Ubisoft Rehaul and Layoffs Demanded by Minor Stakeholder

Following a string of underperforming game releases, Ubisoft faces pressure from a minority investor, Aj Investment, to restructure its management and workforce.

Minority Investor Calls for Ubisoft Restructuring

Aj Investment Claims Previous Layoffs Insufficient

Aj Investment, a significant Ubisoft shareholder, has publicly demanded a company overhaul, including the installation of new leadership and potential privatization. In an open letter to the board, including CEO Yves Guillemot and Tencent, the investor expressed deep dissatisfaction with Ubisoft's performance and strategic direction.

Key concerns cited include the delayed release of major titles (Rainbow Six Siege and The Division) until March 2025, a lowered Q2 2024 revenue forecast, and overall poor financial results. These factors, according to Aj Investment, raise serious doubts about the current management's long-term viability and ability to deliver shareholder value. The letter explicitly proposes replacing Guillemot as CEO, advocating for a new leader to streamline costs and studio operations for enhanced competitiveness.

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

Aj Investment contends that Ubisoft's current undervaluation stems from mismanagement and the perceived undue influence of the Guillemot family and Tencent. The investor criticizes the management's focus on short-term gains rather than a long-term strategy focused on delivering exceptional gaming experiences.

Aj Investment's Juraj Krupa further highlighted disappointment with the cancellation of The Division Heartland and the underwhelming reception of Skull and Bones and Prince of Persia: The Lost Crown. He also pointed to the underutilization of popular franchises like Rayman, Splinter Cell, For Honor, and Watch Dogs, and criticized the rushed release of Star Wars Outlaws, despite high anticipation.

While Star Wars Outlaws was a key title for Ubisoft's turnaround strategy, its underperformance has exacerbated the company's stock decline, reaching its lowest point since 2015 and representing a significant drop since the start of the year.

Aj Investment's letter also calls for further 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 argues that substantial cost-cutting and staff optimization are crucial for improved operational efficiency. He suggests selling underperforming studios to streamline the company's current portfolio of over 30 studios. While acknowledging previous layoffs (approximately 10% of the workforce), Krupa insists that further measures are necessary to ensure Ubisoft's competitiveness in the global market. He also states that the announced cost-cutting plans are insufficient.