Ubisoft Faces Shareholder Pressure for Overhaul, Layoffs

Following underwhelming recent releases and several setbacks, a minority Ubisoft investor, Aj Investment, is demanding significant restructuring, including a new management team and staff reductions. The investor's open letter, addressed to the Board of Directors, CEO Yves Guillemot, and Tencent, expresses deep dissatisfaction with the company's performance and strategic direction.

Aj Investment cites concerns over delayed key game releases (like Rainbow Six Siege and The Division, pushed to late March 2025), a lowered Q2 2024 revenue outlook, and overall poor performance. These factors, the letter argues, highlight management's inability to deliver long-term shareholder value. The investor explicitly proposes replacing Guillemot as CEO, advocating for a new leader to optimize costs and studio structure for improved agility and competitiveness.

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

Aj Investment criticizes Ubisoft's current management for prioritizing short-term results over long-term strategic planning and delivering exceptional gaming experiences. The investor specifically points to the cancellation of Division Heartland and the underperformance of Skull and Bones and Prince of Persia: The Lost Crown as examples of poor decision-making. While acknowledging Rainbow Six Siege's success, Aj Investment highlights the stagnation of other popular franchises like Rayman, Splinter Cell, For Honor, and Watch Dogs. Even the highly anticipated Star Wars Outlaws, initially seen as a potential turnaround, has reportedly underperformed, contributing to the company's share price reaching its lowest point since 2015.

The letter further proposes substantial staff reductions, citing the significantly higher revenue and profitability of competitors like Electronic Arts, Take-Two Interactive, and Activision Blizzard, despite employing fewer staff. Ubisoft's over 17,000 employees, compared to EA's 11,000, Take-Two's 7,500, and Activision Blizzard's 9,500, are highlighted as evidence of inefficiency. While acknowledging previous layoffs (approximately 10% of the workforce), Aj Investment believes further cost-cutting and staff optimization are necessary to enhance operational efficiency. The investor also suggests selling underperforming studios to streamline the company's overall structure, emphasizing the excessive number of studios (over 30) as a contributor to the company's struggles. The investor considers Ubisoft's planned cost reduction of €150 million by 2024 and €200 million by 2025 insufficient to remain competitive in the global gaming market.