Minor Stakeholder Demands Ubisoft Overhaul and Layoffs

In the wake of several setbacks and the underwhelming performance of its recent releases, Ubisoft is facing demands from a minority investor to overhaul its management and reduce its workforce.

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 penned an open letter to the company's Board of Directors, including CEO Yves Guillemot and Tencent, calling for a significant restructuring. They advocate for Ubisoft to go private and install a new management team. "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 investors stated.

The letter highlights the postponement of "key games" like Rainbow Six Siege and The Division to late March 2025, alongside Ubisoft's lowered revenue outlook for Q2 2024 and overall poor performance, which have "heightened [their] concerns" about the current management's ability to deliver long-term value to shareholders. Aj Investment proposed a "change of the current management" and the initiation of a hiring process for a new CEO to "optimise the cost and studio structure" for a more agile and competitive Ubisoft.

Following this letter, Ubisoft's share price reportedly declined earlier in the week, dropping "more than 50% over the past 12 months," as noted by the Wall Street Journal. A Ubisoft spokesperson told WSJ that the company had "no comment on the letter at this time."

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

Juraj Krupa from Aj Investments expressed disappointment over the cancellation of Division Heartland, which was highly anticipated by gamers. He also criticized the releases of Skull and Bones and Prince of Persia Lost Crow as underwhelming. Krupa pointed out that while Rainbow Six Siege is performing well, other beloved franchises like Rayman, Splinter Cell, For Honor, and Watch Dogs have been neglected despite their global fanbase. He mentioned that although the latest release, Star Wars Outlaws, was expected to boost sales, recent reviews suggest it was not fully ready for release, 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.

Krupa also suggested significant staff reductions, noting that companies like Electronic Arts (EA), Take-Two Interactive, and Activision Blizzard achieve higher revenues and profitability with fewer employees. Ubisoft, with over 17,000 staff, far exceeds EA’s 11,000, Take-Two’s 7,500, and Activision Blizzard's 9,500 employees. He urged Ubisoft to "implement significant cost reductions and staff optimization" to enhance operational efficiency and suggested selling studios not essential for developing main IPs, given Ubisoft's current structure of over 30 studios.

Krupa acknowledged the layoffs Ubisoft made last year, which reduced the workforce by about 10%, but argued that this was insufficient. He also mentioned Ubisoft's strategy to cut fixed costs by 150 million EUR by 2024 and 200 million EUR by 2025, but deemed these measures not aggressive enough to remain competitive in the global gaming market.