Following a series of disappointing game releases and underperformance, Ubisoft faces pressure from a minority investor to restructure its management and workforce.
Minority Investor Demands Ubisoft Restructuring
Aj Investment Claims Last Year's Layoffs Insufficient
Aj Investment, a significant minority shareholder, 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, they expressed strong dissatisfaction with the company's current performance and strategic direction.
The letter cited the delay of key titles like Rainbow Six Siege and The Division until late March 2025, a lowered Q2 2024 revenue forecast, and overall poor performance as major concerns. Aj Investment directly proposed a CEO replacement for Guillemot, stating a need for "a NEW CEO who will optimise the cost and studio structure for more agile and competitive company."
This call for change follows a significant drop in Ubisoft's share price, reportedly down over 50% in the past year, according to the Wall Street Journal. Ubisoft has yet to publicly respond to the letter.
Aj Investment contends that Ubisoft's low valuation stems from mismanagement and that shareholders are disadvantaged by the Guillemot family's and Tencent's influence. They criticized 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 The Division Heartland and the underwhelming reception of Skull and Bones and Prince of Persia: The Lost Crown. He also pointed to the underutilization of popular franchises like Rayman, Splinter Cell, For Honor, and Watch Dogs. While acknowledging the success of Rainbow Six Siege, he noted concerns about the rushed release of Star Wars Outlaws, despite high anticipation.
Ubisoft's reliance on Star Wars Outlaws to reverse its fortunes has reportedly backfired, contributing to the recent share price decline, reaching its lowest point since 2015 and a more than 30% drop year-to-date.
The letter also advocates for significant staff reductions. Krupa highlighted that competitors like EA, Take-Two Interactive, and Activision Blizzard achieve higher revenue and profitability with smaller workforces. Ubisoft's over 17,000 employees contrast sharply with EA's 11,000, Take-Two's 7,500, and Activision Blizzard's 9,500.
Krupa urged aggressive cost-cutting and staff optimization to improve operational efficiency, suggesting the sale of studios not crucial to core IP development. He noted that Ubisoft's 30+ studios represent an overly large and inefficient structure. While acknowledging previous layoffs (approximately 10%), he stressed that further action is necessary, even beyond the announced cost-cutting plans of €150 million by 2024 and €200 million by 2025.
