Ubisoft Overhauls Amid Layoffs

Following a string of disappointing game releases and overall underperformance, 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 significant minority shareholder in Ubisoft, has publicly demanded the company go private, install new leadership, and significantly reduce its staff. In an open letter addressed to the Board of Directors, including CEO Yves Guillemot and Tencent, Aj Investment expressed deep dissatisfaction with Ubisoft's current performance and strategic direction.

The letter cites the delayed release of key titles, lowered revenue projections for Q2 2024, and overall poor performance as major concerns. Aj Investment specifically called for a new CEO, arguing the current management lacks the ability to deliver long-term shareholder value. The investor's proposal includes a complete overhaul of the management team, focusing on cost optimization and a more agile studio structure.

Ubisoft's share price has suffered significantly, plummeting over 50% in the past year, according to the Wall Street Journal. The company has yet to respond publicly to the investor's letter.

Aj Investment contends that Ubisoft's low valuation stems from mismanagement and the undue influence of the Guillemot family and Tencent. The investor criticizes the company's focus on short-term results at the expense of long-term strategic planning and delivering exceptional gaming experiences.

Aj Investment's Juraj Krupa further criticized the cancellation of The Division Heartland, the underwhelming performance 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. While acknowledging the success of Rainbow Six Siege, Krupa pointed to issues with the recent Star Wars Outlaws release, suggesting it wasn't fully optimized at launch despite high anticipation.

Ubisoft's reliance on Star Wars Outlaws to revive its fortunes has been unsuccessful, contributing to the company's share price falling to its lowest level since 2015 and a total drop of over 30% this year.

The letter also proposes significant staff reductions, citing the higher revenue and profitability of competitors like Electronic Arts, Take-Two Interactive, and Activision Blizzard, despite having fewer employees. Ubisoft's workforce of over 17,000 is considerably larger than its competitors, prompting calls for cost-cutting measures and staff optimization.

Krupa suggests selling underperforming studios to improve efficiency and reduce the company's overall size, noting that Ubisoft's 30+ studios are excessive. While acknowledging previous layoffs (approximately 10% of the workforce), Krupa insists further reductions are necessary to remain competitive, suggesting the announced cost-cutting measures are insufficient.