Shareholder Demands Changes

Following a series of setbacks and disappointing performance from recent game releases, Ubisoft faces pressure from an investor demanding a management overhaul and staff reductions.

Ubisoft Investor Calls for Company Restructuring

Aj Investment Claims Last Year's 10% Workforce Cut Insufficient

Minority investor Aj Investment has publicly urged Ubisoft's board, including CEO Yves Guillemot and Tencent, to take the company private and install new leadership. In an open letter, the investors expressed deep dissatisfaction with the company's current performance and strategic direction.

The letter cites the delayed release of key titles like Rainbow Six Siege and The Division until late March 2025, alongside lowered Q2 2024 revenue projections and overall poor performance, as significant concerns. Aj Investment explicitly suggested replacing Guillemot as CEO, proposing, "A change in current management. Initiate a hiring process for a NEW CEO who will optimize costs and studio structure for a more agile and competitive company."

This pressure has impacted Ubisoft's share price, which reportedly plummeted over 50% in the past year, according to the Wall Street Journal. Ubisoft offered no immediate comment on the letter.

Aj Investment contends that Ubisoft's low valuation compared to competitors stems from mismanagement and the perceived exploitation of shareholders by the Guillemot family and Tencent. The letter criticizes the company's focus on short-term financial results over long-term strategic planning and delivering exceptional gaming experiences.

Aj Investment's Juraj Krupa further criticized the cancellation of Division Heartland and the underwhelming reception of Skull and Bones and Prince of Persia: The Lost Crown. Krupa highlighted the underperformance of several established franchises, stating, "While Rainbow Six Siege performs well, franchises like Rayman, Splinter Cell, For Honor, and Watch Dogs have been dormant for years despite significant player bases." He also pointed to Star Wars Outlaws' less-than-stellar reviews despite high anticipation, suggesting a rushed release.

Ubisoft's reliance on Star Wars Outlaws to revitalize its performance has seemingly backfired, contributing to a share price decline to its lowest point since 2015 and a year-to-date drop exceeding 30%.

The letter also proposes significant staff reductions. Krupa cites Electronic Arts (EA), Take-Two Interactive, and Activision Blizzard as examples of companies achieving higher revenue and profitability with smaller workforces. Ubisoft's over 17,000 employees dwarf EA's 11,000, Take-Two's 7,500, and Activision Blizzard's 9,500, despite having fewer blockbuster titles.

Krupa urges substantial cost-cutting and staff optimization to enhance operational efficiency, suggesting the sale of studios not crucial to core IP development. He views Ubisoft's 30+ studios as overly extensive and detrimental to future profitability. While acknowledging previous layoffs (approximately 10% of the workforce), he argues that further, more aggressive measures are necessary to remain competitive. The announced plans to cut fixed costs by €150 million by 2024 and €200 million by 2025 are deemed insufficient.