The French video game giant Ubisoft has postponed the release of the next “Assassin’s Creed” to February 14, 2025 (AFP / BERTRAND GUAY)
“What’s going on at Ubisoft?” The question agitates the video game industry as the French giant falters on the stock market and faces a new strike from Tuesday, against a backdrop of takeover rumors.
– Stock market tumble
The publisher of franchises like “Assassin’s Creed” and “Just Dance” experienced a prosperous period at the end of the 2000s then at the turn of the 2020s, competing with the American and Japanese giants.
But in a few years, its stock price collapsed until it reached its lowest level in 10 years in September.
“Ubisoft is suffering from a series of releases which are not achieving the expected success,” said Oscar Lemaire, of the specialist site Ludostrie, citing in particular the pirate game “Skull and Bones” and the new episode of “Prince of Persia”.
At the end of September, Ubisoft founder and CEO Yves Guillemot admitted that initial sales of “Star Wars Outlaws”, released at the end of August, were “weaker than expected”, forcing Ubisoft to lower its financial targets.
And the release of the next episode of its most popular series, “Assassin’s Creed”, was postponed by three months to allow teams to refine it.
“They know they can’t miss their shot,” anticipates Oscar Lemaire. Another failure would be disastrous for Ubisoft.
– “Old-fashioned” formula
If its “open world” game formula – where the player can explore a virtual universe as they wish – was authoritative in the 2010s, “it is starting to be a little outdated”, underlines the creator of Ludostrie.
“What is holding Ubisoft back is its lack of adaptation to changes in the industry,” adds Martin Szumski, financial analyst at Morningstar.
Since the success of online games like “Fortnite”, which generate significant revenue each month thanks to content sold in the game, all the big publishers are trying to copy this so-called “game service” recipe.
Ubisoft made this bet in May with the shooting game “XDefiant” but the title did not meet “expectations”, according to Yves Guillemot.
By missing this boat, Martin Szumski believes that Ubisoft finds itself “behind the rest of the industry”.
– Social discontent
With nearly 45 studios in France and abroad (Canada, Italy, China, etc.) and around 19,000 employees, Ubisoft is one of the largest companies in the sector.
But it has not been impervious to the crisis that the video game industry has been going through for two years. Announced in January 2023, its cost reduction plan resulted in the departure of 1,700 people in 18 months.
In France, where Ubisoft employs 4,000 people, discontent is growing over working conditions and salaries.
After a first strike movement which mobilized nearly 700 people in February – one of the largest in the sector – several unions are calling for a three-day walkout starting Tuesday to protest against the decision to impose at least three days per week of face-to-face work.
“We are currently examining how to refine (our model) to better balance the benefits of remote and in-office working,” Ubisoft said after a meeting with unions last Tuesday.
– Towards a buyout?
On October 4, the Bloomberg agency reported a potential takeover of Ubisoft by the Chinese tech giant Tencent and the Guillemot family, the group’s main shareholder, to take it off the stock market.
Ubisoft “regularly examines all its strategic options” and “will inform the market in due time, if necessary”, reacted the company.
Tencent, with whom the Guillemot brothers have sealed a union in 2022 to keep control of the company, holds nearly 10% of the capital – a threshold that it does not have the right to cross before 2030, according to the agreement – , while the Guillemot family owns around 14%.
“If a takeover takes place, Tencent will probably push for more control than before,” judges Martin Szumski, “even if the Guillemot family wants to retain as much management of the company as possible.”
“Tencent is very strong in the Chinese market, especially in the field of mobile games and +free-to-play+ (free games),” explains Oscar Lemaire. A buyout would allow it to gain a foothold in the Western market and the big-budget games in which Ubisoft specializes.
Exiting the stock market would not necessarily be negative for Ubisoft, “to implement its strategy without being constantly monitored by the markets,” says Michael Hodel, analyst for Morningstar.
“In the short term, it’s a way for the Guillemots to be calm. But it leaves a sword of Damocles hanging over their heads,” concludes Oscar Lemaire.
