Ubisoft Faces Demands for Restructuring and Cuts

Following a string of underperforming releases and setbacks, Ubisoft faces pressure from a minority investor, Aj Investment, demanding a complete restructuring, including a new management team and staff reductions.

Ubisoft Faces Investor Pressure for Restructuring

Aj Investment Claims Last Year's Layoffs Insufficient

Aj Investment, a significant Ubisoft shareholder, issued an open letter to the Board of Directors, including CEO Yves Guillemot and Tencent, advocating for a company-wide overhaul. The letter expresses profound dissatisfaction with Ubisoft's current performance and strategic direction.

Key concerns cited include the delayed release of crucial titles like Rainbow Six Siege and The Division until late March 2025, a lowered Q2 2024 revenue forecast, and overall poor performance. These factors, Aj Investment argues, raise serious doubts about the management's long-term ability to deliver shareholder value. The letter explicitly proposes replacing Guillemot as CEO, emphasizing the need for a new leader to optimize costs and studio structure for enhanced agility and competitiveness.

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

Aj Investment directly criticizes Ubisoft's management, stating that its current focus on short-term gains rather than long-term strategic planning is detrimental to the company's value and the gaming experience. The cancellation of The Division Heartland, a highly anticipated title, is specifically highlighted as a significant misstep. Furthermore, the investor criticizes the underwhelming reception of Skull and Bones and Prince of Persia: The Lost Crown.

The underperformance of several key franchises, including Rayman, Splinter Cell, For Honor, and Watch Dogs, despite their widespread popularity, is also cited as evidence of mismanagement. While Star Wars Outlaws was expected to revitalize the company's fortunes, its reportedly weak sales have further contributed to the decline in share price, reaching its lowest point since 2015 and representing a more than 30% drop year-to-date.

Aj Investment's Juraj Krupa also advocates for substantial staff reductions, pointing to the significantly 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 is contrasted with EA's 11,000, Take-Two's 7,500, and Activision Blizzard's 9,500.

Krupa urges aggressive cost-cutting and staff optimization to enhance operational efficiency, suggesting the sale of studios not crucial to the development of core IPs. He emphasizes that Ubisoft's current structure of over 30 studios is excessively large and unsustainable. While acknowledging previous layoffs (approximately 10% of the workforce), Krupa insists that further, more substantial measures are necessary to ensure competitiveness. He also notes that planned cost reductions are insufficient to achieve this goal.