Following a string of disappointing releases and underperformance, Ubisoft faces pressure from an investor demanding a management overhaul and staff reductions.
Minority Investor Calls for Ubisoft Restructuring
Aj Investment Claims Last Year's Downsizing Insufficient
Aj Investment, a 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 deep dissatisfaction with the company's performance and strategic direction.
The letter cites the delay 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 raising serious concerns about the management's long-term viability and ability to deliver shareholder value. Aj Investment even proposed replacing Guillemot as CEO, stating a desire for "a NEW CEO who will optimise the cost and studio structure for more agile and competitive company."
This news followed a significant drop in Ubisoft's share price, reported by the Wall Street Journal as plummeting over 50% in the past year. Ubisoft has yet to publicly respond to the letter.
Aj Investment further argued that Ubisoft's low valuation stems from mismanagement and that shareholders are being exploited by the Guillemot family and Tencent. They criticized the management's focus on short-term gains rather than long-term strategic planning and delivering exceptional gaming experiences.
Aj Investment's Juraj Krupa specifically criticized the cancellation of The Division Heartland, the underwhelming reception 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. He also pointed to the less-than-perfect launch state of Star Wars Outlaws, despite high anticipation.
While Ubisoft had pinned its hopes on Star Wars Outlaws for a turnaround, its underperformance contributed to the company's share price falling to its lowest point since 2015, adding to a year-to-date decline of over 30%.
The letter also proposes significant staff reductions. Krupa highlighted that competitors like Electronic Arts, Take-Two Interactive, and Activision Blizzard achieve higher revenue and profitability with smaller workforces. Ubisoft's 17,000+ employees contrast sharply with EA's 11,000, Take-Two's 7,500, and Activision Blizzard's 9,500.
Krupa advocated for aggressive cost-cutting measures and staff optimization to boost operational efficiency, suggesting the sale of studios not crucial to the development of core IPs. He noted Ubisoft's 30+ studios as excessive for its current profitability. While acknowledging previous layoffs (approximately 10% of the workforce), he stressed that further action is necessary to remain competitive. The announced cost-cutting plans of €150 million by 2024 and €200 million by 2025 were deemed insufficient.
