Ubisoft's Situation Is Even Worse Than You Think.

Summary

Ubisoft faces a financial crisis with its stock plummeting, leading to a shareholder revolt and a strategic overhaul. The company abandons exploitative business models like paid advanced access and season passes, focusing on player-friendly strategies. CEO Yves Guillemot emphasizes a player-centric approach and long-term brand value. Amidst this, Ubisoft delays 'Assassin's Creed: Shadows' for further polish, reflecting on the underperformance of 'Star Wars Outlaws'. The company's future hinges on increasing day-one sales, cutting costs, and potentially a leveraged buyout, as activist investors eye taking Ubisoft private for greater control and turnaround.

Takeaways

• 📉 Ubisoft's stock has plummeted significantly, with a 60% drop year-to-date, 47% drop month-over-month, and a 20% drop in a single day.
• 🔍 An internal shareholder revolt led by an activist investor is pressuring Ubisoft to make major changes, including leveraging EU law for more control and long-term vision.
• 🏭 CEO Yves Guillemot is under immense pressure to defend the family business and address the company's financial struggles.
• 🎮 Ubisoft is overhauling its business model, ending paid advanced access and season passes, and changing its PC platform strategy.
• 🚫 The company is moving away from controversial practices like psychological forceful revenue optimization and focusing on player-friendly strategies.
• 🌐 Ubisoft games will now be available on Steam, which is a positive move for consumers and a shift from their previous resistance to platform fees.
• 📅 The delay of 'Assassin's Creed: Shadows' and the underperformance of 'Star Wars Outlaws' have led to a reevaluation of Ubisoft's release and content strategy.
• 💸 The cancellation and refund of pre-orders for 'Shadows' indicate a significant change in Ubisoft's approach to game releases and player expectations.
• 🔄 The narrative shift towards player-centric gameplay and long-term brand value is a strategic response to the financial crisis and shareholder pressure.
• 🔮 Looking ahead, Ubisoft aims to increase average sale price through day one sales, improve player experience, and set franchises up for long-term success.

Q & A

What caused Ubisoft to slash their financial targets and experience a significant drop in stock prices?

Ubisoft's stock dropped due to a combination of weak financial performance, an internal shareholder revolt, and underperforming game releases like 'Star Wars Outlaws.' The pressure from an activist investor, who criticized the deal between Ubisoft’s CEO and Tencent, also contributed to the company's financial decline.

What is the main issue raised by the activist investor regarding Ubisoft's management?

The activist investor is concerned that Ubisoft's CEO, Yves Guillemot, and the Tencent deal give too much control to the company's leadership, which they argue is unfair to minority shareholders. They want to use EU law to crack open the company's structure, seek more control, and push for long-term strategic changes.

How has Ubisoft's business model changed according to the video?

Ubisoft is moving away from practices like paid advanced access, season passes, and delaying Steam releases. The company is shifting toward a more player-friendly model, focusing on delivering polished games and a better overall experience.

What effect has 'Star Wars Outlaws' had on Ubisoft's current situation?

'Star Wars Outlaws' underperformed both in sales and reception, which led to Ubisoft reevaluating its future content plans for the game. The game's launch was plagued by minor issues and a lack of polish, causing many players to drop off early.

Why is Ubisoft making player-friendly changes to its business model?

Ubisoft is making these changes out of sheer desperation to turn things around. Their financial situation is dire, and they need to win back players by providing better value and eliminating unpopular practices like season passes and advanced access.

What are some of the specific changes Ubisoft is implementing to address player feedback?

Ubisoft is cancelling season passes, advanced access, and paid expansions. Instead, they are offering free expansions to pre-order customers and focusing on improving the game’s quality of life through patches, aiming to release more polished games from day one.

What role does Assassin’s Creed play in Ubisoft's future strategy?

Assassin’s Creed is Ubisoft’s flagship franchise, and the success of future titles like 'Shadows' is crucial for the company’s survival. If Assassin’s Creed fails, it could spell disaster for Ubisoft, as other major franchises like Far Cry and Ghost Recon have already declined.

How are weak sales and a soft reception for 'Star Wars Outlaws' affecting Ubisoft’s decision-making?

The weak performance of 'Star Wars Outlaws' has led Ubisoft to reconsider their future content investment for the game. They are hesitant to pour more money into DLC if the base game is underperforming. However, they plan to release patches and a first expansion to boost the game's longevity.

What are Ubisoft's long-term strategies to improve their financial situation?

Ubisoft plans to focus on increasing the average sale price by offering better day-one incentives, releasing games on Steam from the start, and shifting toward more player-friendly practices. They are also addressing player feedback to release more polished games.

What is the potential impact of the shareholder revolt on Ubisoft’s future?

The shareholder revolt, led by an activist investor, could lead to significant changes in Ubisoft’s management and business strategy. The investor is pushing for a strategy similar to Activision's, focusing on core franchises and cutting costs by eliminating non-essential projects and studios.