Ubisoft Shakeup: Stakeholder Demands Alterations

A minority investor, Aj Investment, is demanding significant restructuring at Ubisoft, including a new management team and staff reductions, citing underperformance and poor strategic direction. The investor's open letter expresses deep dissatisfaction with recent game delays, lowered revenue projections, and overall weak performance, arguing that current management lacks the ability to deliver long-term shareholder value.

Aj Investment specifically calls for a new CEO to replace Yves Guillemot, emphasizing the need for cost optimization and a more agile company structure. The letter highlights the significant decline in Ubisoft's share price, exceeding 50% over the past year, attributing the low valuation to mismanagement and the influence of the Guillemot family and Tencent. The investor criticizes the company's focus on short-term results over long-term strategic planning and delivering exceptional gaming experiences.

The letter further criticizes the cancellation of Division Heartland, and the underwhelming reception of Skull and Bones and Prince of Persia: The Lost Crown. While acknowledging the success of Rainbow Six Siege, Aj Investment points to the underutilization 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 recent share price drop to its lowest level since 2015.

Aj Investment proposes substantial cost-cutting measures, including staff reductions, citing the significantly higher revenue and profitability of competitors like EA, Take-Two Interactive, and Activision Blizzard, despite employing fewer staff. The investor suggests that Ubisoft's over 30 studios are excessive and recommends selling non-essential studios to improve operational efficiency. While acknowledging previous layoffs, Aj Investment argues that the 10% workforce reduction is insufficient and that further cost-cutting measures are necessary to maintain competitiveness. The letter concludes by expressing concern that Ubisoft's announced cost-cutting targets are not aggressive enough to address the company's challenges.