Ubisoft Rehaul and Layoffs Demanded by Minor Stakeholder

Following a string of underperforming releases and setbacks, Ubisoft faces pressure from a minority investor, Aj Investment, demanding a complete restructuring. This includes installing new leadership and significant staff reductions.

Ubisoft Faces Investor Pressure for Restructuring

Aj Investment Claims Last Year's Layoffs Insufficient

In an open letter, Aj Investment, a significant minority shareholder, expressed profound dissatisfaction with Ubisoft's performance and strategic direction. The letter cites the delayed release of key titles, lowered revenue projections for Q2 2024, and overall poor performance as evidence of management's failure to deliver shareholder value. Aj Investment directly called for a change in leadership, proposing the recruitment of a new CEO to optimize costs and studio structure for improved agility and competitiveness.

This pressure has impacted Ubisoft's share 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 low valuation relative to its competitors stems from mismanagement and the perceived undue influence of the Guillemot family and Tencent. The investor criticizes the company's focus on short-term gains over long-term strategic planning and delivering exceptional gaming experiences.

Aj Investment's Juraj Krupa further criticized the cancellation of The Division Heartland, the underwhelming performance of Skull and Bones and Prince of Persia: The Lost Crown, and the perceived lack of attention given to dormant but popular franchises like Rayman, Splinter Cell, For Honor, and Watch Dogs. While Star Wars Outlaws was anticipated to boost performance, its underperformance further fueled concerns. The company's share price is at its lowest since 2015, down over 30% year-to-date.

The letter also proposes 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 17,000+ employees are contrasted with EA's 11,000, Take-Two's 7,500, and Activision Blizzard's 9,500. While acknowledging previous layoffs, Aj Investment argues that further cost-cutting and staff optimization are necessary to improve operational efficiency. The investor also suggests selling underperforming studios to streamline operations. The current structure of over 30 studios is deemed excessive. The announced cost-cutting measures are considered insufficient to maintain competitiveness.