Ubisoft Faces Demands for Overhaul and Layoffs from Minor Stakeholder

Following a series of setbacks and the underwhelming performance of its recent releases, Ubisoft faces a demand for a major overhaul from one of its investors. The call for change includes installing a new management team and reducing staff numbers, aimed at revitalizing the company's direction and profitability.

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 an open letter to the company's Board of Directors, including CEO Yves Guillemot and Tencent, urging Ubisoft to go private and appoint a new management team. In the letter, Aj Investment expresses deep dissatisfaction with Ubisoft's current performance and strategic direction, stating, "As a significant minority shareholder in Ubisoft Entertainment via Aj Investment and our partners, we are writing to express our deep dissatisfaction with the current performance and strategic direction of the company."

The investor pointed out the delays of key games like Rainbow Six Siege and The Division, now pushed to the end of March 2025, alongside Ubisoft's lowered revenue outlook for Q2 2024, as reasons for their heightened concerns about the management's long-term value delivery. Aj Investment proposed a leadership change, suggesting, "Change of the current management. Start hiring process of NEW CEO who will optimise the cost and studio structure for more agile and competitive company as Ubisoft should be."

Following this letter, Ubisoft's share price reportedly fell, declining "more than 50% over the past 12 months," as per the Wall Street Journal. A Ubisoft spokesperson declined to comment on the letter.

Aj Investment criticized Ubisoft's current management, stating, "The main reason why the valuation is so low compared to the peers is that Ubisoft at current state is mismanaged and shareholders are hostages of Guillemot family members and Tencent who take advantage of them." They further noted that the management focuses more on meeting quarterly results than on a long-term strategy to enhance the gaming experience.

Juraj Krupa from Aj Investment expressed disappointment over the cancellation of Division Heartland and criticized the recent releases of Skull and Bones and Prince of Persia Lost Crow as underwhelming. He highlighted the neglect of beloved franchises like Rayman, Splinter Cell, For Honor, and Watch Dogs, despite their global popularity. Krupa also mentioned that while Star Wars Outlaws was expected to boost Ubisoft's fortunes, its performance has been lackluster, contributing to a significant drop in the company's share price to its lowest since 2015.

In the letter, Krupa suggested a significant reduction in staff numbers, comparing Ubisoft to other major gaming companies like Electronic Arts, Take-Two Interactive, and Activision Blizzard, which maintain higher revenues and profitability with fewer employees. He stated, "Despite having fewer blockbuster titles, Ubisoft employs over 17,000 staff compared to EA’s 11,000, Take-Two’s 7,500, and Activision Blizzard's 9,500."

Krupa emphasized the need for Ubisoft to implement "significant cost reductions and staff optimization" to enhance operational efficiency. He also recommended that Ubisoft consider selling studios not essential for the development of its main IPs, noting that "Ubisoft has over 30 studios, it's obvious to every investor that this structure is too large for Ubisoft and its profitability going forward."

He acknowledged Ubisoft's recent efforts to cut its workforce by 10% and its strategy to reduce fixed costs by 150 million EUR by 2024 and 200 million EUR by 2025, but argued that these measures are insufficient to keep Ubisoft competitive in the global market.