Following a string of disappointing game releases and underwhelming financial performance, Ubisoft faces pressure from a minority investor to restructure its management and workforce.
Minority Investor Calls for Ubisoft Restructuring
Aj Investment Claims Last Year's Layoffs Insufficient
Aj Investment, a minority shareholder in Ubisoft, has publicly urged the company's board, including CEO Yves Guillemot and Tencent, to take the company private and install new leadership. In an open letter, the investor expressed significant dissatisfaction with Ubisoft's current strategic direction and performance.
The letter cites the delayed release of key titles like Rainbow Six Siege and The Division (now slated for late March 2025), a lowered revenue projection for Q2 2024, and overall poor performance as major concerns. Aj Investment explicitly called for Guillemot's replacement, proposing a new CEO to optimize costs and studio structure for improved agility and competitiveness.
This pressure has impacted Ubisoft's share price, which, according to the Wall Street Journal, has plummeted over 50% in the last year. Ubisoft has yet to publicly respond to the letter.
Aj Investment contends that Ubisoft's low valuation relative to its competitors stems from mismanagement and the perceived undue influence of the Guillemot family and Tencent. The investor criticizes 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, the underperformance of Skull and Bones and Prince of Persia: The Lost Crown, and the perceived rushed release of Star Wars Outlaws, despite high anticipation. Krupa also highlighted the underutilization of popular franchises like Rayman, Splinter Cell, For Honor, and Watch Dogs.
While Star Wars Outlaws was expected to boost Ubisoft's fortunes, its sales have reportedly fallen short of expectations, contributing to a share price decline to its lowest point since 2015, representing a drop of over 30% year-to-date.
Aj Investment's letter also advocates for significant staff reductions, citing the higher revenue and profitability of competitors like Electronic Arts, Take-Two Interactive, and Activision Blizzard, despite employing fewer staff. Ubisoft's workforce of over 17,000 contrasts sharply with EA's 11,000, Take-Two's 7,500, and Activision Blizzard's 9,500.
Krupa argues that Ubisoft needs aggressive cost-cutting measures and staff optimization to improve operational efficiency. He suggests selling underperforming studios to streamline operations and focus on core intellectual properties. He points to Ubisoft's 30+ studios as an excessively large and inefficient structure. While acknowledging previous layoffs (approximately 10% of the workforce), Krupa insists that further reductions are necessary, deeming the announced cost-cutting plans insufficient for long-term competitiveness.
