Ubisoft Faces Demands for Overhaul and Layoffs from Minor Stakeholder

Amidst a series of setbacks and disappointing performances from its recent game releases, Ubisoft is facing calls for a significant overhaul, including a new management team and staff reductions, from one of its investors.

Ubisoft Minority Investor Urges to Restructure Company

Last Year's 10% Workforce Reduction Not Enough According to Aj Investment

Ubisoft's minority investor, Aj Investment, has issued a strong call to the company's Board of Directors, including CEO Yves Guillemot and Tencent, advocating for Ubisoft to go private and introduce a new management team. In an open letter, Aj Investment expressed their "deep dissatisfaction with the current performance and strategic direction of the company," highlighting their significant stake in Ubisoft Entertainment.

The investors pointed to the delay of key titles like Rainbow Six Siege and The Division until the end of March 2025, alongside Ubisoft's reduced revenue forecasts for Q2 2024 and overall poor performance, as reasons for their heightened concerns about the management's ability to deliver long-term value to shareholders. They proposed a change in leadership, suggesting the hiring of a new CEO to optimize costs and streamline studio structures, making Ubisoft more agile and competitive.

As a result of these concerns, Ubisoft's share price experienced a significant drop earlier this week, falling "more than 50% over the past 12 months," according to the Wall Street Journal. A Ubisoft spokesperson declined to comment on the letter when approached by WSJ.

Aj Investment further criticized the current management, stating, "The main reason why the valuation is so low compared to the peers is that Ubisoft at its current state is mismanaged, and shareholders are hostages of Guillemot family members and Tencent who take advantage of them." They accused the management of prioritizing short-term quarterly results over a long-term strategy focused on delivering exceptional gaming experiences.

Juraj Krupa from Aj Investments expressed further disappointment with Ubisoft's recent decisions, such as the cancellation of Division Heartland and the underwhelming reception of Skull and Bones and Prince of Persia Lost Crow. He noted that while Rainbow Six Siege performs well, beloved franchises like Rayman, Splinter Cell, For Honor, and Watch Dogs have been neglected despite their large fan bases. Additionally, Krupa criticized the release of Star Wars Outlaws, which, despite high anticipation, was launched before it was fully ready, contributing to a decline in Ubisoft's share price to its lowest levels since 2015 and a drop of over 30% since the start of the year.

In the letter, Krupa also suggested that Ubisoft needs to reduce its workforce significantly. He compared Ubisoft's staff numbers to those of other gaming giants, noting that despite having fewer blockbuster titles, Ubisoft employs over 17,000 staff compared to Electronic Arts' 11,000, Take-Two Interactive's 7,500, and Activision Blizzard's 9,500. Krupa emphasized the need for "significant cost reductions and staff optimization" to enhance operational efficiency and urged Ubisoft to consider selling studios not essential for developing main IPs. He argued that with over 30 studios, Ubisoft's structure is too large for its current profitability.

Krupa acknowledged Ubisoft's recent layoffs, which reduced the workforce by about 10%, but stated that this was "simply not enough." He also mentioned Ubisoft's strategy to cut fixed costs by 150 million EUR by 2024 and 200 million EUR by 2025, but argued that these measures are not aggressive enough to keep Ubisoft competitive in the global market.