Ubisoft Faces Restructure Pressure from Investor

Following a string of underperforming releases and setbacks, Ubisoft faces pressure from a minority investor, Aj Investment, to restructure its leadership and workforce.

Aj Investment Calls for Ubisoft Restructuring

Previous Layoffs Insufficient, Investor Claims

In an open letter, Aj Investment urged Ubisoft's board, including CEO Yves Guillemot and Tencent, to take the company private and install new management. The investor expressed profound dissatisfaction with Ubisoft's performance and strategic direction, citing the delay of key titles like Rainbow Six Siege and The Division until March 2025, a lowered Q2 2024 revenue forecast, and overall poor performance. Aj Investment's concerns center on the management's long-term ability to deliver shareholder value. The letter explicitly proposed replacing Guillemot as CEO, advocating for a new leader to optimize costs and studio structure for enhanced agility and competitiveness.

Ubisoft's share price has suffered, plummeting over 50% in the past year, according to the Wall Street Journal. The company declined to comment on the letter.

Aj Investment attributed the low valuation to mismanagement and the perceived exploitation of shareholders by the Guillemot family and Tencent. The investor criticized the management's focus on short-term results rather than a long-term strategy focused on delivering exceptional gaming experiences.

Aj Investment's Juraj Krupa further criticized the cancellation of The Division Heartland, the underwhelming performance of Skull and Bones and Prince of Persia: The Lost Crown, and the underutilization of popular franchises like Rayman, Splinter Cell, For Honor, and Watch Dogs. While Star Wars Outlaws was anticipated to boost performance, its reportedly weak sales further contributed to the share price decline, reaching its lowest point since 2015 and a cumulative drop of over 30% year-to-date.

The letter also recommended significant staff reductions, highlighting that competitors like Electronic Arts, Take-Two Interactive, and Activision Blizzard achieve higher revenue and profitability with smaller workforces. Ubisoft's 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 advocated for substantial cost-cutting and staff optimization to improve operational efficiency, suggesting the sale of studios not crucial to the development of core IPs. He noted that Ubisoft's 30+ studios constitute an overly large structure hindering profitability. While acknowledging previous layoffs (approximately 10% of the workforce), and cost-cutting measures, Krupa argued these were insufficient to ensure long-term competitiveness.