Following a string of underperforming releases and setbacks, Ubisoft faces pressure from a minority investor, Aj Investment, demanding a complete restructuring. This includes installing new leadership and significant staff reductions.

Ubisoft's Strategic Shortcomings Under Scrutiny

Aj Investment, in an open letter, criticizes Ubisoft's current management, including CEO Yves Guillemot and Tencent, for its strategic direction and poor financial performance. The letter cites the delay of key titles like Rainbow Six Siege and The Division until late March 2025, a lowered Q2 2024 revenue outlook, and overall weak performance as evidence of mismanagement. Aj Investment explicitly calls for a new CEO, advocating for someone who can optimize costs and studio structure to enhance the company's competitiveness.

The investor's concerns have impacted Ubisoft's share price, which has 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 alleges that Ubisoft's low valuation stems from mismanagement and that existing shareholders are being exploited by the Guillemot family and Tencent. The investor criticizes the company's focus on short-term gains over long-term strategic planning and delivering exceptional gaming experiences.

Aj Investment's Juraj Krupa further criticizes the cancellation of The Division Heartland, the underwhelming reception of Skull and Bones and Prince of Persia: The Lost Crown, and the underperformance of several established franchises. While acknowledging the success of Rainbow Six Siege, Krupa points to the stagnation of titles like Rayman, Splinter Cell, For Honor, and Watch Dogs. He also notes that Star Wars Outlaws, a highly anticipated title, appears to have launched prematurely, impacting its reception and sales.

Ubisoft's reliance on Star Wars Outlaws to reverse its fortunes has proven unsuccessful, contributing to its share price reaching its lowest point since 2015 and a year-to-date drop exceeding 30%.

The letter also 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 urges aggressive cost-cutting measures and staff optimization to improve operational efficiency. He suggests selling underperforming studios to streamline operations and focus on core intellectual properties. While acknowledging previous layoffs (approximately 10% of the workforce), Krupa insists that further action is necessary to remain competitive in the global gaming market. He also states that the announced cost-cutting measures of €150 million by 2024 and €200 million by 2025 are insufficient.