Ubisoft Rehaul and Layoffs Demanded by Minor Stakeholder

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 overhaul its management and reduce its workforce. The investor's dissatisfaction stems from several factors, including recent game delays and a lowered revenue outlook.

Aj Investment's Open Letter

In an open letter to Ubisoft's Board of Directors, including CEO Yves Guillemot and Tencent, Aj Investment urged the company to go private and install a new management team. The letter highlights concerns over the postponement of key titles like Rainbow Six Siege and The Division until late March 2025, coupled with a weak Q2 2024 revenue forecast. The investor explicitly called for a new CEO, emphasizing the need for cost optimization and a more agile company structure.

The investor's criticism extends beyond financial performance. Aj Investment contends that Ubisoft's management prioritizes short-term gains over long-term strategic planning, resulting in a failure to deliver engaging gaming experiences. The cancellation of The Division Heartland, and the perceived underperformance of Skull and Bones and Prince of Persia: The Lost Crown, further fueled the investor's discontent. The investor also pointed to the underperformance of Star Wars Outlaws, despite high expectations, as a contributing factor to the company's current struggles.

Layoffs and Studio Restructuring Proposed

Aj Investment's letter also advocates for significant staff reductions, citing the higher revenue and profitability of competitors like Electronic Arts, Take-Two Interactive, and Activision Blizzard, despite employing fewer staff. Ubisoft's workforce of over 17,000 is deemed excessive compared to its competitors. The investor suggests selling underperforming studios to improve operational efficiency and streamline the company's structure. While acknowledging previous layoffs, Aj Investment believes a more aggressive approach is necessary to ensure Ubisoft's competitiveness.

Ubisoft's Response and Market Reaction

Ubisoft has yet to publicly respond to the letter. However, the investor's concerns have already impacted the company's share price, which has reportedly fallen significantly over the past year. The situation underscores the significant challenges facing Ubisoft and the growing pressure on its leadership to implement substantial changes.