Ubisoft to worried employees: 'We need to take the time to figure this out'

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Ubisoft management is still ironing out all the details of the new billion-dollar Tencent deal and seem unsure exactly where the cards will fall.

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Things are looking up for Ubisoft. Assassin's Creed Shadows is a hit with 3 million players and the second-largest launch revenues in franchise history, and Ubisoft just secured a critical $1.2 billion investment from Tencent to help pay down debts and stabilize Ubisoft's books.

The deal does complicate things. Ubisoft has effectively splintered into two groups: Ubisoft 1, which will handle the main operations and record-keeping, and Ubisoft 2, a subsidiary that now has exclusive rights to Assassin's Creed, Far Cry, and Rainbow Six. Tencent purchased 25% stake in Ubisoft 2 with its $1.2 billion investment. Tencent also has ~10% stake in Ubisoft 1, and purchased 49.9% stake in Ubisoft 1's majority shareholder Guillemot Bros. Ltd., which is run by Ubisoft's founding Guillemot family.

Ubisoft workers, who have already been stressed by the threat of layoffs, are unsure about what's next. Ubisoft apparently doesn't know just yet.

Recently acquired internal memos indicate as much. There's a new memo from Ubisoft's general manager of North America Christophe Derennes that lays out a 3-step plan, but Derennes also says that "we need to take the time to figure this out."

The memo refers to Zone 1, but this is presumably referring to North America given Derennes' position.

Check below for the memo:

Hello all -

By now you have seen the message from Yves about the decision to create a new subsidiary that encompasses the three biggest Ubisoft brands: Rainbow 6, Assassin's Creed, and Far Cry. This new entity will remain part of the Ubisoft family and will continue to be operated by us, with Tencent being a minority shareholder. This important decision is a key turning point for us after the last few difficult years and is an opportunity for Ubisoft to rebuild stronger than ever.

What will this mean for us in Zone 1? Certainly, we can expect some major changes in terms of structure and organization, since these three brands compose a significant part of Zone 1's population. For now, what we can say is that once the agreement is finalized and confirmed by legal authorities, our Quebec, Saguenay and Sherbrooke studios will move entirely to the new entity, while our Montreal project teams will be spread between the new entity and the current Ubisoft organization. Our studios in Toronto, Winnipeg, as well as Red Storm and Blue Mammoth, will continue evolving in the current organization.

It is still very early in the process and I know you must have many questions, but the short answer to the "what's next" question is: we need to take the time to figure this out and the next months will be dedicated to determining the transition plan.

Step one was this announcement, where we shared the decision and kicked off the planning phase.

Step two will be from now until this summer, where we will work out how to support the new entity with the existing organization and determine what the new model looks like on both sides. There will be a variety of guided consultations and discussions over the next few months, and your leaders will be involved as we take this opportunity to set up Ubisoft and the new entity for success.

Step three will be the implementation of the new model, with a longer period to complete the transition. Of course, there are many things that have not been determined yet such as who and how we will manage the new entity, what will happen to the structure we have created around the Zone, what will be the impact on the studios, and more. While there are many things that will only be defined during the planning process over the next few months, I can assure you that Ubisoft will continue to be a world class creator of video games, and your great ideas and energy will always be a critical part of our success.

I'm sure you have many questions for which we have no answers yet. Your MDs have also been just recently briefed on this announcement, and like me, don't have any more information than I do. However, as always, we will try to keep you updated on our progress as we go along and share the latest decisions as soon as we can. In the meantime, we are looking forward to this opportunity of rebuilding a new and stronger Ubisoft, and of maximizing the contributions of all our people.

Thank you for your patience and resilience: living through change is never simple, and this is a big (and important) one for us and for the future of Ubisoft. My ask to you is to keep focusing on what you do best and where you have the biggest impact: making great games that enrich the lives of our players. I'm thankful to be able to count on your cooperation as we move forward together.

Christophe

Managing Director, Zone 1