Ubisoft Overhaul, Layoffs Sought by Activist

Following a string of underperforming releases and setbacks, Ubisoft faces pressure from a minority investor, Aj Investment, demanding a company restructuring, including a new management team and staff reductions.

Ubisoft Faces Investor Pressure for Restructuring

Aj Investment Claims Last Year's Layoffs Insufficient

Aj Investment, a significant Ubisoft shareholder, has publicly criticized the company's performance and strategic direction in an open letter addressed to the Board of Directors, including CEO Yves Guillemot and Tencent. 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 poor performance as reasons for concern about long-term shareholder value. Aj Investment even proposes replacing Guillemot as CEO, advocating for a new leader to optimize costs and studio structure for enhanced agility and competitiveness.

This criticism has 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 officially respond to the letter.

Aj Investment argues that Ubisoft's low valuation compared to competitors stems from mismanagement and the perceived exploitation of shareholders by the Guillemot family and Tencent. They claim the current management prioritizes short-term gains over a long-term strategy focused on delivering exceptional gaming experiences.

Aj Investment's Juraj Krupa further expressed disappointment over the cancellation of The Division Heartland and criticized the reception of Skull and Bones and Prince of Persia: The Lost Crown, deeming them underwhelming. Krupa also highlighted the underperformance of several established franchises, while acknowledging the success of Rainbow Six Siege. He noted concerns about the rushed release of Star Wars Outlaws, despite high anticipation.

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

The letter also proposes significant staff reductions, citing the higher revenue and profitability of competitors like EA, Take-Two Interactive, and Activision Blizzard, despite employing 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 cost-cutting measures and studio optimization, suggesting the sale of studios not crucial to core IP development. He considers Ubisoft's 30+ studios excessive for its current profitability. While acknowledging previous layoffs (approximately 10% of the workforce), Krupa believes further action is necessary to maintain competitiveness, stating that announced cost-cutting measures are insufficient.