Following a string of disappointing game releases and poor financial performance, Ubisoft is facing pressure from a minority investor to overhaul its management and reduce its workforce.

Minority Investor Calls for Ubisoft Restructuring

Aj Investment Claims Last Year's Layoffs Insufficient

Aj Investment, a minority shareholder, has publicly urged Ubisoft's board, including CEO Yves Guillemot and Tencent, to take the company private and install new leadership. In an open letter, the investor expressed deep dissatisfaction with the company's current performance and strategic direction.

The letter cites the delayed release of key titles like Rainbow Six Siege and The Division until March 2025, alongside a lowered Q2 2024 revenue forecast and overall weak performance, as major concerns. Aj Investment specifically proposed replacing Guillemot as CEO, advocating for "a new CEO who will optimize costs and studio structure for a more agile and competitive company."

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

Aj Investment contends that Ubisoft's low valuation is due to mismanagement and that shareholders are being disadvantaged by the Guillemot family and Tencent. The investor criticizes the company's focus on short-term financial results over long-term strategic planning and delivering exceptional gaming experiences.

Aj Investment's Juraj Krupa further criticized the cancellation of The Division Heartland and the underwhelming reception of Skull and Bones and Prince of Persia: The Lost Crown. He also highlighted the underperformance of several established franchises, stating that titles like Rayman, Splinter Cell, For Honor, and Watch Dogs have been neglected despite their popularity. While Star Wars Outlaws was anticipated to boost performance, its launch reportedly fell short of expectations, contributing to the company's share price decline to its lowest point since 2015.

The letter also recommends significant staff reductions. Krupa points to the higher revenue and profitability of competitors like Electronic Arts (EA), Take-Two Interactive, and Activision Blizzard, which employ significantly fewer staff despite greater success. 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 Ubisoft to implement substantial cost-cutting measures and staff optimization to improve efficiency, suggesting the sale of studios not crucial to the development of core IPs. He argues that Ubisoft's 30+ studios represent an overly large and inefficient structure. While acknowledging previous layoffs (approximately 10% of the workforce), Krupa insists that further action is necessary to maintain competitiveness. He states that the announced cost-cutting targets of €150 million by 2024 and €200 million by 2025 are insufficient.