Following a series of underperforming releases and setbacks, Ubisoft faces pressure from a minority investor, Aj Investment, demanding a significant restructuring. The investor urges a management overhaul and staff reductions to improve the company's financial performance and long-term viability.
Ubisoft Investor Calls for Restructuring and Leadership Change
Aj Investment Claims Previous Layoffs Insufficient
In an open letter, Aj Investment expressed deep dissatisfaction with Ubisoft's current trajectory, citing the postponement of key game releases, lowered revenue projections, and overall poor performance. The investor's concerns center on the management's ability to generate shareholder value. A key proposal involves replacing CEO Yves Guillemot with a new CEO focused on cost optimization and improved studio efficiency. The letter explicitly states a need for "Change of the current management. Start hiring process of NEW CEO who will optimise the cost and studio structure for more agile and competitive company as Ubisoft should be."
The letter's release coincided with a decline in Ubisoft's share price, reportedly falling over 50% in the past year, according to the Wall Street Journal. Ubisoft has yet to publicly comment on the investor's demands.
Aj Investment criticizes Ubisoft's management for prioritizing short-term gains over long-term strategic planning, stating that the company's current valuation is significantly undervalued due to mismanagement and the influence of the Guillemot family and Tencent. The investor specifically highlighted the disappointment surrounding the cancellation of The Division Heartland and the underwhelming reception of Skull and Bones and Prince of Persia: The Lost Crown.
Further criticism targets the underutilization of popular franchises like Rayman, Splinter Cell, For Honor, and Watch Dogs, while acknowledging the success of Rainbow Six Siege. Even the highly anticipated Star Wars Outlaws, intended to revitalize the company's fortunes, reportedly underperformed expectations, contributing to the recent share price decline, reaching its lowest point since 2015.
Aj Investment's Juraj Krupa proposes substantial staff reductions, citing the higher revenue and profitability of competitors like Electronic Arts, 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 "significant cost reductions and staff optimization," suggesting the sale of studios deemed unnecessary for the development of core intellectual properties. He argues that Ubisoft's current structure of over 30 studios is unsustainable. While acknowledging previous layoffs (approximately 10% of the workforce), Krupa insists these measures are insufficient and calls for more aggressive cost-cutting to maintain competitiveness.
