Ubisoft Rehaul and Layoffs Demanded by Minor Stakeholder

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

Ubisoft's Strategic Restructuring Urged by Minority Investor

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 restructuring, including a new management team and potentially going private. The letter expresses profound dissatisfaction with Ubisoft's current performance and strategic direction.

The investor cites the delayed release of key titles like Rainbow Six Siege and The Division until March 2025, coupled with lowered Q2 2024 revenue projections and overall poor performance, as fueling serious concerns about the management's long-term viability. Aj Investment explicitly proposed replacing Guillemot as CEO, emphasizing the need for a new leader to optimize costs and studio structure for improved agility and competitiveness.

This pressure has impacted Ubisoft's stock price, which reportedly plummeted over 50% in the past year, according to the Wall Street Journal. Ubisoft has yet to publicly respond to the letter.

Aj Investment's letter criticizes the company's current management for prioritizing short-term gains over long-term strategic planning and delivering exceptional gaming experiences. The investor points to a significant undervaluation compared to competitors, attributing it to mismanagement and the perceived advantage taken by the Guillemot family and Tencent.

Aj Investment's Juraj Krupa further highlighted the disappointment surrounding the cancellation of The Division Heartland, a highly anticipated title. He also expressed dissatisfaction with the reception of Skull and Bones and Prince of Persia: The Lost Crown, deeming them underwhelming. Krupa also noted the underperformance of several established franchises, such as Rayman, Splinter Cell, For Honor, and Watch Dogs. While Star Wars Outlaws was expected to boost performance, its initial sales and reviews have reportedly fallen short of expectations.

The letter also proposes substantial staff reductions, citing the comparatively higher revenues and profitability of competitors like EA, Take-Two Interactive, and Activision Blizzard, despite employing significantly 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 advocates for aggressive cost-cutting measures and studio streamlining, suggesting the sale of studios not crucial to core IP development. He stresses that the current structure of over 30 studios is unsustainable. While acknowledging previous layoffs (approximately 10% of the workforce), Krupa insists that further, more substantial action is required to ensure competitiveness.