Ubisoft Faces Demands for Overhaul and Layoffs from Minor Stakeholder

Amidst a series of setbacks and disappointing performance from its recent releases, Ubisoft faces demands from one of its investors 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 publicly called for a significant restructuring of the company. In an open letter addressed to Ubisoft's Board of Directors, including CEO Yves Guillemot and major shareholder Tencent, Aj Investment expressed deep dissatisfaction with Ubisoft's current performance and strategic direction. The investor is pushing for the company to go private and install a new management team.

The letter highlighted Ubisoft's recent challenges, including the delay of key titles like "Rainbow Six Siege" and "The Division" until the end of March 2025, and a lowered revenue forecast for Q2 2024. These issues have amplified Aj Investment's concerns about the management's ability to deliver long-term value to shareholders. The investor proposed a change in leadership, suggesting the hiring of a new CEO to streamline costs and enhance the company's agility and competitiveness.

Following the letter's release, Ubisoft's share price experienced a significant decline, reportedly dropping over 50% in the past year, according to the Wall Street Journal. A Ubisoft spokesperson declined to comment on the letter.

Aj Investment criticized Ubisoft's current management for prioritizing short-term financial results over long-term strategy and gamer satisfaction. Juraj Krupa, representing Aj Investment, pointed out the cancellation of "Division Heartland" and the underwhelming reception of "Skull and Bones" and "Prince of Persia Lost Crow." He also highlighted the neglect of beloved franchises like Rayman, Splinter Cell, For Honor, and Watch Dogs, despite their potential.

Krupa noted that while "Rainbow Six Siege" performs well, the recent release of "Star Wars Outlaws" did not meet expectations, contributing to a further decline in Ubisoft's share price, which hit its lowest level since 2015 and dropped over 30% since the beginning of the year.

In addition to leadership changes, Aj Investment suggested significant staff reductions. Krupa compared Ubisoft's workforce to that of competitors like Electronic Arts, Take-Two Interactive, and Activision Blizzard, noting that Ubisoft's 17,000 employees far exceed the staff numbers of these companies despite having fewer blockbuster titles.

Krupa emphasized the need for Ubisoft to implement substantial cost reductions and staff optimization to improve operational efficiency. He also recommended selling off studios not essential for developing Ubisoft's main IPs, pointing out that the company's 30 studios are an oversized structure for its current profitability.

Despite Ubisoft's previous layoffs, which reduced the workforce by 10%, and the announced strategy to cut fixed costs by 150 million EUR by 2024 and 200 million EUR by 2025, Aj Investment believes these measures are insufficient to maintain competitiveness in the global market.