Ubisoft Faces Investor Pressure for Restructuring and Layoffs
Following a string of underperforming game releases, Ubisoft is facing intense pressure from a minority investor, Aj Investment, to restructure its management and workforce. The investor's open letter expresses deep dissatisfaction with the company's current performance and strategic direction.
Aj Investment's Concerns
Aj Investment cites several key concerns, including the delayed release of major titles like Rainbow Six Siege and The Division, a lowered revenue outlook for Q2 2024, and overall poor performance. These factors have raised serious questions about the management's long-term viability and ability to deliver shareholder value. The investor even proposes replacing CEO Yves Guillemot with a new CEO who can optimize costs and studio structure for improved agility and competitiveness.
The impact of these concerns is evident in Ubisoft's declining share price, which has reportedly fallen over 50% in the past year, according to the Wall Street Journal. Ubisoft has yet to publicly comment on the letter.
Criticism of Management and Game Releases
Aj Investment criticizes Ubisoft's management for prioritizing short-term gains over long-term strategic planning and delivering exceptional gaming experiences. The investor specifically points to the cancellation of The Division Heartland and the underwhelming reception of Skull and Bones and Prince of Persia: The Lost Crown as examples of poor decision-making. Furthermore, while acknowledging the success of Rainbow Six Siege, the investor highlights the underutilization of other popular franchises like Rayman, Splinter Cell, For Honor, and Watch Dogs. Even the highly anticipated Star Wars Outlaws, intended to revitalize the company's fortunes, has reportedly underperformed.
Call for Staff Reductions and Studio Optimization
Aj Investment's letter also calls for significant cost reductions and staff optimization. Comparing Ubisoft's 17,000+ employees to the smaller workforces of competitors like EA, Take-Two Interactive, and Activision Blizzard, the investor argues that Ubisoft's current structure is bloated and unsustainable. The investor suggests selling underperforming studios and implementing more aggressive cost-cutting measures than the previously announced 150 million EUR reduction by 2024 and 200 million EUR by 2025. While acknowledging previous layoffs, Aj Investment insists that further reductions are necessary to improve operational efficiency and competitiveness. The current situation leaves Ubisoft facing a critical juncture, requiring significant changes to regain investor confidence and secure its future.
